SMEs lose £ 6.4 billion through bad advice

Poor professional advice from third parties or consultants had resulted in 16 per cent of small and mico businesses surveyed losing money, according to a study by Direct Line.

Their research found that over 320,000 small and micro businesses had lost an average of over £20,000 in the past 12 months due to inadequate professional advice and services. One in five business said they had lost between £50,000 and £100,000.The insurer estimated this would equate to a total of £ 6.4 billion lost by small and micro businesses in the UK as a result of poor advice in the past 12 months. IT consultants were named the most often in the survey for giving bad advice with 44 per cent of businesses affected by poor guidance.

A third of companies said poor advice had been on management issues while 32 per cent claimed incompetent marketing consultancy had impacted their business. Direct Line warned professional advisers could be pursued for losses incurred as a result of giving substandard advice and suffer damage to their reputation. They should consider the effects on the businesses to which they provide advice.