Small firms lack exit strategies and key person insurance

Millions of sole traders in the UK are leaving their businesses vulnerable by not insuring against profit losses or the cost of replacing their "key person", it's been claimed. That's despite 77 per cent of sole traders who have a key person in their business admitting their enterprise wouldn't survive the loss of that individual.

Research from the Scottish Widows Business Protection Report reveals that around 2.6 million sole traders have not protected their owner/key person against the worst. The study also highlights that 73 per cent of sole traders in the UK don't have a business exit strategy in place.

Commenting, Clive Allison from Scottish Widows said it has never been more important for small firms to plan ahead to protect themselves from unforeseen circumstances: "Sole traders are the engine of the UK economy but are often reliant on one or two key people to keep themselves afloat. Our research highlights that without suitable protection in place, a serious illness, disability or death could be the last straw for these vital grass-root businesses."

In addition to lacking key person insurance and exit strategies, nearly a quarter of sole traders were found to have no business protection insurance in place either.