We are just under a year away from the official date for Brexit. Though we would hope that the incumbent UK government can agree some form of deal that will allow the UK to continue to trade while matters are dealt with, there is significant uncertainty across the country on the impact of Brexit and understandable anxiety has led to scaremongering. While there has been a focus on how this will affect large corporations there is not as much evidence of how this will affect UK SMEs, long considered the backbone of the UK economy.
There are 5.7m SMEs in the UK which account for over 99% of private sector firms and 60% of total UK private sector employment. SMEs also account for 73% of all net private sector job creation in the UK, creating about 2m jobs since 2010.
Of course it is not possible to predict the exact impact of the final decisions before they are made and know how they will play out over the next 12 months and beyond, but there are ways to ensure that your business is in the strongest position possible.
This blog explores key themes that may impact your business and things to keep an eye on, as well as practical tips to manage predicted challenges. Be prepared. Take advice. Keep up to date.
Ways that Brexit will affect UK SME businesses
- Staff Employment
Businesses may already be experiencing challenges in the labour market with their staff uncertain of what their position will be post Brexit. A recent study by the Association of Professional Staffing Companies (APSCo) found that companies were finding it increasingly difficult to fill roles, with vacancies in finance and banking up 12% and engineering and construction openings rising by 10%.
Businesses will need to review their workforce continually to ensure that they can meet new changes head on. Companies which rely heavily on European workers need to ensure they have appropriate plans in place going forward to ensure their staffing needs are met.
It is never too late to start preparing. With apprenticeships very much in the spotlight for the government and media, take advantage of the new non-levy and levy contributions system and the new employer-led apprenticeships. Partnering with your local college or training provider could ensure the stability of your future workforce and guarantee trained employees for years to come.
- Tariff and Trade Requirements
The UK government is currently still in discussions with Europe regarding a trade agreement post-Brexit, so at present it is still uncertain what the future landscape will look like. Until such time that we have a clearer picture on a future trade agreement, UK businesses need to remain aware of how any increases in tariffs might affect their businesses.
Businesses should ensure that their current pricing structure is robust enough to absorb any future tariff increases. Create models and test different scenarios to arm yourself with the reality of how these fluctuations may impact your business. It is never an ideal scenario but you may need to review and increase prices in order to remain competitive.
- Brand Names & Trade Marks
Like various other matters, specifically legal, there is uncertainty around how trademarks and brand names will be protected once Britain leaves the EU. Will a EU registered trademark continue to be valid in the UK? If your business has a registered EU trademark they will ensure that you are aware of the necessary measures to be put into place post-Brexit. Whether that be conversions, new registrations or some other form of system businesses should prepare, to ensure that they can protect their intellectual property.
With this type of issue it is impossible to guess, but make sure you follow any updates closely and take advice. Discuss any concerns with your lawyers – they may even have set up specialist teams working on the impact of Brexit and changes to international law who will be able to keep you update and make sure there are no unwelcome surprises.
- Supply Chain Issues
What is certain post Brexit is that the administration and associated costs of importing goods into the UK will rise. VAT and duty deferment for example will become much more complex. Pan-European companies who currently benefit from economies of scale will lose these post Brexit so UK businesses could find themselves being charged more for the services that they currently use. Whilst we await certainty on these changes spend the time forging stronger relationships with your customers and suppliers. The better you get along with the people you do business with the more likely they are to be understanding. It may need to be a case of give-and-take whilst everyone adjusts to the new systems and the more openly and regularly you are communicating with your network, the better.
As touched on previously, staffing will be a majorly affected area for some businesses post-Brexit. But the movement of current staff may also be seriously affected. At present, staff can be deployed to anywhere around Europe at a moments notice. Whatever rules the UK implements on movement and immigration are likely to be mirrored to all staff. If lots of your team are from overseas or if European travel forms a large part of your standard business operations, it is definitely worth consulting with a legal specialist in this area. They will not only advise you on what to do now, will also keep you abreast of any changes as they happen and guide you through any evolution
Brexit will bring with it the loss of certain EU funding schemes for SMEs. Whilst these central European programmes providing SME finance will no longer be available, the bigger concern for business owners is what the appetite will be from current high street lenders to the SME market. What does this mean for their growth plans?
The flourishing alternative finance market has been bridging the funding gap left behind by the banks since the 2008 crisis. Brexit does not mean that you need to put your ambitions for your business on hold. Nor does it mean that you should not seek external finance.
Although in times of uncertainty the instinct is to retreat to safety and avoid bold decisions, this fear of the unknown could turn Brexit predictions for the economy in to a self-fulfilling prophecy.
Certainly it is always wise to exercise a degree caution – but that is true of all business decision making.
The business lending market is the strongest it has ever been, with more options available to businesses than ever before. Capitalise on this strength vs the perceived uncertainty post-Brexit. By planning, preparing and seeking a long-term finance partner now you can take the time to explore all your options, consult experts and find the right product that fits your business. You can continue to deliver your growth plans, or even just ensure that you have that reserve pot of money for peace of mind.
It is always much better to look for finance when you don’t need it – rather than waiting for the situation to become desperate when no one will want to lend and what you’re offered won’t be competitive.
Although there may still be uncertainty the topics discussed here should allow you to safeguard your business as best you can and seek advice from professionals, where it matters.
Source: SME Web