As the United Kingdom prepares to leave the European Union, businesses across the country are preparing for the impact of Brexit. While the final terms of the UK’s departure are still being negotiated, businesses must take steps to ensure that they are able to survive and thrive in the new economic environment. One of the key challenges will be to maintain access to markets and talent. Businesses will need to diversify their supply chains and develop new relationships with suppliers outside of the EU.
They will also need to rethink their approach to recruiting and retaining talent, as restrictions on migration are likely to make it more difficult to attract and retain skilled workers from Europe. By taking these steps, businesses can ensure that they are able to continue operating successfully after Brexit.
Brexit is coming, probably, at some point. Depending on which way you voted that’s either a good thing or very bad thing. Arguments continue to rage around Westminster and the country as a whole, but stuck in the middle of all this are small and medium businesses who have to manage this uncertainty and keep their finances ticking over?
How to survive Brexit as a business
It seems that we’ve been arguing about Brexit forever, so it’s even more surprising that we seem no closer to getting a clear view of what it might look like when it gets here. Deal, no deal, revoke or referendum are all still on the table when we hit the latest deadline in October. This is maddening for businesses. Every fresh setback sends Sterling tumbling and sets business owners’ nerves jangling.
The Daily Telegraph Company Sentiment Tracker, which analyses business tweets for positivity and negativity, found that 23% were pessimistic while 13% were optimistic.
Removing neutral opinions, it said 64% of firms were in a downbeat mood against 36% which could be described as upbeat.
1. Initiate an honest conversation with stakeholders – employees, shareholders, customers – about what a “no deal” Brexit would mean for the business and its operations.
2. Make a plan for all possible scenarios, including a “no deal” Brexit, and assign responsibility for each part of the plan to a specific individual or department.
3. Review supply chains and identify any potential disruptions that could occur in the event of a “no deal” Brexit. Make contingency plans to minimise the impact of these disruptions.
4. Inform employees about the steps the company is taking to prepare for a “no deal” Brexit and encourage them to take personal steps to protect themselves and their families.
5. Monitor developments in the Brexit negotiations closely and be prepared to adapt your plans accordingly. These are just some of the steps businesses can take to survive Brexit, however no one knows exactly what will happen if Britain leaves the EU without a deal. The best course of action is to be prepared for all eventualities.
How Small Businesses Can Weather the Storm?
The impact of a no deal Brexit could be profound. Businesses may have to pay tariffs on products imported from the EU. This could hit companies with unstable or variable incomes which import substantial quantities from the continent. They may try to look to other suppliers within the UK to reduce their costs.
Investment might be harder to come by. The European Investment Fund (EIS) is a useful source of funding. It does not invest directly into businesses but does channel this money through the banks. Removing this could make it more difficult to access capital.
The entire economy has already taken a hit. According to a major think tank, the UK economy is already 2.3% smaller than an imaginary doppelganger UK which voted to stay. That impact could be magnified once the UK’s exit from the EU becomes a reality.
Will the trade deal be a good thing for businesses?
After more than four years of negotiations, the United Kingdom has finally reached a trade deal with the European Union. The agreement, which was announced on December 24, 2020, will come into effect on January 1, 2021. Under the terms of the deal, the UK will be able to trade freely with the EU without having to pay any tariffs or quotas.
The agreement also includes provisions on fishing rights and financial services. While the details of the deal are still being finalised, it is clear that it represents a major breakthrough for both sides. With the UK’s withdrawal from the EU now complete, the focus will turn to implementing the new trade arrangement and ensuring that it works smoothly for businesses and consumers.
It is yet to be seen whether the trade deal between the UK and EU will be a good thing for businesses. On the one hand, zero-tariffs is a definite positive, but on the other hand businesses may still need to pay customs duties. paper work such as customs and safety and security declarations is also likely to cause delays at border points. Time will tell whether the trade deal will be beneficial for businesses or not.
Coping after Brexit
The unavoidable truth is that Brexit carries plenty of risks, but few tangible benefits. It will hit the wider economy, making business harder to come by. Investors may keep their money in their pockets as they wait to see which way the wind will blow and banks may be less willing to lend.
