Small businesses 'too reliant on key personnel'

Date: 19th June 2009

A majority of small businesses could find themselves in serious trouble if a key member of staff was taken ill or suddenly passed away, it has been claimed.

Recent research carried out by Scottish Widows found that around 80 per cent of smaller enterprises in the UK are currently reliant upon one or more key workers whose loss would not only disrupt productivity and profitability but could also place the firm at risk of going under.

Despite this, three in five have not taken out insurance against losing such a key employee, whether they be an IT expert, chairman or small business accountant.

Commenting on the findings, Malcolm Tarling, media relations officer for the Association of British Insurers, said: "This research suggests that businesses are underestimating the importance of their key assets which are their employees and this research shows that some businesses don't appreciate that.

"The data also shows that some businesses do perhaps rely too much on the expertise, skills and ability of one or two key employees and this survey highlights that those businesses need to ensure those key assets are protected."

The Scottish Widows figures also revealed that small and medium-sized businesses currently account for two thirds of private sector employment in the UK.