Why it’s time to prepare your business for the worst
With bad weather conditions hitting the revenues of over two-thirds of SMEs, it’s a timely reminder that companies need to plan ahead to avoid the devastating impact of unexpected disasters.
Here we look at three potential dangers and how you can limit the damage to your business.
As storms continue to cause misery across the country, it’s been revealed that 70% of SMEs have been hurt by bad weather – but only three out of five are adequately insured against flooding, high winds, thunder and lightning, snow, ice or hail.
This lack of insurance could leave a business responsible for an average of £74,000 worth of property damage. And, with an estimated 5.4 million SMEs in the UK, the total cost of weather damage could be as high as £240 billion.
As well as property damage, the research from Towergate found that staff unable to travel to work, reduced demand for goods or services and poor weather conditions preventing work also contributed to a loss of earnings.
This highlights the importance of being protected against the elements. But the research showed that over a third of SMEs don’t have a business continuity plan, and, as a result, lose two working days each year on average due to weather chaos.
Commenting on the findings, Towergate’s Drew Wotherspoon said: “It’s vital that small business owners take heed of weather warnings and take precautionary measures to allow them to weather the storm and get back to business as quickly as possible.
“There are a few practical steps business owners can take to make sure they’re equipped – from putting a backup plan in place to taking out specific policies against the elements.”
With 2.5 million incidents of cybercrime between May and August 2015, according to the Office for National Statistics, the dangers to SMEs are clear. But many businesses do not believe they are at risk and only a quarter of companies (24%) are taking steps to protect themselves.
Research conducted by Aviva found that 44% of businesses believe they are unlikely to be a target for cybercrime, whilst 23% admitted that despite being worried they are not sure what to do to protect themselves. A further 8% haven’t considered the risks at all.
The study also showed that more than a third of business owners were a victim of crimes such as hacking, phishing and pharming, with 75% revealing that it cost up to £1,000 to put things right.
For other businesses the costs were much higher, with 6% spending up to £5,000 and 4% up to £10,000.
With a loss of earnings, reputational damage and loss of assets or intellectual property to consider, it’s time to put cyber risk on your agenda and take action to help prevent your business becoming a target.
This can include, but is not limited to, keeping on top of software updates, regularly changing passwords (use long, complex passwords with a combination of letters, numbers and special characters where possible) and training staff on how to spot compromising emails.
Another common issue that many businesses fail to protect themselves against is late payment.
With more than half (53%) of the UK’s small businesses owed an estimated £255bn in outstanding payments, according to Zurich, a lot of money is tied up in unpaid invoices.
And, unsurprisingly, 41% of those questioned said that this is placing significant pressure on their cash flow.
Therefore, it can be beneficial to protect your cash flow, and ultimately your business, by acquiring credit protection.
Credit insurance protects a business’s cash flow from the repercussions of late payment and bad debts by safeguarding the business from non-payment through insolvency or protracted default.
In the event an invoice becomes aged or a customer enters insolvency proceedings, the credit insurance company will ensure that you get paid for any goods or services you have supplied, subject to a designated credit limit.
Policies can be tailored to meet your specific requirements, with whole turnover credit insurance protecting your entire debtor book and selective cover insurance allowing you to select individual invoices or debtors you would like the cover to be provided against.
Whilst offered as a standalone facility, credit protection can also be provided through invoice finance facilities that additionally release up to 90% of the invoice’s value within 24 hours of its issue to boost your cash flow and cover the cash flow gap often associated with trading on credit.
To find out more about the benefits of credit insurance or invoice finance, call us on 0800 9774833 or email email@example.com to speak to one of our specialist funding consultants.