The HUGE £12.9billion cost of bad business advice, discovered

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Bad business advice has cost UK micro businesses an estimated £12.9billion, new research has found.

The research, conducted by independent digital insurance broker PolicyBee, surveyed more than 500 small and micro business owners to ask them what were the best and worst business advice they had ever received, and what was the impact of these tips.

The research found that almost two-thirds (62%) of small and micro businesses in the UK have received bad business advice in the past. This included a range of topics, across finance and investments, administration and accounting, contracts, taxation, hiring, and more.

The results also revealed that bad business advice caused two out of five (42.7%) small businesses to lose money. Of those who cited some level of financial loss to the business, research finds bad business advice costs an average of £9,225.00, with 1 in 20 losing over £25,000.

Representing 95% of all businesses, there were 5.3 million micro businesses (0-9 employees) in the UK in 2021. Using our finding that 62% of the sample received bad business advice in the past, this equates to a potential of 3 million companies. (3,286,000) microenterprises who may have experienced the same thing. Assuming 42.7% saw a negative financial impact (percentage based on sample), bad business advice cost UK micro businesses around £12.9 billion (£12,943,800,450).[KN1]

Transport and logistics suffered the greatest financial impact from bad business advice in real figures, with an average loss of £16,450.35 per business. The top five based on actual financial losses also included energy and utilities (average loss of £16,214.79 per company), information technology (average loss of £14,715.65 per company), hospitality and event management (average loss of £12,675.25 per business) and social care (average loss of £11,750.50 per business).[KN2]

Looking at city-level locations, Sheffield-based business owners were most likely to have received some form of bad business advice in the past (84.6%), followed by Birmingham (75, 8%) and Norwich (71.4%).

Kerri-Ann Hockley, Customer Service Manager at PolicyBee, commented:

“Bad advice can make businesses more vulnerable. This can increase the risk of mistakes being made, things not going to plan, and a claim for negligence, wrongdoing, or worse landing on your doormat.

“Handling legal claims takes time, money and expertise. That’s why it’s worth protecting your job, your reputation, and your bank balance with professional indemnity insurance.

“It pays a legal expert to defend a claim against you and pays for any compensation or damages you have to pay. This means that it not only offers solid business protection, but also valuable peace of mind.

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