Should last winter’s severe weather return, 84 per cent of businesses said they would be adversely affected – according to recent research by insolvency trade body, R3.

Nearly two thirds (61 per cent) of businesses said that staff would be unable to attend work and nearly half (48 per cent) said they would experience reduced profits.

Frances Coulson, R3 President, comments:

“These are worrying findings. Last year the weather caught us all off guard and the detrimental economic impact was widely reported. It seems as though a few days of icy weather this year could easily snowball into a financial disaster, especially for struggling businesses. They should be planning for the worst to avoid taking a real hit if trading suffers.”

The survey found that six per cent of business thought that adverse weather conditions could tip them into insolvency. In the retail and distribution sector, the findings were considerably higher than the national average, with 11 per cent of businesses worrying that severe winter weather could tip them into insolvency.

Frances Coulson continued: “It comes as no surprise that the retail sector is most concerned. Earlier in the year, R3′s Business Distress Index showed that retail businesses are more likely than any other to be concerned about their debt levels (41 per cent). The research also found that 58 per cent of retailers were experiencing a decrease in profit which was 24 per cent higher than the cross sector average.

“Although the last retail figures showed sales were up, people are likely to curb their spending again after Christmas. Retailers also have quarter day to contend with at the end of December, which will mean many will be paying landlords a hefty lump sum. If a business is already struggling and does not think it will withstand the pressures of severe winter weather, it should seek the advice of a professional to ensure it has the best chance of survival.”

A quarter of UK small and medium sized enterprises (SMEs) are leaving themselves vulnerable to threats in IT security, according to new research on behalf of communications provider KC. Key findings from the research include:

Despite 92 per cent of small business owners polled valuing IT security as important (36 per cent) or very important (56 per cent) for their business, a quarter (25 per cent) fail to use any form of IT security software
Threats to security are increased for most businesses by their failure to install security software on their mobile phones (67 per cent don’t), despite over a third (35 per cent) indicating mobile devices are regularly hooked up to their office network

The results indicate that small and medium sized enterprises (SMEs) are leaving themselves vulnerable to attacks that could lead to the loss of important information and productivity through systems failure, or worse; theft of financial data and money. KC is calling on small businesses to step up their IT security and protect their business.

Tracey Hannan, IT security specialist at KC, explained: “The internet is vital to the operations of most businesses these days. But by not taking adequate security precautions, small businesses are playing Russian Roulette every time they go online, open an email or connect a mobile phone to their computer to download music. This may sound dramatic, but when you consider that each security breach costs between £10,000 and £20,000, in a tough economic environment this can mean make or break. No one would knowingly leave their office or shop unlocked at all times, so why do it online?”

New research from Scottish Widows has revealed that UK businesses remain worryingly passive when it comes to protecting one of their key assets – their employees. This is despite over three-quarters (77 per cent) admitting that they can identify at least one individual whose loss through death or critical illness would have a serious impact on the profitability or future survival of the business.

The Scottish Widows Business Protection Report, which details research carried out with over 500 UK business decision makers, shows that the majority of businesses are still reluctant to protect themselves from the unexpected happening to a business owner or key member of staff. Just 13 per cent of businesses who have identified the importance of a key person hold insurance that would protect the business against their loss and despite such a low take up of business protection, 60 per cent of businesses admit that they would definitely not survive the loss of a key person.

In fact, it is more likely that UK businesses will insure office equipment, such as the photocopier, against breakdown than they are to insure a key individual whose skill sets are vital to the future survival of the business. The research shows that over a quarter (27 per cent) of businesses have insurance for office equipment in place, compared to just six per cent with financial protection if a key person dies and four per cent with protection if a key person suffers a critical illness.

A logical conclusion as to why the take up of Business Protection is so low is down to a lack of knowledge and understanding of the benefits – with 38 per cent of businesses not taking out cover as they don’t see its’ value, 16 per cent saying they hadn’t even thought about taking it out and 17 per cent saying they thought it would be too expensive. This highlights the value of sound holistic financial advice which could potentially ensure a better informed and better protected business population.

Unfortunately, despite the majority of businesses openly acknowledging that the loss of a key person would have a severe, if not fatal impact on their future survival, just 29 per cent have actually sought any form of advice on business protection, whether through an Independent financial adviser, their bank or any other resource such as their solicitor, accountant or even family and friends.

In addition, the research highlights that in the last 12 months almost a quarter (27 per cent) of business owners have invested their own money into their business, while a further 13 per cent expect that they will have to do so in the coming year. If people are to put personal assets at risk then it is vital that they take the necessary steps to prevent a damaging impact not just on their business, but potentially their families and personal lives.

Businesses are also worried about the future impact recent and proposed government spending cuts will have on them, with 53 per cent stating these will have a negative impact, despite a pledge by government to provide further support, through competition reform and reducing the regulatory requirements imposed on them.

