More than half a million small firms across the country have been forced to cease trading in the past two years following a business disruption, new research has revealed.
The study, which was carried out by a small business insurer, found that 550,000 small firms were faced with some sort of disruption to their business which proved to be so costly that they could not continue to trade after the event.
The research found that the average cost of keeping a small firm running while being unable to trade for a period of two weeks after some sort of disruption was £8,775. Some of the disruptions that could cause firms to cease trading included destroyed stock as a result of fire, flood or other natural disaster or the firm's delivery vehicles breaking down.
All business owners should consider business interruption insurance to help cover the large costs involved in being forced to close down temporarily following things like flooding or fire. Suffering losses of valuable stock or equipment can often be enough to put many firms out of business. That is unless you are covered by comprehensive business insurance, which will help to cover the replacement equipment and even help you to protect your premises and equipment against future natural disasters.
The most common impacts of a trading interruption included a reduction in profit, cited by 48 per cent of small business owners questioned for the research, a reduction in revenue, cited by 42 per cent and a loss of customers, cited by 39 per cent.
If the average small firm was forced to stop trading, it believes it would be able to last around eight months and three weeks, with sole traders saying they could last nine months and one week. Micro-businesses reported that they believed they would be able to last nine months if they were forced to halt trading for two weeks, while small firms said that they could last on average six months and two weeks. The average period of shutdown was more than three months for firms that were forced to stop trading after a disruption of some sort.