More than half a million small businesses in the UK have been forced to halt trading due to a disruption in the last two years, according to new research by small business insurer Direct Line for Business.
Destroyed stock and delivery vehicles breaking down are just a couple of incidents that have been known to cause a halt in business trading and, as a result, reduction in profit (48%), reduction in revenue (42%), loss of customers (39%) and putting personal money into the business (32%) were found to be the most common impacts of an interruption in trading. The consequence of this is that the average cost of keeping a small business afloat while unable to trade for two weeks is estimated to be £8,775.
The average small business believes that it would last around eight months and three weeks if it were forced to halt trading, with sole traders (nine months, one week) faring better than micro-businesses (nine months) and small businesses (six months, two weeks).
Of those companies that have had to cease trading due to business disruption, the period of shutdown lasted, on average, more than three months. This will be of particular concern for the one in five (21%) small businesses that claim they would not be able to survive if their business had to cease trading for more than a month.
The Business Continuity Institute's latest Horizon Scan Report showed that small businesses are very often no different to larger business when it comes to the threats they face. It is therefore vital for organizations of all sizes to have some form of business continuity plan in place to be able to manage through any disruption that may occur.
Nick Breton, Head of Direct Line for Business, said: “There are many reasons a business might need to halt trading and unfortunately a lot of them are unforeseen. Keeping a business afloat when there is a disruption can be stressful enough, especially when there are no funds being generated. Business owners must ensure they have adequate insurance to minimise any disruption should an incident occur.”