The effect of Brexit on small businesses
10th November 2017
The definitive effect that Brexit is going to have on Great Britain and its businesses – of all sizes – isn’t known. Right now, it depends on who you ask. Generally (and there really is no hard dividing line), the left-leaning media tend to have a more pessimistic view, whereas the right offer a more positive outlook.
Which is all well and good, but confusion and uncertainty is the last thing that any small business owner needs on the cusp of one of the most powerful and revolutionary moments we’re ever likely to witness, for better or worse. Plus, it’ll no doubt vary anyway from industry to industry, so there’s no singular answer. Instead it’s better to step back and look at the potential effects of Brexit, both positive and negative, and how you as a small business owner can ensure you’re fully prepared.
The value of the pound
One of the most widely talked about effects of Brexit that we’ve already seen is the fall in the value of the Pound. Against the Euro, the Pound has fallen by 15% in value in the first full year since Brexit, and 11% against the US Dollar, putting it at its lowest in over 30 years.
For many UK businesses, this won’t be any cause for concern. If you trade solely within the UK and have no plans for expansion, then £1 = £1, and that’s all you need to be worried about. But many small businesses buy from Europe or may be looking to export, if they don’t already.
Suddenly the value of the Pound against the Euro matters. You’re getting less for your money when you’re buying supplies, and you’re either having to sell at a lower cost or increase your prices to maintain the same income when you sell. And there’s no guarantee that the Pound will recover once Great Britain has left the EU. You need to make considerations for the value potentially dropping even lower.
Access to the single market
On a similar note, if you trade with Europe (or intend to), there’s still plenty of uncertainty over whether Britain will strike a deal to remain in the single market. If not, then any goods that are imported or exported could be subject to tariffs that may increase your business costs.
Whatever happens to the single market, Britain will be actively negotiating further trade deals around the world, so it may also open up new opportunities for your expansion. If you’re in the position of being ready to look at expanding your market, now’s the time to push ahead – get yourself into Europe while you can, and then start thinking about how you might be able to reap the benefits of further trade deals once Brexit has gone through.
Many of the laws that protect employees in the workplace, including anti-discrimination, come from the EU. And while it’s unlikely that the UK government won’t replace these laws once they stop being statutory through EU directives, it’s still important that you reassure your workforce to keep morale from dropping.
You can set your own business regulations as part of employee contracts, and guaranteeing your workforce’s rights and safeguarding laws whatever comes of Brexit will reassure and keep them working at their best during the uncertainty of the Brexit process.
Existing and new talent
How secure is your workforce, and how appealing will your business be to new talent once Brexit has gone through?
Many small businesses rely on the good value labour of migrant workers. There’s currently no guarantee on the residential status of EU migrant workers post-Brexit, so is there a chance you’ll be left with a hole in your team as employees are forced to move back to Europe?
Also, Brexit is a highly controversial and divisive issue, and for many Europeans it has made Britain a less appealing place to work. Whereas before many small businesses could look to Europe to attract top talent who wanted to try their hand working in the UK, now it may be a much less exciting prospect for workers to come here, particularly if they’re uncertain whether they’ll be able to stay.
Take the time to consider your workforce, and how you can protect your people and your business at the same time. This doesn’t mean suddenly only hiring British workers, but rather how you can support employees if they need it.
One thing you can’t be complacent about is the continued agreements with – or indeed even the presence of – your bank. It all depends on who you’ve banked with, but as most small businesses only use one bank account provider, if you suddenly find they’re no longer operating in the UK then you’ll need to undergo a switchover, and with a business this can take up to six months.
That’s without considering any investment in your business – are you covered if your investor bank suddenly pulls out due to a change in their circumstances? It may be worth examining your options for further investment to ensure you’ve got a backup plan should your main investor move on.
Time to plan
The main effect of Brexit should be you getting your business plan in order to cope with whatever comes your way. It may be that Brexit will have a minimal impact on you, but it’s still vital that you rethink your business strategy in light of the potential changes on the horizon.
This may be a positive plan, looking at ways you can take advantage in an uncertain market to help propel your business even further forward. Or it may be contingency plans on dealing with blows. Whatever your plan may be, make sure you’re still working towards growth – there’s no reason to fear industry implosion and planning to stagnate is self-fulfilling. If you make sure you have a watertight plan now, there’s no reason you can’t ride the waves or the storm of Brexit to a successful future.