Bad advice cost UK businesses £6.4bn this year, shows study
In excess of 320,000 British businesses have lost a total of £6.4bn in the last year due to receiving poor advice, says a new report.
Research conducted by Direct Line for Business revealed that the average SME loses more than £20,000 a year.
The figures don't just reflect accounting procedures, but can also have very real effects, as 46% of companies who reported a loss said they had to lay off staff as a consequence.
Whilst 20% of micro businesses claimed to have lost between £50,000 and £100,000, 30% of all those surveyed said they had scaled back plans for expansion.
Head of Direct Line for Business Nick Breton said: "Our research clearly highlights the devastating effect poor professional advice can have on small and micro businesses. However, the impact on an advisory firm that is facing litigation can be just as shattering. For those providing advisory services, it is important to recognise that issues can occur and clients could pursue them for compensation."
With more than a quarter of businesses who took part in the survey reporting that the survival of their business was at stake through the losses, four in ten identified IT consultants as the source of their bad advice problems.
A third of companies blamed the poor advice they had been given on management issues, and a further third claimed that incompetent marketing consults had damaged their business.