Two in five (38 per cent) companies rely on advice from family or friends, while just 13 per cent consult financial advisers, with 9 per cent using legal advisers, according to a study by insurer Aviva.
Small and medium-sized enterprises (SMEs) find that the top three hurdles when setting up their business are financial administration (32 per cent), marketing and sales (31 per cent), and understanding and fulfilling legal obligations as an employer or business owner (30 per cent).
All are areas of which they had little or no knowledge when setting up; three quarters of SME owners knew little or nothing about bookkeeping or marketing and sales. An even greater proportion (85 per cent) say they knew very little about their legal obligations as an employer.
Having established their businesses, respondents say the top three hurdles that they have still not been able to overcome are marketing and sales (26 per cent), getting financial help (18 per cent) and understanding legal obligations as an employer (also 18 per cent).
Employer obligations, for many businesses, will include overcoming hurdles like pension auto-enrolment for the first time. While the research shows a third have done so already, one in five (21 per cent) say they haven’t yet set up a workplace pension but know they need to at some point and more than a third (36 per cent) of micro-employers (those with 1-5 employees) don’t think they need to.
Angus Eaton, managing director of commercial lines at Aviva says that making the time to balance the management of day-to-day customer, employee and supplier demands with protection against nasty surprises is a perpetual challenge for any business.
‘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, learnt from similar experiences in other businesses,’ he adds.
‘Whether it’s getting hands-on help with bookkeeping, or getting to grips with the legal obligations associated with being an employer, there is a wealth of advice and material designed to support SMEs along every step of the way.’
Not being able to understand legal obligations as an employer or business owner is leaving some SMEs in danger of breaking the law.
Employers’ liability insurance is a legal necessity for the vast majority of businesses with staff however one in ten (11 per cent) SMEs think it isn’t a legal requirement in any scenario.
A quarter (25 per cent) of SMEs also wrongly believe that employers’ liability insurance is only legally required once a business has more than one employee.
Employers’ liability provides vital cover should a member of staff make a claim for illness or injury caused by their job and it is a legal requirement. Failure to have it carries the risk of fines of £2,500 for every day the business is not properly insured.
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