As part of Aviva's bi-annual SME Pulse, half of SME owners asked about BCPs stated that they had no such plan in place, and a further 16% said they didn't think they needed one. In fact, just 28% of business owners who took part in the research said they had a BCP in place.
However, there are good reasons for having a plan. According to the Federation of Small Business, 80% of businesses affected by a major incident close within 18 months and 90% of businesses that lose data from a disaster are forced to shut within 2 years.
David Bruce, commercial product manager at Aviva: "Given the current economic climate, it's understandable that business owners are focusing on the day-to-day aspects of their business. But that doesn't mean they should take their eye off the business planning side of things. A disaster or crisis can strike a business at any time and failing to plan for such an event can undo years of good work and hard trading in an instant. If the worst does happen, then having a business continuity plan in place may be the difference between your business recovering or failing.
"Consider, for example, the effects of the recent bad weather on businesses. Some may have had to close unexpectedly because of freezing pipes or operate at a much lower capacity because staff or suppliers could not get to them. Being prepared for such events mean the business owner has greater control over a situation and this can take away some of the pressure at what is likely to be a stressful time.”
The research also revealed a lack of knowledge as to the role of a BCP with only 36% of respondents aware of them and confident that they know about their purpose. The remainder had either heard of them but were unsure as to their purpose or effectiveness (31%) or else had not come across the term previously (33%).
And just a quarter (25%) of businesswomen confirmed they had a BCP and kept it up to date, compared to 40% of businessmen.
The Aviva SME Pulse also found that business owners grossly underestimate the time it can take to get their company back on its feet following a serious incident or interruption.
The majority of SMEs believe it would take them only one week (33%) or one month (31%) to return to normal trading. However, according to Aviva's team of commercial specialists, a return to full normal trading can often take a business more than a year.
David Bruce continued, "The recovery period after a serious incident is often underestimated. It's only once the disruption has occurred that business owners realise the number of hurdles involved in getting back to normal. For example, we have seen some instances where just obtaining planning permission can take several months.
"Having your recovery plan firmly in place, rehearsed and agreed upon clearly helps with the process - not just in handling an unexpected event but also in understanding the key influences on the businesses' day to day operations, which in turn can help estimate the likely recovery time the business might need.
"Worryingly, we found that only 19% of businesses who took part in our research said they had full contingency plans in place and the appropriate levels of insurance which suggests a lot of businesses are unprepared should an event occur.
"We urge business owners to spend some time making sure they have appropriate contingency measures and protection in place. "