SINGAPORE - The loss of their key person is a top risk for three in 10 small businesses here, ahead of payment delays and rising costs and expenses, according to a survey by United Overseas Bank (UOB).

In seven cases out of 10, the business owner takes on the role of key person, although that role goes to the main revenue generator in two out of 10 cases, and a product developer in a tenth of cases.

The survey polled 200 small businesses in Singapore with an annual turnover of $20 million.

Although close to 90 per cent of firms said that they would lose revenue and face cashflow problems if they lost their key person, only half are insured to protect their business against the loss of that person.

"The fact remains that many small businesses rely on a few core people to keep the company going," said Mr Mervyn Koh, UOB head of business banking for Singapore:

"(They) tend to focus more on building their business rather than protecting it by managing risks, which makes them vulnerable to financial failure."

A key challenge highlighted by small businesses was the difficulty in finding a suitable successor to replace their key person, especially in today's tight labour market.

In fact, one in two small businesses predicted that it would take at least nine months to find the right candidate.

Mr Koh also noted that small businesses often use the personal assets of their key person as security for a bank loan. This means that "the risk extends to the financial health of that person's family", he said.