Nearly one in four SMEs would cease trading within a month if they lost a key person in their business, according to a new report from Scottish Widows.
The research also found that one in 10 UK smaller firms would stop trading immediately if the business owner became incapacitated due to illness.
The insurer says this highlights how vulnerable many smaller business are in the UK, and the potentially devastating loss of a key individual when it comes to business continuity.
Despite this, the research says that awareness and uptake of business protection remains low. Nearly half (45 per cent) of SME owners surveyed said they had never sought advice about business protection, while 94 per cent acknowledged that their business relies on more than one key person.
Scottish Widows is urging corporate advisers, employee benefit consultants and financial advisers to raise awareness of business protection products among their client base, by raising these issues when talking to SMEs and micro- businesses about wider employee benefits and financial planning.
Scottish Widows says there are more than 1.3 million micro and small businesses operating across the UK which could be vulnerable. It adds that these findings indicate that businesses may not be receiving proactive guidance on business continuity and protection planning.
Scottish Widows, head of distribution, protection Catherine Trimble says: “Business protection is often seen as specialist or unknown territory. In reality, the opportunity is much closer to home. Advisers are already having the conversations that lead to business protection.
“Clients talk about debt, succession, reliance on key individuals, pressure on cashflow and uncertainty about what would happen if something changed unexpectedly. The need is there. It simply does not arrive labelled as business protection.”
She adds: “Wealth planners, workplace specialists and individual protection advisers don’t need every technical answer from the outset. The important first step is helping their business clients identify where vulnerabilities exist and then exploring the options available to strengthen their business resilience.”
Scottish Widows has produced a guide to business protection, highlighting the key issues from an advice perspective, as well as a separate guide for business owners about how and where their own business may be exposed.