The cost of keeping businesses going
More than 550,000 UK small businesses have been forced to halt trading due to a disruption in the last two years, according to new research.
Destroyed stock and delivery vehicles breaking down are just a couple of incidents that have been known to cause a halt in business trading.
The report, by small business insurer Direct Line for Business, also found that 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 lasting nine months, one week which would fare better than microbusinesses with fewer than 10 employees. Most microbusinesses surveyed said there were likely to last nine months while small businesses would stay afloat for 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 small businesses that claim that they would not be able to survive if their businesses had to cease trading for more than a month.
Reduction in profit, reduction in revenue, loss of customers and putting personal money into the business were found to be the most common impacts of an interruption in trading on small business owners.
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. Business interruption insurance covers your business if your insured property has been damaged resulting in a loss of income.”