The entrepreneurial spirit lives on
in the UK, with the Department for Business Innovation and Skills
(BIS) estimating there were 3 million sole traders operating in the
country at the start of 2008.
However, while many of these small
entrepreneurs may be adept at creating wealth few are doing much to
protect it, reveals a study by life insurer Scottish Widows, a unit
of Lloyds Banking Group.
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Specifically, Scottish Widows found that sole
traders are generally reliant on one or two people to run the
business.
Some 86 percent of sole traders told the
survey they believed their business had at least one person whose
loss through death, critical illness or serious accident would
severely impact the profitability and survival of the company.
But despite this, just 5 percent of sole
traders had “loss of their key people cover” in case of death or
critical illness, compared to 15 percent who had insurance in place
for office equipment.
Adding to their risk profile, the majority of
sole traders (73 percent) had no strategy for exiting their
business. This is both on a planned basis where provision for a
pension on retirement is needed and on an unplanned basis requiring
protection insurance against death and critical illness.
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By GlobalDataOf those sole traders with no life, critical
illness or key person protection, Scottish Widows found that 42
percent did not see value in such cover, 26 percent had not thought
about it and 18 percent thought it would be too expensive.
Scottish Widows protection market director
Clive Allison said: “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.”
Indicating the significance of sole traders in
the UK, BIS estimates enterprises with up to nine employees
generate annual turnover of £650 million ($1 billion) or 21.8
percent of the national total.