Iain McGowan, head of savings and protection at Scottish Widows commented: “There are many reasons for business owners failing to take action. In some cases, this represents a failure to plan properly or a lack of understanding of the benefits of business protection. Perhaps even a refusal to contemplate the death or critical illness of a colleague. However the potential consequences to the business, demonstrate the importance of protecting arguably the one thing that can ensure its future survival; its employees.

Not all customers are good for your business.

With so much focus on growth, all eyes are on small businesses to make it happen. The ability to find and acquire new customers is a key element in the growth process, but Experian’s research has identified this as one of the main areas of concern for small businesses.

Finding new customers can be a challenge, while finding profitable customers is another. However, businesses are operating in a riskier environment than they would have been used to in the early part of this century, and the biggest challenge today is finding customers that will continue to pay their bills.

Experian’s latest data on late paying businesses reveals the last two quarters of 2010 saw a deteriorating payment trend among businesses, while the first quarter of 2011 saw no signs of significant improvement as UK businesses continued to contend with challenging trading conditions.

While the largest businesses (500+ employees) remained the worst late payment culprits, smaller firms with three to ten employees – traditionally among the fastest payers – saw the biggest deterioration in payment performance as greater numbers struggled to pay their bills.

This highlights that the current threat of exposure to bad debt is a very real one. Businesses face reputational as well as financial risk when they target failing businesses. If you knew in advance that a potential customer wasn’t going to pay their invoice, would you still target that them? Would you still go after their business?

Small firms looking for new business clients should not simply target every potential prospect in their region without delving deeper into the impact those businesses could have on their own operations. Taking on the wrong kind of customers could have a negative effect on their own businesses and ultimately lead to its own demise.

While intelligent marketing information is still key to highlighting those prospects most likely to buy, credit risk information is just as important to show those that are most likely to pay. The financial losses and to failing businesses could well create a knock-on effect that causes their own business to fail.

Not every single business classed as risky will fail, as many will take some steps to change the path they going down.

So, the first step is to take them out of the equation. Through the use of marketing data that has been pre-screened against credit risk data, those unprofitable, high-risk businesses, including those that are likely to fail in the coming year, can be removed from an organisation’s databases and marketing prospect lists. This will enable small businesses to ensure their resources are more focused and effective. It will in turn reduce unnecessary expense marketing to unsuitable prospects and also help avoid the costs associated with expensive sales visits to small businesses that will end up proving costly in the long run.

However, while this can prove highly effective in avoiding the businesses most likely to fail within the next 12 months, it is only the first step. There is a more intelligent way of using pre-screened data.

Small businesses can use this data to delve deeper into the higher risk companies. By targeting them with payment terms and conditions that are more appropriate to them or by agreeing up front deposits before goods or services are despatched, businesses will be able to continue to take on new customers, but at lower risk.

It is worth bearing in mind that not every single business classed as risky will fail, as many will take some serious steps to change the path they are going down. By taking advice, reviewing current operations and adopting best practice, some of these struggling companies will manage to turn their fortunes around. However, until the business does turn itself around, it is still a risky prospect.

If the status of a high risk business later changes and it begins to grow, it could become a profitable customer in the future. Experian’s analysis shows that there is a lesson for all firms in terms of creating and enforcing robust credit management and collection policies so that companies do not leave payment to chance. Goodwill goes a long way in business relationships, but ultimately firms need to pick up the money that they are owed promptly or they risk encountering serious cash flow issues.

Content Source: Simon Streat. Managing Director of SME, Experian UK&I

 

In light of the Government’s new report which states that UK cyber crime costs the UK economy £27 billion a year, research by specialist small business insurer Hiscox reveals that nearly a quarter (22 per cent) of SMEs are concerned about e-risks and cyber crime.

Hiscox SME insurance expert, Alan Thomas, commented: “In light of these latest Government figures and the importance of data to businesses, it is essential that SMEs have strategies in place to mitigate online risks. Our research reveals businesses are now more concerned about cyber crime (22 per cent), such as hacker attacks and electronic ID theft, than having cash (eight per cent) stolen from their premises.”

“Our research also revealed that over a third (38 per cent) believed that their businesses are more likely to be a target of burglary since the start of the financial downturn which makes it all the more important to put in place robust security measures.”

Hiscox offers the following security tips to help SMEs to protect against online and offline risks:

Protect information with a need-to-know policy with employees. If storing information on a central file server, manage who has access to files. This can help prevent data loss whether accidental or deliberate

Running an enterprise is a full-time activity and if you do not have online technical expertise seek professional advice on security. This can both save time and ensure the security measures cover the business needs

Encrypt important information for extra security so that only authorised users will be able to access them

Using the internet and email to conduct business means that data loss becomes a risk. Develop a clear email policy and raise online security awareness and issues with employees

Back up your files and check your insurance cover so that you can get business up and running again quickly in the event of an incident

Items like laptops and computer monitors are common targets for thieves and the real cost of a stolen IT asset isn’t just the hardware, it’s the lost data and the lost productivity. Lock servers in a room and move laptops into a secure drawer at the end of a working day .