News

April 24, 2015

SMEs flying blind with lack of expert help

SMEs are failing to take professional advice when setting up their business, leaving them vulnerable to costly mistakes.

Research by Aviva has revealed that 38% of small business owners rely on advice from family or friends, while just 13% consult financial advisers, 9% use legal advisers and 6% turn to insurance providers.

And yet business owners said that the top three hurdles when setting up their enterprise were financial administration (32%), marketing and sales (31%) and understanding and fulfilling legal obligations as an employer or business owner (30%).

These are all areas that many had little or no knowledge about. The survey found that three-quarters of SMEs knew little or nothing about book-keeping or marketing and sales when they set up their business. And the vast majority (85%) said they knew very little about their legal obligations as an employer.

Even once established, business owners report that on-going hurdles include marketing and sales (26%), getting financial help (18%) and understanding legal obligations as an employer (18%).

Many of those polled were unaware of their legal obligations on workplace pensions and business insurance.

One in five (21%) says they haven't yet set up a workplace pension but know they need to at some point; over a third (36%) of micro employers (those with 1-5 employees) don't think they need to.

In addition, 11% of SMEs thought that employers' liability insurance wasn't a legal requirement in any scenario. A quarter (25%) also wrongly believe that employers' liability insurance is only legally required once a business has more than one employee.

Angus Eaton, managing director of commercial lines at Aviva, said: "Clearly SMEs need a strong understanding of their legal obligations and how they can protect their business and employees to keep it trading."

He added: "It's only natural to want to consult with your family and friends but advice from professional experts can save time and money, helping small business owners with practical solutions."

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