Recent research shows that UK SMEs are failing to take care of their legal business at the cost of £13.6 billion a year.
The YouGov survey of 1,000 UK SMEs across 20 business sectors was conducted to highlight the impact of not taking care of a business’ legal needs and the risks they take as a result.
According to the findings, the average SME in the UK is likely to encounter more than 8 legal issues a year.
The business sectors with the highest average number of issues annually include Membership Organisations (21), Food and Beverage (18) and Business Administration and Support Services (13).
Of the legal issues SME’s experienced, 43 per cent resulted in costs of £5,000 or more.
The most common legal issues faced by the UK’s 5 million SMEs day-to-day were found in five key areas:
Disputes (13.2 per cent)
Employees and Key Contractors (12.5 per cent)
Customers and Suppliers (11.4 per cent)
Terms and Conditions (9.2 per cent)
Software (9.1 per cent)
The highest amounts were estimated to have been lost in:
Disputes (£1.7 billion)
Employees and Contractors (£1.6 billion)
Customers and Suppliers (£1.6 billion)
The report reads: “Given the number of incidences of these kinds of issues, SMEs are over-optimistic about the prospects of future losses occurring because of these problems – with only 12 per cent thinking these issues are ‘likely to pose a significant risk’ to their business.
“SMEs assume that risky outcomes are more likely to happen to other businesses than to themselves.”
The report concludes: “As an SME business owner … engaging properly with your legal issues and guarding against them is going to potentially save you tens of thousands of pounds a year.
“The biggest issues (and most expensive ones) you’re likely to face are all often easily preventable. Simple matters like having contract terms and conditions checked or drafted properly to ensuring your employment or contractor terms are clear and up to scratch will de-risk your business rapidly.”
At Beavis Morgan we understand the challenges faced by SMEs and the environment you operate in. Our specialist SME business advisers are available to help you navigate any pitfalls and implement the appropriate structures and strategies required to remain successful and increase your net worth.
As part of our commitment to supporting SME’s by providing holistic business advisory solutions, we are able to put you in touch with one of our many contacts within our extensive network of law firms and legal professionals.