How Brexit Could Change the Way You Do Business: A Guide for SMEs.

Despite numerous rumors and discussion, the deadline for the UK to leave the European Union is still the 29th of March, just over three weeks away.

And with the uncertainty that is a massive jump out of our familiar trading ground, it's important that SMEs understand that Brexit can and will affect UK business (whether it be positive or negative).

What is the general consensus of SMEs in regards to the impacts of Brexit?

Last year, a survey of over 1000 SMEs undertaken by Opinium between 25th May and 4th June 2018 found that 33% believed Brexit will have a positive impact on their business whilst 27% believed Brexit will have a negative impact on their business. This suggests that 40% of businesses are unsure of how Brexit will impact their business.

The Key Affects to UK Business

Importing goods from the EU may be more expensive and lethargic.

Importing goods from Europe to the UK could change if we enter into a no-deal Brexit. For example, businesses such as restaurants who rely on imports of wine from the EU may find that their wine is held up by customs, slowing done supply and incurring extra VAT charges.

Whilst businesses that rely on the use of multiple road vehicles such as van hiring companies, taxi firms and car salesman may find the price for road vehicles rise greatly impacts costs and sales. Especially with German vehicles set to have a 10% import tax.

And it works both ways, businesses who sell to the overseas market in the EU will also suffer from a slower importing/exporting process with considerable costs when it comes to VAT.

It's important to ensure that your business is ready in regards to stock from the EU when this affect takes place.

EU Workers are seemingly in decline and therefore may be more costly if you are looking to hire.

Despite the large fear of losing EU workers for many employers, EU citizens who are living in the UK maintain the right to work and study.

It has already been agreed that EU nationals can also continue arriving and working in the UK as they do now up until 31 December 2020. Whereby after the cutoff date EU citizens arriving in the UK will need to get a work visa.

For EU citizens and many employers this is a sigh of relief as many SMEs such as construction companies rely heavily on these workers. However the uncertainty of Brexit has caused a significant decline, with 132,000 less EU nationals working in the UK from 2017 to 2018.

An economist at Indeed.com stated on Twitter: "Today's @ONS data shows employment ticking up to record high. As the supply of EU workers falls and businesses compete harder with each other for recruits, there is good news for workers: pay growth accelerates to 3.2%"

This suggests that SMEs may have to increase wages with the shortage of EU nationals.

If your business is in UK Tourism, you may reap the benefits.

If you work in the UK tourism industry, you might have already noticed an increase in customers since the Brexit referendum.

The tourism industry in the UK has boomed since the fall of the pound. Making the UK a rather cost effective holiday option for many internationals; swapping their dollars, euros and yen for more pound sterling than they would have had before.

This has in turn brought about more UK citizens spending holidays in Britain as the exchange rate works against them and with uncertainty around free travel, the tourist industry in the UK may continue to flourish.

This suggests that UK SMEs in the tourism sector should be positively impacted by Brexit and should seek out further opportunities of expansion.

What should I do in the lead up to Brexit?

With the level of uncertainty that Brexit brings, businesses have found themselves anxious to push through with any crucial business decisions.

It's however important that SMEs don't let the fear of Brexit hinder their business from growing and that they prepare for any outcome.

Ensure you're ready for changes in your supply chain.

Whether you're importing flat-leaf parsley from Italy for your restaurant or a laser cutter from Germany for your workshop, it's important that you have it ready now.

It's important to consider that with Brexit uncertainty comes time delays and price fluctuations as previously mentioned. You should ensure you have enough stock to meet your current demand and you are able to afford any price increase in importation for the goods needed. You may need to review your yearly timescale and adjust accordingly. It's a good idea to have reserves ready.

Speak with your workforce.

Some of your employees may be EU citizens justly worried about their current position working in the UK. It's important to speak with them about the options they have so that you can prepare for any concerns, or in some cases even resignations. The year following the referendum, 123,000 EU citizens emigrated from the UK, an indication as to how things might evolve.

Allowing for better communication with these employees will allow you to prepare your business appropriately. A good guide for them can be found via: https://ec.europa.eu/unitedkingdom/services/your-rights/Brexit_en

Cut unnecessary costs

If you haven't already done a thorough analysis on your day-to-day business expenses, now is the time to do it. The key expenditure here being travel costs.

The price of fuel is expected to hit a record high and with importing/exporting being a massive part of business (as well as transportation), there are always opportunities where you can cut how much fuel needs to be used. Whether it be importing goods in bigger bulks or reducing the amount of unnecessary travel, reducing your day-to-day fuel costs can save you a lot more than you think.

Ensure any funding is suitable for your business.

Despite the recommendation of cutting unnecessary costs, there are thousands of SMEs who rely on funding options such as business loans for hiring staff, driving leads and filling inventory.

With Brexit uncertainty, it is now more than ever that businesses choose the right funding options for them and don't fall into the pit of going for a loan which is too expensive or over a longer period of time than they need. Choosing a merchant cash advance over a traditional business loan or invoice finance over a STUBL can help push your business in the right direction through the uncertainty.

Conclusion

The uncertainty around Brexit has already caused SMEs to fear the negative impacts that it may have and look forward to the positives that may come out of it. It's important to understand that importing/exporting can dramatically change and that UK businesses should prepare for it, as well as potential shifts in a worried workforce.

Ensuring that you are pro-active when it comes to tackling these issues will leave you in a better position.