It is a difficult situation in which revenue may be at risk and capital will be harder to come by. At the very least this may limit the ability of small businesses to grow. At worst it could threaten their very existence. Indeed, the chances are that we will see an increase in the number of small business failures after Brexit. Others may decide to act before Brexit and relocate themselves into the EU.
Different sectors may be more affected than others. For example, sectors such as finance and technology, which often rely on highly skilled international experts and regularly collaborate across borders, may have more problems. A local business which doesn’t do much business overseas might be relatively unaffected.
Even so, as critics of Brexit point out, a general economic slowdown would hit the entire economy. Consumers would have less money spare and businesses would have fewer resources. Uncertainty will be everywhere and many sectors could be in for a rough ride.
One result of this could be that invoice and asset-based finance could grow. Alternative sources of capital, which rely on tangible assets and infrastructure, are becoming increasingly popular with businesses who are looking to plug short term funding options gaps. These could look attractive if your business has to go through a temporary dip after Brexit.
The advantage of these options is that they generally have a lower bar of qualification and can transfer the money more quickly. This is useful for short term situations in which companies need finance sooner rather than later. These do have costs and businesses will need a clear idea of how expensive this capital will be and what it will be useful for, but for any enterprise looking to fund growth or cover a shortfall in capital it could be crucial.
The only certainty about Brexit is uncertainty. Experts may say otherwise but they have little real idea of what will really happen. Few predict anything good, so the maxim for SMEs is to follow the example of the Scouts and ‘be prepared’. This will mean good control of finances will be key to how they weather the storm.
What impact will Brexit have on my customers?
As the United Kingdom’s withdrawal from the European Union approaches, businesses are understandably concerned about the potential impact of Brexit on their customers. While the full extent of the changes is still unclear, there are a few key areas that are likely to be affected. First, the free movement of goods and services between the UK and EU countries will come to an end, which could lead to delays and disruptions in supply chains.
In addition, new customs and tariffs may be introduced, which could increase the cost of goods and affect pricing. Finally, changes to immigration rules could impact customers who travel between the UK and EU for business or pleasure. While it is still too early to predict the full impact of Brexit, businesses should start preparing for some changes in their customers’ behaviour.
How will Brexit impact on VAT?
The value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The end consumer pays the VAT, though it is collected by the seller. Currently, the standard VAT rate in the UK is 20%. After Brexit, this is expected to increase to 25%.
This will have a significant impact on businesses and consumers alike. For businesses, the increased cost of VAT will likely be passed on to customers in the form of higher prices. This could lead to inflation and lower consumer spending, which would in turn impact businesses’ bottom line.
For consumers, the higher cost of living could lead to financial hardship and reduced standard of living. The full extent of Brexit’s impact on VAT remains to be seen, but it is clear that it will have a significant impact on both businesses and consumers in the UK.
What will be the impact of Brexit on my workforce?
For many companies, one of the biggest concerns is the impact Brexit will have on their workforce. The free movement of labor has been a cornerstone of the EU, and business leaders are worried that Brexit will create new barriers to hiring and retaining talent. In particular, firms that rely on highly skilled workers from other EU countries could be forced to make major changes to their recruitment and retention strategies. The uncertainty surrounding Brexit has also made it difficult for businesses to plan for the future.
Many firms are still waiting to see how negotiations play out before making any decisions about their workforce. As a result, the full impact of Brexit on businesses is still unclear. However, it is clear that companies will need to adapt their strategies in order to protect their ability to hire and retain top talent.
Getting the right deal
There are a small number of financing options that allow SMEs to borrow sums of money without having equally large minimum turnover requirements. There are even fewer that also provide a flexibility but is competitively priced. A quick turnaround in lending decisions that will be necessary to keep the economy afloat post-Brexit.
One of the main sources of funding for SME’s in the UK that offers all the above is Fund Invoice. This financial option may well hold the key to the betterment of the UK economy. SME manufacturers are facing uncertainty as a result of Brexit and growing competition from operating in a globalised market.
Comparing invoice finance and its growth with that of the country’s value is a clear indicator that small to medium sized businesses will continue to strive for growth. Hopefully this will last as long as GDP continues on an upward curve.
Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.