The Small Business Problem
Many communities are very dependent on small businesses. Often the village or small town's sub post office or small shops are the heart of a community and local small factories provide much of the employment and prosperity.

Small businesses can be very vulnerable to flood damage, and unless the business is adequately insured, a flood can lead to bankruptcy.

A survey published in November 2002 by the Federation of Small Businesses in the South East of England shows that most small businesses that survived the Autumn 2000 floods have had significant increases in premium. It also shows that 42% had losses in excess of £50,000 after taking business interruption costs into account. The majority (63%) felt that their insurance settlement was fair, but 21% suffered from the imposition of big excesses, or withdrawal of flood cover afterwards.

The most commonly used sources of advice during the floods were the insurance companies (24%), the Environment Agency (17%) and the local authority (13%). The highest levels of satisfaction with the advice given, related to advice from insurance companies. The highest dissatisfaction with advice given related to advice from the Environment Agency and local authorities.

According to the survey, very few businesses had installed flood protection measures after flooding. 37% moved the electrical sockets higher, but only 12% had installed moveable flood protection barriers in doorways, and only 4% had bought temporary covers for airbricks. This may well reflect the fact that many small businesses operate from rented premises, often under a five or ten year lease. A number of the respondents indicated that they would stay until the lease has expired, but would then be looking to relocate to a safer area.

This means that in many flood hazard areas there could be a delayed impact on communities and landlords over the next five to ten years, if a large number of businesses decide not to renew their leases and move to safer areas, or cease trading altogether.

The Federation of Small Businesses research only applied to companies that had survived a flood event. According to research by the insurance company AXA, 1.1 million or 68% of small businesses do not have recovery plans to ensure they could survive serious computer failure. AXA state that the majority of small businesses affected by flooding either never reopen or cease trading within 18 months, because in arranging insurance, they have underestimated the business interruption costs a flood can cause. The ABI claim that a severe flood event can result in a general loss of trade as people avoid a disaster area and that some communities "may be blighted permanently".

The value of such small businesses in keeping a community alive should not be underestimated. Unfortunately, the prospects for them are not good, especially in the light of climate change projections.

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