SMEs are nearly three times as likely to ask friends or family for advice when setting up their business than consult a financial adviser, research from Aviva has found.
Advice from family or friends is relied on by 38% of those setting up SMEs while 13% consulted financial advisers, the online survey of 1,507 SMEs found.
Insurers were asked for advice by 6% of those setting up SMEs, while 32% said a major hurdle setting up their business was financial administration.
Understanding and fulfilling legal obligations as an employer or business owner was a top hurdle for 30% of those questioned and 85% knew little about their legal obligations as an employer.
Once established, 18% of SMEs said that getting financial help was still to be overcome, and the same proportion were struggling with understanding legal obligations.
Less than a third (29%) of SMEs felt very confident they had the right insurance for their business and 12% had none.
SMEs were also at risk of fines, 11% wrongly thought employers liability insurance wasn't a legal requirement and 25% wrongly believed it was needed only after taking on more than one employee.
Failure to have employers liability insurance can see companies fined £2,500 for every day the business if properly insured.
Angus Eaton, managing director of commercial lines at Aviva, said: "Making the time to balance the management of day to day customer, employee and supplier demands with protection against nasty surprises is a perpetual challenge for any business. Great advice helps.
Eaton added: "Clearly SMEs need a strong understanding of their legal obligations and how they can protect their business and employees to keep it trading - one claim without adequate cover could easily be enough to put severe financial pressure on an organisation or even close it down completely.
Further Reading:
Opinion: Why advisers must consider business protection
L&G: 40% of SMEs would cease within a year of losing key employee
