In 2016, Theresa May declared that small businesses were the backbone of the British economy. This sentiment was followed by her belief that leaving the EU would benefit SMEs and that ultimately, Brexit would allow the UK to prioritise the needs of small businesses and promote further opportunities. However, it would now seem that Britain’s over 5 million SMEs are facing an uncertain post-Brexit future.
Making up nearly 50% of private sector revenue, SMEs are crucial to the stability of the British economy. However, unlike their larger counterparts, small businesses lack the resources requires to react to the difficulties that the European divorce may bring.
While talks are ongoing, negotiations are yet to result in a trade agreement. As a result, Barnier, the Brexit Secretary, recently warned of the impact of leaving the single market and stated that ‘barriers to trades in goods and services are unavoidable.’
That being said, with Brexit’s 2019 deadline how fast approaching and a report claiming that 64% of SMEs are not adequately prepared, is there anything British SMEs can do minimise the impact of Brexit? Just how can small UK businesses prepare for this period of uncertainty?
Consider Contracts
Many of the employment laws that protect both SMEs and their staff come from EU legislation. Although it is predicted that the government will maintain current employment laws, there are no guarantees that this will happen. This means that in order to be safe, it would be wise for business owners to revisit their employment contracts.
This will be particularly important in two areas: hiring new talent and overseas workers. With the former, business owners may be in a position to alter employee contracts, while for the latter, it will be essential to consider any additional processes that must be adopted in order to attract or retain employees from the EU.
Trading Outside the EU
It goes without saying that Brexit brings about a lot of ambiguity. For this reason, SMEs may begin to consider trading outside of the EU. It is believed that Asian markets could prove fortuitous for British businesses, with Theresa May making a recent visit to China in search of a trade deal.
Should the UK leave the single market as predicted, trading with European countries could become more expensive and impact the bottom line of many SMEs, while trading further afield could open up new and prosperous business markets.
Budget for Brexit
The UK is due to withdraw from the EU on 29th March 2019, providing businesses with just over one year left in which to prepare for Brexit. With such uncertainty, Britain’s SMEs must increase their cash flow, to budget for any negative impacts.
There are many ways in which UK businesses can save money, including renegotiating with suppliers, going green to reduce utilities and overheads, outsourcing tasks, and finding an expert logistics and international delivery service.
International Currency Issues
With news that the pound to euro exchange rate has weakened again, it is crucial that SMEs consider how currency rates would affect international trade. The weakening of the pound could have real impact on the bottom line of many SMEs as well as their customers, as businesses are forced to reassess their prices.
As such, it is advisable to keep up-to-date with the latest currency news and be prepared for any changes that may affect your company’s profits.