What small and medium-sized businesses need to do next, by Linda Whitney
Brexit day, Friday, March 29, 2019, is less than a year way and a recent survey found that 64 per cent of small and medium-sized enterprises have not made specific plans to prepare their businesses for Brexit.
Looking to the government for guidance won’t help. At the time of writing (mid-March 2018), it’s offered little or no practical advice.
It’s no wonder that the same Collaborate UK survey of over 1,000 owners and decision makers, by CitySprint Group, found that 43 per cent lacked confidence in the government’s ability to protect their business from the impact of Brexit.
How will it affect SMEs?
When asked about their specific Brexit related worries, accountancy firm Moore Stephens found 38 per cent of businesses said the introduction of trade tariff s was their biggest concern, 30 per cent feared a loss of EU labour and 23 per cent were concerned about loss of European customers. Only 33 per cent said they had no concerns around Brexit.
Mark Lamb, head of owner managed businesses at Moore Stephens, says: “Brexit could potentially impact on an enormous number of issues affecting owner managed businesses in the UK, from import and export costs, to access to labour and grants and subsidies.
“Businesses have been given very little clarity so far on what effect Brexit might have on any of these issues.” However, for the moment at least, it looks like SMEs are on their own. Fortunately, some experts are offering more ideas than the government.
Look at the risk and opportunities
Moore Stephens found that 51 per cent of owner managed businesses were concerned about the impact of Brexit negotiations.
“As details around the terms of the UK’s exit from the EU become known, it’s vital they discuss the scenarios that might impact their business and take stock of the risks and opportunities the future might bring,” Mark says. “Doing nothing is not an option.”
Moore Stephens says don’t assume you have to reduce prices to win sales – many businesses want to deal with trusted suppliers with whom they can develop strong relationships.
Increase business development
Patrick Gallagher, group CEO at CitySprint Group, says: “Our figures show that since Article 50 was triggered in March 2017, 32 per cent of SMEs have upped business development activity. Many, especially those outside of London, are exploring international opportunities for growth.
“Our research highlights lower customer demand, increased operating costs and Brexit as some of the top obstacles to success, so unlocking new markets is critically important for SMEs.”
Moore Stephens recommends considering exporting goods and services as an option for mitigating any concerns about the strength of the UK economy.
Mark says: “Don’t think you have to delay your plans for international growth due to Brexit uncertainties.”
Strengthen your business
The CitySprint survey found that 27 per cent had decreased their fixed and/or variable costs, 25 per cent had increased investment in capital goods or technology and 20 per cent had upped headcount.
Patrick says: “Over the next 12 months this focus on existing customers and acquiring new ones, all while cutting their cloth where they need to, will help insulate smaller businesses from economic fluctuations.”
Mark suggests businesses should look to retain their valuable talent: “This need not increase wage bills. Staff can be retained by offering competitive employment conditions, training and development programmes and career progression.”
Invest in new technology
Mark says: “Automating processes to cut the need for manual intervention could make businesses more efficient. Rather than replacing people with robots, increased efficiency frees up staff to carry out other tasks.”
He also points out that up to date accounting systems will mean owner managed businesses can respond more swiftly to the planned Making Tax Digital and new GDPR regulations.”
Patrick says: “We’re also seeing reassuring signs that SMEs are continuing to invest in new technology to ensure they remain competitive.”
Boost collaboration
There is strength in numbers. The CitySprint survey found that 23 per cent of SMEs had already collaborated more with other SME partners since Article 50 was triggered.
However, Patrick says: “Our research shows that just 13 per cent of SMEs plan to collaborate more with other businesses in the next 12 months.
“This is disappointing, as the uncertainty triggered by Brexit has made it more important than ever that small businesses work together and support each other – either as partners, suppliers, outsourced expertise or even joining forces to share costs.
“The practical value is tangible. Our research shows that the businesses that value collaboration report greater confidence in the future and report being in better financial shape.
“By working together, they can brave whatever uncertainty the future holds.”
Form your own EU
The prospect of Brexit prompted Danny Curran, founder of Finders International, the ‘heir hunters’ company that reunites next of kin to assets they often didn’t know were theirs, to form the International Association of Professional Probate Researchers, Genealogists & Heir Hunters.
He says: “We have constant interaction with other companies in our industry in Europe and around the world. Brexit made us think we should firm up those contacts, so we formed the association as a self-regulatory international body.
“We can talk together about changes in regulations. If, for instance, UK regulations change we can disseminate the changes immediately to all IAPPR members.
“A lot of regulations affect our industry and there could be millions of pounds at stake if you get it wrong. This is particularly critical for small and medium-sized enterprises, where an owner is taking personal responsibility for meeting the right legal requirements.”
This article has been first published in startupbusinessuk.net