Micro business owners struggle to prioritise risk management and business planning
Micro business owners struggle to prioritise risk management according to a recent survey commissioned by Broker Network, the UK’s leading network of independent insurance brokers. The same research also found that micro businesses (a definition for a business with 10 or less staff) are inconsistent when it comes to business planning.
The research found that no micro business owners, who responded to the survey, had a formal risk management plan, nor did their businesses have anyone specifically responsible for risk management. All respondents said they felt the issue was more relevant for larger businesses, but did accept they should have a risk management plan in place.
One micro business owner, when asked about whether they have risk management responded, “It’s been spoken about but it hasn’t really gone on beyond that. …sometimes these plans are there, they’re good on paper but when it comes to actually use them, it’s a different case.”
Another owner commented that they preferred not to have a dedicated plan and to adopt a more flexible approach: “I’ve been through about five business plans, going back over a long time though. You change things as things happen, decide what you’re going to do …it has to be done supposedly the right way. Sometimes it’s better to just be flexible.”
This sentiment was mirrored by brokers’ opinions on micro businesses. When asked, brokers said they saw few organised risk management plans or procedures in place at their customers’ companies, despite advising to the contrary. This means they are often dangerously exposed to issues that could in extreme cases threaten business continuity.
Commenting on the findings, Andy Fairchild, CEO at Broker Network said: “As a Network we assist our members with devising and implementing business and risk management plans and it is a valued aspect of our proposition but unfortunately there is not enough help and support for UK SMEs in this area. It is vitally important for a business that wants to grow that they work on their business as well as in their business.”
Overall, the research found that micro business owners have a narrow list of concerns, in comparison to small and medium-sized enterprises (SMEs). These concerns centred on reputation and legal issues, however stretched into issues with employees and data protection.
A key finding of the research was that the longer a company had been trading, the more likely they were to use a broker. Larger SMEs and those with a turnover greater than £1 million were more likely than smaller companies with a turnover of less than £1 million. 42% of companies who had been trading for less than 5 years were insured through a broker, whereas 70% of companies trading for over 35 years were insured through a broker.
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