Sunday, 25 October 2021 21:27

Survey suggests half of Scottish SME’s would go under if founder left

Sean Elliot

Nearly half of SME’s in Scotland believe their businesses would close in under 12 months, if their founder were to suddenly leave the business according to a new survey.

More worryingly, nearly a quarter of Scottish businesses among the 500 respondents asked, said their company would survive less than a month.

Sean Elliot, Managing Director of Network ROI who undertook the survey comments:

“We carried out the business continuity and succession planning survey to get a better understanding of attitudes towards these issues within the UK small business community. The results show that business continuity is an area that requires a greater deal of investment and understanding, especially within the SME space.”

According to the Business Continuity Institute (BCI), a membership and certified organisation for Business Continuity professionals, business continuity is defined as; ‘the capability of the organisation to continue delivery of products or services at acceptable predefined levels following a disruptive incident.’ Much of the research available suggests too few businesses of all sizes are committing enough time or resources to this practice. In fact, according to a survey undertaken by Aviva back in 2011, 50% of SME businesses admitted to not having business continuity or disaster recovery plans in place. 16% felt there was no business requirement to have a plan and just 28% do have a plan in place.

Despite the lack of planning in place, SME’s are clearly aware of the threat. A more recent study carried out by the BCI found that ‘77% of professionals are concerned about the effects of unplanned IT or telecommunications outage,’ putting IT at the top of the list of perceived threats. Unplanned downtime cost millions in terms of lost revenue, brand and reputation damage as well as deploying solutions.

The consequences of inadequate business continuity planning are shocking. The Federation of Small Businesses have released figures which show that up to 80% of businesses affected by a major incident close within 18 months, while 90% of businesses that lose data from a disaster are forced to shut down within 2 years.

So why is business continuity so low down in the agenda? According to Continuity Central, a recognised portal and news site for business continuity professionals, SME’s are held back by their ‘entrepreneurial culture’ and have limited resources for ‘non‐productive’ investments. They also argue many smaller businesses have limited or no knowledge of business continuity and are not in a position to develop a business continuity plan to the fullest extent. Many have some IT‐knowledge, but usually not about systems availability and IT recovery.

In 2015, Continuity Central also conducted an online survey asking business continuity professionals why disaster recovery or business continuity was not perceived as a priority for companies. 35.6% of respondents believed a lack of budget, funds and resources were the key contributors, while 16% put it down to a lack of top management commitment and buy in. Other recurring challenges included a lack of business unit support, low priority given when compared to other deliverables, staffing difficulties and lack of time.

So what can and should SMEs be doing about their succession planning and wider business continuity strategy?

Sean Elliot continues:

“Succession planning represents an important part of the business continuity process, and it deserves some careful consideration as many smaller businesses fail in the immediate aftermath of losing a leader. Doing simple things like having a discussion with your family and professional advisors in the first instance are important. Blocking out a few hours in your work diary each week will give you enough time to put a simple plan together.”

Network ROI has compiled a comprehensive guide to help businesses develop a business continuity strategy. Other useful resources for businesses thinking about business continuity include BCI’s good practice guidelines and BSI Group’s useful guides.

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