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The Cost of Disruption for Small Businesses

New research by Direct Line for Business has highlighted the potential financial consequences for small businesses that are unexpectedly forced to stop trading because of a disruption.

The research found that in the last two years, over 550,000 small businesses in the UK have been forced to halt trading due to a disruption, such as destroyed stock or a broken-down delivery vehicle. The average cost of keeping a small business afloat while unable to trade for two weeks is thought to be £8,775.

The average small business estimates it would survive around eight months and three weeks if it was forced to halt trading, with sole traders (nine months, one week) faring better than microbusinesses – businesses employing fewer than ten 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. Direct Line highlights that this could be potentially devastating for the one in five small businesses that claim that they would not be able to survive if they had to cease trading for more than a month.

The research also revealed the most common impacts of an interruption in trading on small business owners:

  • reduction in profit (mentioned by 48% of businesses),
  • reduction in revenue (42%),
  • loss of customers (39%) and
  • putting personal money into the business (32%).

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For expert legal advice on these issues, or other areas of business law, then contact our specialist commercial lawyers today.

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