Supply chain · 20 October 2016

Small business owners reveal cost of two weeks’ disruption

In the last two years, more than 550,000 of the UK’s smaller firm owners have been forced to temporarily cease trading

A two-week disruption to working operations costs the average small business £8,775, according to new research from Direct Line for Business.

Analysis from the small business insurer revealed that in the last two years, more than 550,000 of the UK’s smaller firm owners have been forced to temporarily cease trading following disruptions such as destroyed stock and broken down delivery vehicles.

The average shutdown period for a business suffering from disruption was found to be over three months.

This statistic could be particularly worrying for the one in five small business owners who claimed that just a month of business inactivity would see their company fold due to the halt in revenue.

Business’ margins suffer most from a two-week disruption, as almost half of small business owners reported a reduction in profit in the last two years following an incident. Revenue was also found to have affected 42 per cent of firms in the same period.

Disruption to business also inflicted longer term effects on small companies. Some 39 per cent of owners lost customers to competitors as a result of an interruption, while 23 per cent were forced to postpone plans for future business expansion.

Commenting on the research, head of Direct Line for Business Nick Breton acknowledged that the unpredictable nature of disruptions can be harmful for a small business owner.

He said in a statement: “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.”

Insurance expert Lee Mooney recently advised Business Advice readers on how to identify the right kind of commercial insurance for their business, and echoed the findings of the study from Direct Line for Business.

“No business owner likes to think about suffering any losses as a result of events outside of their control, but these events do happen and it’s paramount that businesses have a safety net to fall back on so that they can get things back to business as usual as soon as possible and minimise any damage caused to the company,” he said.

Is your small firm still uninsured? Read our beginners’ guide to business insurance.

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Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.


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