These incidents include damage to a client’s business reputation following consultancy services, injuries being sustained on a company’s premises by clients and the loss of confidential data.
The research also showed that the larger the business, the more likely they are to experience these problems. Only eight per cent of sole traders have experienced problems, compared to 25 per cent of micro businesses, 41 per cent of small businesses and 62 per cent of medium businesses.
The survey of UK small business owners found that the most common incidents were employees being injured on site, having an employee steal money or information from the company or a client, losing a client as a result of giving poor advice and having a client experience a financial loss because of service provided.
Table One: Most common critical business issues experienced by SMEs
| Incident | Percentage of SMEs that had experienced a critical business issue |
| Had an employee get injured while on duty | 29% |
| Had an employee steal money or information from you or a client | 21% |
| Lost a client as a result of giving poor advice | 19% |
| Had a client experience a financial loss because of your advice | 18% |
| Had a client suffer an injury as a result of your service/skills | 18% |
| Had a client experience damage to their businesses reputation because of your advice | 16% |
| Had to hire a lawyer over advice you gave | 16% |
| Lost confidential data | 15% |
| Had a client suffer an injury on your premises | 14% |
| Had a client suffer injury as a result of using one of your products | 13% |
Source: Direct Line for Business 2016
Jane Guaschi, Business Manager at Direct Line for Business, said: “Advising clients and running premises comes with its risks, so it’s important to makes sure you have the right safety procedures in place to minimise any potential issues. Even if you’re professional and always give advice and sell products in good faith, everyone has the potential to make mistakes. The costs of litigation and damages can be steep, so small business owners should ensure they have the relevant insurance cover to give them peace of mind and allow them to get on with growing their business”.
The research found that over two thirds of small business owners who have experienced these issues said the incident had impacted their business, with the most common outcome being that they had to pay the compensation out of their own pocket. Staff leaving, losing clients and a bad reputation followed in terms of the most common incidents that impact on businesses.
Table Two: Most common outcomes of these critical business issues
| Incident | Percentage of SMEs experiencing an incident following critical business issue |
| I paid out of my own pocket as recompense | 23% |
| Staff resigned | 18% |
| I lost a client(s) | 18% |
| It affected my reputation within the industry | 18% |
| I incurred a fine | 17% |
| I lost an employee(s) | 15% |
| I had to lay off staff | 14% |
| I had to dissolve the business | 13% |
| It did not impact my business | 30% |
Source: Direct Line for Business 2016
Guaschi continued: “Small businesses should consider taking out Professional Indemnity (PI) insurance which includes cover for breach of confidentiality and professional duty, malicious acts or omission by former and present employees and loss of data or damage to a client’s reputation.
“If you have customers visiting your premises or are visiting clients at their own premises, then Public Liability (PL) insurance will provide cover for damage by your business to their property, as well as injuries, such as if somebody tripped on a piece of loose carpet in your office and hurt themselves.”
While over a quarter of SMEs claim not to need Professional Indemnity cover, 24 per cent of the remaining businesses don’t have any PI cover in place, with eight per cent claiming not to be familiar with PI at tall. Of the companies that told us they do have cover, more than one in five have had to make a claim on it, with 10 per cent having to claim on it on multiple occasions.
