Bad Advice Costs UK Small Businesses Billions
Poor consultancy resulted in a £6.4bn loss for micro and small firms, causing them to fire staff, halt investment plans and almost close down
Almost fifth (16%) of micro and small businesses lost a combined £6.4bn last year due to poor professional advice – £20,842 per business – with 19% of business owners said to have lost between £50,000 and £100,000 due to consultancy issues.
The data, outlined in a report by Direct Line for Business, estimates that 320,000 enterprises lost money due to deficient advice from consultants and third party advisors.
Poor advice was found to have negatively impacted small firms in a number of ways; 46% of companies were forced to let staff go, 34% had to take out credit, 30% were required to scale back, 28% said it almost caused failure and 16% lost clients.
Insufficient IT advisors was named as the top issue by 44% of companies, followed by poor consultancy in management (34%), marketing (32%), property (23%), communications (16%), accountancy (9%), advertising (8%), and legal (6%).
Nick Breton, head of Direct Line for Business, said:
“Our research clearly highlights the devastating effect poor professional advice can have on small and micro-businesses. However the impact on an advisory firm that is facing litigation can be just as shattering.”