SME finances 'lack disaster planning'
Disasters such as fires can have a devastating impact on small firms
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Monday, 23, Oct 2006 10:38
Half of Britain's small businesses have no formal procedures in place to ensure that they can resume trading in the event of a disaster, according to new research.
A survey of 1,000 small firms across the UK conducted by Bank of Scotland Business Banking found that exactly 50 per cent of such businesses had no agreed plan that they would adopt if their operations were to be affected by a fire, natural disaster or explosion.
But despite the lack of disaster planning demonstrated by British small businesses, just over half (51 per cent) of respondents acknowledged that it would be "difficult" to get their business back on their feet in the wake of such an event.
The research found that businesses in Wales and the north-east were least likely to have a disaster plan, with 44 per cent of Welsh firms claiming to have formal procedures, compared to 45 per cent in the north-east.
However, both areas came only just behind the midlands in terms of the highest percentage of businesses with a disaster plan, with just 50 per cent of firms there having appropriate procedures in place and no region in the UK having a majority of small businesses who had adopted such measures.
While a majority of larger companies questioned did have disaster recovery plans in place, sole traders were found to be the type of small business least likely to be prepared for a major problem.
Some 57 per cent of companies who employed over ten people said that they had established disaster plans, compared to just 37 per cent of sole traders.
Meanwhile, of the 84 per cent of small companies that said they used computers in their business on a daily basis, just 58 per cent claimed that they regularly backed up their files on a remote site or server.
Of the total number of businesses who acknowledged they did not have a disaster recovery plan in place, 48 per cent said that the idea had "never crossed their mind", while 29 per believed that a disaster was unlikely to effect their operations.
A further 11 per cent said they had no time to consider adopting a disaster recovery plan, while seven per cent thought that it was too much hassle and three per cent thought it too costly.
Three per cent also thought that the formulation of recovery procedures was unnecessary, while an additional three per cent thought that it would be easy to start their business from scratch in the wake of a disaster.
Commenting, Ken Gillett, head of Bank of Scotland Business Banking, warned that while it was rare for disasters to hit small businesses, when major incidents did occur, the impact of them could be "devastating".
"It is therefore alarming to see how little thought and preparation is being put into disaster planning by many companies," Mr Gillett said.
"Such planning need not be burdensome or costly and, given that it might prevent a business's closure, I would recommend that every owner-manager considers the issues raised by these findings," he added.