Creating a resilient small business community

El Nino has returned and, according to the Met Office, the next two years could bring the hottest global temperatures on record. But, as we head into the winter months, what does this mean for the UK’s weather?

Severe weather this winter, caused by a strong ‘El Nino’ event, could cause problems for UK businesses
Severe weather this winter, caused by a strong ‘El Nino’ event, could cause problems for UK businesses
  • Updated: 17 September, 2015
  • Author: Allen Creedy, Federation of Small Businesses Energy and Environment Chairman

The Federation of Small Businesses (FSB) has been keen to understand how prepared small business are for severe weather events, as in 2013–14 when the wettest winter on record led to widespread and prolonged flooding. This is particularly relevant as the UK Government continues to gather evidence ahead of the next Climate Change Risk Assessment, due in 2017.

During the events of winter 2013–14, 3,200 commercial properties were flooded. Although this figure represents a small proportion of the 5 million small businesses across the UK, it is clear that the combined impacts of these flood events went way beyond those whose premises suffered direct flood damage. For a small business, the loss of vital services and infrastructure like power, internet, or deliveries can be devastating.

Startling results

With this in mind, the FSB carried out research to assess the impacts – both direct and indirect – of severe weather on small businesses. Our report ‘Severe weather: a more resilient small business community’ was published in July 2015 and contains feedback from 1,199 FSB members.

The headline results are startling. Two-thirds of small businesses say they have been negatively affected by severe weather in the last three years. The financial cost of these events over this period was, on average, just under £7,000 for each affected business. Disruption to people (customers and staff) and logistics (supply chain, utilities and transport) are the most frequently occurring problems for small businesses.

Reducing the risk

There are particularly vulnerable small businesses who continue to struggle to find adequate flood insurance, with 9% of those at risk of flooding saying they have had difficulty finding cover. 3% say it is unaffordable and 6% say they have been refused cover altogether. It remains unclear how the Government’s domestic Flood Re deal with the insurance industry – which excludes businesses – will subsequently impact on the most vulnerable microbusinesses when the scheme is rolled out next year.

Given the clear potential vulnerability of small businesses, there is further cause for concern. Our research suggests that only 25% have a severe weather resilience plan in place.

It is clear that reducing the risk to our small business community will be a challenge. It will require multiple partners working together to both reduce the impact of severe weather and improve the resilience of those caught in its wake.

There are areas where businesses can do more to help themselves, through a combination of resilience planning and information gathering. There are clearly roles for Government, in terms of continued infrastructure and defence investment, public messaging, long-term strategic planning, and working with the insurance industry to guarantee affordable flood insurance. Local authorities will also play an important role through their own strategic plans, promoting sustainable flood plain development and ensuring that emergency resources are directed quickly and efficiently to the right places.

Finally, it is important to recognise that flooding is merely one of many potential impacts of severe weather. In fact, the winter of 2013–14 was just the latest in a long list of weather related records broken over the last decade. In recent years, we’ve experienced the coldest December on record (2010), the driest period in Southern England since 1910 (April 2010 to March 2012), the wettest April for 100 years (2012), the highest storm surge since 1953 (December 2013), and the driest September on record (2014).

It is more critical than ever that the UK’s community of small businesses can continue to operate whatever the weather.