UK small businesses dangerously exposed to the weather
Bad weather is causing small businesses across the UK to lose revenue, yet new research shows that nearly half of firms lack measures to protect themselves.
A study from Towergate suggests that firms lack continuity plans or insurance cover that can protect them from storms and any resultant damage.
This lack of preparation is costing businesses money, as many are forced to cover losses from their own pocket, which places pressure on their cash flow in the process.
As the effects of Storm Doris are felt across the UK, 66% of SMEs said they have lost revenue as a result of bad weather, while nearly a third have suffered weather-related property damage in the past half a decade.
Despite this, 44% of businesses do not have a continuity plan and 69% reported that their insurance, if they had it, did not provide the required protection.
A number of issues were found to result from bad weather, with the most common complaint being that employees were delayed or unable to reach their place of work – named in 24% of cases.
Some 16% of businesses said that demand for their goods or services dropped as a result, while 15% listed supply chain disruption as having a major impact on their finances.
The average SME believes they lose 14.7 hours every year to inclement weather conditions, although the figure varied wildly by sector.
It rose to nearly 21 hours in the engineering and building sector, to 19.6 hours for manufacturing and utilities firms, and to 19.7 hours for transport companies.
Based on figures from the Department for Business, Energy and Industrial Strategy, there are almost 5.5 million SMEs in the UK, which employ around 15.7 million people.
If two thirds of them lack insurance cover against the weather, it means around 3.8 million businesses could be exposed.
Costs associated with damage are the biggest cause for concern for small businesses, as an average of nearly £525,000 of assets can be at risk of damage by adverse weather.
For firms operating on tight budgets, losses of this magnitude could force them to cease trading or face insolvency – having a contingency plan in place is therefore beneficial for those who fear their businesses could be at risk, alongside an insurance plan that covers most eventualities.
By Phil Smith