New research by Direct Line for Business indicates that 31% of UK small business owners have experienced critical business issues that have had a damaging impact on their business, as well as a knock-on effect on their clients.
These incidents include damage to a client’s business reputation following consultancy services, injuries being sustained on a company’s premises by clients and the loss of confidential data.
The research also showed that the larger the business, the more likely they are to experience these problems. Only 8% of sole traders have experienced problems, compared to 25% of micro businesses (enterprises with up to nine employees), 41% of small businesses (10 to 49 employees) and 62% of medium businesses (50 to 249 employees).
Direct Line for Business’ survey of UK small business owners found that the most common incidents were employees being injured on site (29%), having an employee steal money or information from the company or a client (21%), losing a client as a result of giving poor advice (19%) and having a client experience a financial loss because of service provided (18%).
Jane Guaschi, business manager at Direct Line for Business, said: “Advising clients and running premises comes with its risks, so it’s important to makes sure you have the right safety procedures in place to minimise any potential issues. Even if you’re professional and always give advice and sell products in good faith, everyone has the potential to make mistakes.
“The costs of litigation and damages can be steep, so small business owners should ensure they have the relevant insurance cover to give them peace of mind and allow them to get on with growing their business.”
The research found that 70% of small business owners who have experienced these issues said the incident had impacted their business, with the most common outcome being that they had to pay the compensation out of their own pocket. Staff leaving, losing clients and a bad reputation followed in terms of the most common incidents that impact on businesses.