What is business interruption?

Trying to keep your business going is hard enough without being derailed by factors outside your control.

Most businesses are quite rightly focussed on issues like growth and profit, staying competitive and maintaining cash flow, but it doesn’t take much to go wrong for your business to be forced into complete shutdown for days, weeks or even months. For some businesses, being forced to stop trading, even just temporarily, can be a killer blow that will shut them down for good.

It’s estimated that more than 550,000 small businesses in the UK have suffered from business interruption in the past two years. The average cost of keeping a business afloat during a two-week period of interruption is estimated at £8,775. However, the average shutdown period is three weeks or more, and one-in-five small businesses claim they wouldn’t survive a shutdown of more than a month.

The cost of flooding

The most common cause of serious business interruption is fire or flood. Flooding, in particular, has been in the news in recent years, with the Government stepping in to tackle the ongoing crisis in Britain’s flood-risk regions.

Even after the water has receded, the nightmare has sometimes only just begun. Damaged stock, ruined premises and disruption to roads and surrounding infrastructure may mean it can be months before you can open for business again.

Inconveniences add up

If your business does suffer an interruption it can take weeks, months or even years to recover.

And it’s not just interruption to the tangible that businesses now have to consider. In our digital age, companies are increasingly at risk of cyber-attack. High-profile stories, such as the recent hacking of Tesco Bank, have shown that even the biggest companies with sophisticated defences are still vulnerable. Small companies could easily find vital data has been wiped out or compromised in an attack. While computer files and communications are a massive asset, they can also be a major weak point.

The best way to be prepared is to have comprehensive business interruption insurance. We’ll be looking at this in a future article but, in the meantime, it’s worth considering how your business would survive if an unexpected incident forced you to stop trading temporarily – and how you can reduce the chances of this happening.