Business insolvency is a looming threat for 2.4 million British SMEs, according to insurer Simply Business, if they experience an interruption of just two weeks.
According to the insurance provider, the average company needs £20,000 per month to remain in business – meaning a £10,000 interruption to their earnings could force them into business insolvency in as little as two weeks.
Some companies have cash reserves to fall back on, but the research revealed that 52% have less than £10,000 going spare, 30% have less than £500, and 20% have nothing at all.
This is in spite of a turbulent few years, when business interruptions have ranged from floods in some areas – notably the south-west this past winter – to riots in some of the largest cities.
Perhaps surprisingly, 22% of those surveyed believed they could survive a six-month business interruption without falling into corporate insolvency.
Simply Business CEO Jason Stockwood warned that this may be unjustified optimism, explaining: “While being a small business means you have a great deal of potential, it also makes you vulnerable.”
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