Little-Known Dangers Small Businesses Need to Know About

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Small to medium-sized enterprises (SMEs) are the backbone of many economies across the world. Many SMEs, however, are unnecessarily putting themselves at risk of major disruption to daily operations. Business disruptions of any kind can cause a variety of dangers to any small business, and major disruptions could even lead to severe issues with cash flow and business profitability. Because of their size, and smaller revenue, SMEs are less capable of bouncing back from a major hit to their operations. So, with that in mind, what are the dangers they need to watch out for?

What is a Disruption?

Cybercrimes, bad weather, transport or infrastructure difficulties, the loss of a key member of staff, burglary or vandalism, and terrorism are all types of disruption that could impact any business. And, of course, the Covid-19 (or ‘coronavirus’) outbreak currently threatening global economies is another major disruptive influence that is highly likely to affect many SMEs throughout 2020.

No small business works in isolation. Whether it’s major health hazards, bad weather or transport issues that are causing danger to your business, you can be sure they are impacting on other suppliers and service providers in the locality, too. Of course, this doesn’t actually solve your own risk issues, and just some of the ways your business could be affected by any type of disruption include:

  • In worst-case scenarios, businesses may need to close down for a few days or even weeks.
  • Reduced profitability and loss of cash flow.
  • The requirement to invest in additional building works or critical operational infrastructure, like computer security.
  • The need to take on more staff.

Some of the most common business disruptors are discussed in more detail below.

Cybercrime

Cybercrime
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Cybercrime is on the rise, and many businesses neglect to insure themselves against this risk – in the UK, the number is as high as eight out of ten businesses. It hardly needs stating how devastating cyber attacks can be, especially as businesses are now increasingly dependent on the digital world for their operations. 

Theft, Accidents, and Water Damage

Insurance claims for accidental damage, theft or flooding are another major disruptor for small businesses. Accidental damage is one of the biggest reasons for insurance claims: in the UK, for example, Direct Line found that 36% of SME claims in the past five years are related to accidental damage. If organizations have neglected to put sufficient measures in place, furthermore, it can take up to 24 days for operations to return to normal. What’s more, many insurance claims by small businesses are at least 45% of their typical total monthly profits. It’s always wise to ensure your business isn’t risking further damage by underestimating some of the most common threats.

Businesses should also think about carrying product liability insurance, which could help cover the costs of damages resulting from theft, accidents, or water damage.

Loss of Key Staff Members

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The loss of key team members causes major damage and disruption for SMEs. If you’re in this position, reviewing your HR policies and putting extra well-being measures in place simply won’t be enough. Insuring against this type of risk can be the most important solution for any business.

This article merely scratches the surface of disruptions to small businesses – there are literally hundreds of risks that could mean the difference between profitability and shutting up shop. You can’t insure against everything, but it’s certainly important to make every effort to cover the known dangers that are sure to disrupt your operations.

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