A recent survey found that the top five concerns for small business owners are:
- Talent management, including recruiting and retaining staff
- Functionality and reliability of technology to run the business
- Taxes and government regulations
- Financing, with decreasing ability to acquire funds year-over-year
- Customer acquisition and retention
These results appear to confirm the fact that small business owners often struggle with many of the same issues as big businesses do. However, the big difference between the two is that small businesses often have minimal resources to sort out these challenges.
Notable, labour issues are the single largest business expense accounting for about 50% of the revenue of small businesses. While firms with high-performing employees are projected to grow three times faster than their peers, these employees are consistently a target for other firms.
Small businesses are most concerned with competition from other similar businesses in their area. Four in 10 small businesses responded that the biggest risk to their business is an interruption due to injury or illness, while 16% are concerned with data being lost, stolen or compromised and 11% worry about having essential equipment break down.
Many small business claims are due to damage to a building and/or contents, loss of income, and computer or data loss. Safeguarding a business with insurance from a variety of risks can alleviate the stress associated with these concerns.
Many of the UK’s SMEs do not have adequate protection from the risks they face. In some cases this is because the risks are simply being overlooked. For some with constricted cashflows, they may decide that certain insurance covers are a luxury rather than a necessity. This could prove an expensive misjudgment if all aspects of potential liability the business is exposed to, have not been properly identified and minimised.
Essential covers such as Employers’ Liability (EL) and Public Liability (PL) should be taken out without hesitation. If a business employs staff, even if they are part-time or temporary, they are legally obliged to take out EL cover.
An EL policy will ensure the business is protected from the cost of illness or injuries sustained by employees in the line of their work and generally will have a limit of indemnity of £10m.
Public Liability, although not compulsory, is probably one of the most important insurance covers you can buy to protect a small business. PL insurance would protect the business from the damages claim resulting from its contact with the general public, customers, suppliers and other third parties.
Shops, tradesmen and other small businesses may want to look at including Business Interruption insurance. This cover compensates the business should it be forced to temporarily stop trading due to an insured event.
And there are a host of other insurance policies available to cover SMEs from threats including theft and physical damage, to computer hacking and data loss. The insurance industry shares the concerns of small businesses and can help ease the challenges they face as well as mitigate their losses.
For more information on the different types of insurance cover available to protect your business please contact us.