"Advisers are already having the conversations that lead to business protection [...] The need is there. It simply does not arrive labelled as business protection."
- Catherine Trimble - Scottish Widows
A new report from Scottish Widows has found that nearly a quarter (23%) of UK SMEs would only be able to continue trading for a maximum of one month if they lost a key person within their business.
Similarly, the research found that one in ten firms would cease trading immediately if the business owner became incapacitated due to illness, underlining the potential impact that the loss of a key individual can have on business continuity.
However, awareness and uptake of business protection remain low. 45% of SME owners surveyed revealed that they had never sought advice about business protection, while 94% acknowledged that their business relies on more than one key person.
With more than 1.3 million micro and small businesses operating across the UK, Scottish Widows suggests that many owners may be unaware of how vulnerable their business, and by extension their family life, could be if they or a key individual were unable to work for an extended period of time, with the findings indicating that businesses may not be receiving proactive guidance on business continuity and protection planning.
"Business protection is often seen as specialist or unknown territory," Catherine Trimble, head of distribution, protection at Scottish Widows, said. "In reality, the opportunity is much closer to home.
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"Advisers are already having the conversations that lead to business protection. Clients talk about debt, succession, reliance on key individuals, pressure on cashflow and uncertainty about what would happen if something changed unexpectedly. The need is there. It simply does not arrive labelled as business protection.
"At the same time, most small businesses remain under-protected. Many rely on a small number of people to generate income, service debt, and drive growth. Yet a significant proportion have never taken advice, do not fully understand their options, or have no funded plan in place."
Catherine added: "Our research suggests many business owners may not fully understand where they're exposed or what support is available. That's why we've developed this guide, to help business owners recognise potential risks and give advisers a practical starting point for conversations that can otherwise be difficult to begin.
"Wealth planners, workplace specialists and individual protection advisers don't need every technical answer from the outset. The important first step is helping their business clients identify where vulnerabilities exist and then exploring the options available to strengthen their business resilience."
