SMEs Advised to “Keep Finger on Pulse”
As the UK economy holds its head just above water, the AAT advises SMEs to keep their fingers on the pulse or risk going under.
Despite recent reports that the UK has emerged from recession, British business has not surfaced unscathed. The AAT, the leading professional body for accounting staff, is urging SMEs to expect the unexpected and minimise every potential risk of business downfall.
Although catastrophic events like the 2005 London bombings deeply affected enterprise, a massive 45% of small firms have admitted they still have no business continuity plan in place. With this in mind, it is no surprise that 80% of SMEs impacted by disaster either never re-open or close within 18 months. Loss of key staff, crime, fire, flood and IT breakdown are the most common threats to success, so it is imperative they prevent disaster by establishing a strategy for survival.
Tom Kelman, AAT’s Director of Finance, said:
“Planning is essential for small to medium firms because they often lack the resources to cope easily in a crisis. If several staff members are ill at the same time, it can seriously affect their chance to flourish because they rely heavily on a small team. Withstanding a recession is a great achievement, yet SMEs cannot be complacent and must focus on preventing future crises.”
With an estimated 500,000*** people launching a new business each year, SMEs could be the solution to unemployment. To increase their financial prospects, employers should adhere to the following:
- Loss/absence of key staff: ensure all key members of staff have access to each other’s files, keep shared diaries and network computers; purchase key person insurance and critical illness cover
- Crime including theft: improve security of equipment and premises by changing online passwords and installing alarms; prevent fraud by undertaking credit checks on all prospective clients and consulting the Registry of County Court Judgement; ensure your business insurance is adequate and establish a backup system so employees can work from home or remotely if necessary
- Fire: carry out a fire risk assessment; purchase business interruption insurance to cover damage and loss of profits
- IT breakdown/theft/security breach: encrypt confidential data; install automatic online back-up; purchase business continuity insurance to protect lost profits should computer systems be destroyed
- Flooding: keep back-ups of vital data and copies of important documents in a second location; make a shared network accessible remotely so employees can work from home; check your policy if premises were previously flooded and ensure insurance is kept up to date
Tom Kelman continues:
“There are no guarantees that SMEs will experience substantial success if they undertake these measures. However, their odds of survival will undoubtedly increase and more opportunities for growth should develop over time.”