Business disruptions cost thousands

Martin Kirby, Tenon Regional Managing Director

Incidents including natural disasters, major technological failures and power cuts seriously affect 46 per cent of the regions SMEs, with loss of business during disruptions costing an average of £22,914 per incident, according to entrepreneur think tank the Tenon Forum.

In addition, of those businesses which have been affected by disruptions, over a quarter (30 per cent) had to pay out in excess of £10,000 each in order to rectify the damage.

58 per cent of respondents were temporarily unable to do business as a result of the disruption, whilst over a quarter (33 per cent) lost profits and close to one in five (18 per cent) suffered a loss of clients or sales. 
Incalculable effects such as losing irreplaceable company records and files harm 16 per cent of companies and technology problems also consistently add to the burden.

However, despite the potential costs, many entrepreneurs are leaving themselves at risk of business interruption. 35 per cent of owner-managers in North West do not have any plans in place to deal with business interruptions – yet four in ten (40 per cent) believe their company would be vulnerable in the event of a major disruption.

The most common disruptions impacting  one in five of the region’s SMEs include major technology failure (22 per cent), and major power or utility failure (20 per cent); whilst 9 per cent have suffered from natural disaster such as fire or flooding. Finally, 6 per cent of the region’s SME’s has been affected by industrial strike action.

Martin Kirby, Regional Managing Director commented: “Entrepreneurs need to be prepared in the event of any sort of business interruption – be it a technological failure or a repeat of last year’s floods, where over 7,000 businesses were affected.  The unpredictable nature of business means that it’s vitally important that owner-managers put
rigorous plans in place to ensure their business can survive any disaster which may strike.

“By failing to put adequate plans in place, whether this is checking that insurance policies are robust or ensuring all data is backed up, entrepreneurs are putting themselves at risk of costs rising into the tens of thousands – something which UK owner-managers can ill-afford.”