£8,750: The cost of two weeks of disruption to a small business

£8,775: the cost of two weeks of disruption to a small business

  • £8,775 is the average cost to keep a business operating if trading is halted for two weeks
  • One in ten small businesses have suffered disruption that severely impacted their enterprise in the last two years
  • One in five small businesses would last less than a month in the event of being forced to halt trading

London, 20th October 2016: More than 550,0001 small businesses in the UK have been forced to halt trading due to a disruption in the last two years, according to new research by small business insurer Direct Line for Business2.

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 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 (nine months, one week) faring better than microbusinesses – businesses employing fewer than 10 people - (nine months) and small businesses (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 (21 per cent) 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 (48 per cent), reduction in revenue (42 per cent), loss of customers (39 per cent) and putting personal money into the business (32 per cent) were found to be the most common impacts of an interruption in trading on small business owners.

Table One: Most common effects disruptions have on a business3

Effect of disruption

Percentage of small business owners who had experienced disruption in last two years

Reduction in profit

48%

Reduction in revenue

42%

Lost customers

39%

Had to put personal money into the business

32%

Used up cash reserves

32%

Had to place expansion plans on hold

23%

Forced to lay off employees

16%

Had to borrow from friends and family

10%

Forced to source credit to keep business afloat

10%

Business failed

6%

Source: Direct Line for Business 2016

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.”

For further details on Direct Line for Business insurance visit https://www.directlineforbusiness.co.uk/small-business-insurance

Notes to editors

  • 1 Figure based on 5,350,000 (number of small businesses in the UK) * (31 respondents/301 small business owners asked = 10.3%) = 550,997

  • 2 Research conducted by Opinium amongst 301small business owners in the UK between 29th August and 2nd September 2016.

  • 3 These numbers are indicative as the base is below 50.

For further information please contact:

Citigate Dewe Rogerson
Samantha Stewart
Tel: 020 7282 2856
Email: samantha.stewart@citigatedr.co.uk

Direct Line for Business
Jade Trimbee
PR Manager
Tel: 01372 839 452
Mobile: 07825 315 931
Email: jade.trimbee@directlinegroup.co.uk

Direct Line for Business

Launched in 2007 Direct Line for Business provides a range of insurance products for the small business sector direct by phone or on-line.

Direct Line for Business insurance policies are underwritten by U K Insurance Limited, Registered office: The Wharf, Neville Street, Leeds LS1 4AZ. Registered in England and Wales No 1179980. U K Insurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Direct Line for Business and U K Insurance limited are both part of Direct Line Insurance Group plc.

Customers can find out more about Direct Line for Business products or get a quote by calling 0345 301 4827 or visiting www.directlineforbusiness.co.uk

Press Release

ADDED: 20th Oct 2016