Most new SMEs not getting professional advice

clock

SMEs are nearly three times as likely to ask friends or family for advice when setting up their business than consult a financial adviser, research from Aviva has found.

Advice from family or friends is relied on by 38% of those setting up SMEs while 13% consulted financial advisers, the online survey of 1,507 SMEs found.

Insurers were asked for advice by 6% of those setting up SMEs, while 32% said a major hurdle setting up their business was financial administration.

Understanding and fulfilling legal obligations as an employer or business owner was a top hurdle for 30% of those questioned and 85% knew little about their legal obligations as an employer.

Once established, 18% of SMEs said that getting financial help was still to be overcome, and the same proportion were struggling with understanding legal obligations.

Less than a third (29%) of SMEs felt very confident they had the right insurance for their business and 12% had none.

SMEs were also at risk of fines, 11% wrongly thought employers liability insurance wasn't a legal requirement and 25% wrongly believed it was needed only after taking on more than one employee.

Failure to have employers liability insurance can see companies fined £2,500 for every day the business if properly insured.

Angus Eaton, managing director of commercial lines at Aviva, said: "Making the time to balance the management of day to day customer, employee and supplier demands with protection against nasty surprises is a perpetual challenge for any business. Great advice helps.

Eaton added: "Clearly SMEs need a strong understanding of their legal obligations and how they can protect their business and employees to keep it trading - one claim without adequate cover could easily be enough to put severe financial pressure on an organisation or even close it down completely.

Further Reading:

Opinion: Why advisers must consider business protection

L&G: 40% of SMEs would cease within a year of losing key employee

More on Business

Business Protection: Are advisers doing enough to help clients mitigate risk?

Business Protection: Are advisers doing enough to help clients mitigate risk?

COVER, Talks: Business Protection, Thursday 18 April

Cover
clock 20 March 2024 • 2 min read
Workplace financial stress costs firms £10.3bn annually

Workplace financial stress costs firms £10.3bn annually

CEBR report shows financial stress is plaguing UK workforce

Sahar Nazir
clock 14 November 2023 • 2 min read
The cost-of-living crisis and conveying need in an uncertain market

The cost-of-living crisis and conveying need in an uncertain market

"Key to successful conversion is positioning and language"

Nathaniel Lee
clock 28 September 2023 • 2 min read

Highlights

COVER Survey: Advisers damning of protection insurer service levels

COVER Survey: Advisers damning of protection insurer service levels

"It takes longer than ever to get underwriting terms"

John Brazier
clock 12 October 2023 • 5 min read
Online reviews trump price for young people selecting life and health cover

Online reviews trump price for young people selecting life and health cover

According to latest ReMark report

John Brazier
clock 11 October 2023 • 2 min read
ABI members with staff neurodiversity policy nearly doubles

ABI members with staff neurodiversity policy nearly doubles

Women within executive teams have grown to 32%

Jaskeet Briah
clock 10 October 2023 • 3 min read