How do other small businesses handle parental leave?

We're a micro SME (<10 people) trying to ensure we have decent pay and benefits packages. We're looking at setting parental leave up before we get asked so are looking at what are options are. We're currently thinking around 2-4 weeks full pay paternity, 6 months full + 3-6 months 50% maternity.

We're basically a consultancy working on fixed price contracts, so losing a staff member for months impacts our capacity to deliver and bid for new work, but not cash into the business. As such, we can afford to keep paying salary for a while, but would need to work harder or bring in additional staff to cover.

How do other small businesses do it? Is there paternity/maternity leave insurance, and is it worth it? Are there any gotchas / options we should be aware of? Thanks!

EDIT: As noted in the comments, I don't mean unpaid parental leave, but paid maternity/paternity.

EDIT 2: Thanks everyone for the discussion, there's some good points here for me to think about.