FSB: Floods Cost SMEs £831m

New Figures Highlight Huge Cost Of Recent Floods To SMEs

06.03.2014

Fergal Dowling, Partner | +44 (0)121 214 5476

The recent flooding and bad weather cost small companies a collective £831 million, new figures released by the Federation of Small Businesses (FSB) have suggested.

It calculated that the average firm lost out on £1,537 as a result of the damage and disruption caused by the floods.

One in three small and medium enterprises (SMEs) in badly affected areas reported reduced demand for goods and services, while 29 per cent said transport delays cost them money.

Around 16 per cent of the survey respondents confirmed that staff had been absent because of the bad weather.

Flood warnings were issued almost three months ago in certain parts of the UK and many businesses are still coming to terms with the damage.

The government pledged to help firms get back on their feet, but prime minister David Cameron insisted this process would not happen overnight.

To make life easier for startup firms, Companies House agreed to offer more flexible deadlines for submitting accounts for companies that had been adversely affected. A number of businesses such as Regus and Citrix also offered free services - like office space and conferencing packages - to SMEs that had their properties severely damaged by rainwater and high winds.

Meanwhile, the FSB is worried that SMEs will find it hard to get insurance following the widespread floods.

Approximately 37 per cent of the organisation's members said they thought it would be much more difficult for them to obtain adequate cover, while 59 per cent stated they fully expected their premiums to rise.

FSB national chairman John Allan revealed he has heard "countless stories" from devastated SME owners in the past few weeks.

"Not only have they had to cope with a lack of demand for their services, many have had to close. That is why government support has been welcome, and with many still affected, why that support needs to be kept under review," he commented.

However, Mr Allan added that the government and insurance industry need to evaluate the terms of the Flood Re support scheme so that it does not exclude SMEs.

Expert Opinion
These figures highlight the shocking extent of the problems which small businesses have faced as a result of the recent severe weather, as well as the long-term impact that these issues are continuing to have on many growing firms.

"For a long time, small businesses have been regarded as key to the continuing improvement in the UK economy. However, devastating incidents highlight how such organisations are hugely reliant on the right level of support to achieve their targets.

"Businesses need to think about issues such as disaster recovery and have provisions in place to ensure they can continue to function, but also meet their regulatory responsibilities. This includes consideration of data protection for both their own organisation and their clients. Businesses with concerns over such matters should seek legal advice on the key issues to bear in mind."
Fergal Dowling, Partner