SMEs are failing to take professional advice when setting up their business, leaving them vulnerable to costly mistakes.
Research by Aviva has revealed that 38% of small business owners rely on advice from family or friends, while just 13% consult financial advisers, 9% use legal advisers and 6% turn to insurance providers.
And yet business owners said that the top three hurdles when setting up their enterprise were financial administration (32%), marketing and sales (31%) and understanding and fulfilling legal obligations as an employer or business owner (30%).
These are all areas that many had little or no knowledge about. The survey found that three-quarters of SMEs knew little or nothing about book-keeping or marketing and sales when they set up their business. And the vast majority (85%) said they knew very little about their legal obligations as an employer.
Even once established, business owners report that on-going hurdles include marketing and sales (26%), getting financial help (18%) and understanding legal obligations as an employer (18%).
Many of those polled were unaware of their legal obligations on workplace pensions and business insurance.
One in five (21%) says they haven't yet set up a workplace pension but know they need to at some point; over a third (36%) of micro employers (those with 1-5 employees) don't think they need to.
In addition, 11% of SMEs thought that employers' liability insurance wasn't a legal requirement in any scenario. A quarter (25%) also wrongly believe that employers' liability insurance is only legally required once a business has more than one employee.
Angus Eaton, managing director of commercial lines at Aviva, said: "Clearly SMEs need a strong understanding of their legal obligations and how they can protect their business and employees to keep it trading."
He added: "It's only natural to want to consult with your family and friends but advice from professional experts can save time and money, helping small business owners with practical solutions."