What Brexit Means for Small Businesses
As we all know, the UK public voted to exit the European Union. Now every business, big or small doesn’t quite know what to expect from the decision. As the country goes on negotiating with the EU, small businesses, especially those whose supply chain reaches outside of the UK, have to embrace an undefined future. But what does that really imply to your small business?
An Uncertain Future
As of now, small businesses have to continue observing the very same EU rules they had while waiting for new ones in the near future. The reason is that free trade agreements are not completed in one sitting, and the priority will be to EU members. This uncertainty is not likely to sit well with many business owners; most likely you will be calling for more action. Upcoming firms have already started insisting that the government should clarify issues such as free movement of people and a free market. A large percentage of The Federation of Small Businesses members export to the single market.
The Red Tape
It is believed that most of the members supported the leave campaign because of the EU red tape. This is because most of the self-governing companies would not trade with member countries but have to follow the rules and regulations. These guidelines are thought to be counterproductive and over the top by business owners. For instance, the complex tax procedures in place take a lot of money and valuable time, which affects growth in unfavourable ways. Such rules derail production, which holds back companies from making sales and creating a new clientele. However, if the red tape was removed, the way for your small businesses to excel would be cleared. This could also lead to a healthy United Kingdom economy. Nonetheless, for benefits to come fast, there will be a need for an enhanced delegation program but not promises of ten billion cuts. They also need a beefed up program that will enable the UK workers to have the much-needed skills by their employers.
A small business needs skilled people who are committed to making it bigger for it to prosper. The UK relies heavily on foreign workers, and in most cases, they come from EU countries. For instance, unlike South America or Asia where work permits are needed, businesses in the UK and Europe are not required to obtain them. With the decision, visas will be required for any non-British citizen. This will reduce the talent pool, making it harder for your small businesses to grow.
Conflictingly, some think that Brexit marks an employment opportunity; those having the required skills will have increased demand if the influx of foreign nationals is reduced. Besides, during stages of hesitation, businesses are inclined to choose flexibility, which can be good for contractors and freelancers. There is evidence from Freelancer and Contractor Services Association that shows that demand for its members is quite high and has the potential to increase. Representatives of the self-employed say that this could be the perfect era for them, but they need politicians to embrace the change and enforce the agenda for business owners.
Alterations in International Trade
It would be right to argue that membership does give smaller businesses chances to trade all over the continent. Since most the member countries use the same currency, a lot of barriers are omitted. Companies in the UK can trade with many countries without constantly changing currencies. While red tape costs a lot of cash, in theory, businesses in the EU face reduced paperwork by producing a standard method; this is especially useful during customs procedures. The decision to leave EU could make companies deal with more administrations.
Independent Professional and Self Employed (IPSE), believes that this new era has to be taken as an advantage for the UK. The core priorities should be fresh worldwide trading agreements to ensure that Britain gets the most attractive economy globally and cuts heavy regulations on your startups or small businesses. These priorities can enable the UK to be a place where contracting and freelancing will thrive.
Huge Gap on Information Technology Skills
Entrepreneurs who rely on skilled workers have concerns about their talent pool, with the fear that it may have shrunk. IT businesses such as Spectromax believe that the consequences of the exit of the British from the EU are huge and long-term. They also believe that there is a huge gap in the IT industry and it is going to need a few years to close it. The fact that the UK left the EU at a time when it needed skills was a huge loss for its businesses, not forgetting the commercial chances that could be lost and end up affecting the growth of your business negatively.
Possible Decrease in Exports
Those who manufacture goods and export them to Europe have worries about losing access to the single market. Some businesses, such as Faith in Nature that exports most of its goods to Europe fear losing much of their turnover. The single market offers the UK access to an economy bigger than itself with common rules and regulations, and absent of tariffs, which ensures easy trade to the single market. Their worst fear is the imposition of tariffs and introduction of trade barriers, which would make your business to crumble and fall.
Investors in the technology industries are optimistic about Europe relishing its access to talents and markets, international perspective and common regulations. Some even hoped that the EU would come up with its own single digital market; thus businesses in London felt like they could benefit from it. Onfido and other businesses believe that the hopes for a digital single market are gone and that there will be questions of whether London will become a leader in technology and finance. They are also certain that it will be difficult to attract top techno talent to the United Kingdom. Others, including Brilliant Noises, have concerns that London as a universal hub for technology, media and business might be impacted adversely. They also believe that it is going to affect the growth of minor businesses and question UK’s credibility as a global business hub.
Effect on the Economy
Lenders are worried about the interest rates on financial loans, which are a major concern, especially to your growing business. If the pound hits a low, inflation will go up, making banks raise their interest rates, creating negative equity for those who own businesses and other properties. In case the value of properties decreases, certain concerns over investments that were made recently would arise; some people would think of putting job offers on hold. Markets for many businesses have had bad reactions, but some hoped that it would not last long because the current UK economy is strong. Fortunately, many people believe that small business will spearhead the recovery. It, however, might not be smooth in the beginning, but after some time, due to the resilient financial system in the UK, the market will adjust. Furthermore, private businesses are flexible, adaptable and are at the heart of the economy; therefore, they are equipped to handle the changes.
Time will tell exactly how the decision will impact businesses, but investors tend to be optimistic and rely on microeconomic data to make decisions. Some people believe that they will carry on, nevertheless. You as a business owner should trust and be eager for opportunities that arise from changes. In doing so, you will simply get along with them and focus on formulating strategies that will help you survive in the coming days while still planning for the future of your business.
The sentiment is way more optimistic in Scotland than all the parts of UK; that Brexit will give the country a stronger argument to get its independence. This could influence business across the country. As far as organisations such as Economic and Business Research are concerned, the chances are high of an influx of competition nationally because many firms will move to the south. These changes would create job openings, which would be great news for job seekers but would not be so for your business because it would not really attract the best talent possible.
EU membership is not free; it costs the UK government a substantial amount each year. The gross contributions by the UK reach billions of pounds, and this money could be used to boost growing businesses in the kingdom. It would also help small time investors like you to get your business ideas going, as well as providing support to the upcoming business so that you can compete with large companies. Even though it would not be so simple, there certainly would be something on offer for you to enlarge your business.
An economy cannot stop doing business in one night. Even in the face of a lower value of the pound, nothing has changed materially in the trading relationship between the UK and the EU. You should find a way to level up with the developments and focus on transforming your business into a more successful one.
Kingsland Business Recovery are insolvency experts. For more information on how Brexit might affect your business, please feel free to contact one of our directors on 0800 955 3595 for a no obligation, confidential chat. Or alternatively, drop us an email at firstname.lastname@example.org