Brexit Impact on Small Businesses

A survey by the Federation of Small Businesses (FSB) has revealed that only one in seven, or (14%) of small businesses have started planning for a no deal Brexit. It also showed that at least 35% of small business owners say they would postpone major business decisions. This article will discuss what you should be reviewing and planning in case of a no deal Brexit if you run a small business.

FSB National Chairman, Mike Cherry said

'Looking at this research it is obvious that our small firms are not prepared or ready for a chaotic no deal Brexit and the impact that it will have on their businesses. If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.'

Source: https://www.fsb.org.uk/media-centre/press-releases/small-businesses-entirely-unprepared-for-chaotic-no-deal-brexit

The difficulties in planning for Brexit

How do you plan for an event where information is limited and constantly changing? The number of potential scenarios makes the process incredibly challenging and the cost required in terms of employee time and finances could be prohibitive. Diverting resources towards planning for any Brexit scenario would impact on the current business however, a business owners will need to take a long-term view to ensure that their businesses are not caught without a plan on the 29th of March 2019.

An example of small business Brexit planning

Source: http://www.cbi.org.uk/cbi-prod/assets/File/FINAL-Brexit-preparedness-survey-write-up.pdf

Since the referendum, a bakery employing 250 people has had Brexit as a standing item for discussion at the board each month. The company has had experts from legal firms and business associations as guests, to try and understand more about what Brexit might mean for its business and staff. The operations director has taken on responsibility for helping the company get ready for Brexit on top of his existing role. The company board meets monthly and includes the chairman, finance director, operations director, sales director & HR director.

Ensuring that Brexit is a standing item on the agenda for discussion and employing outside help in the form of lawyers and industry experts are the two key options this business has taken to keep the topic front of mind.

Issues across the organisation (knock on effects)

A single company may be impacted across every part of the organisation for example:

• The change in currency may make imported products more expensive
• There is a risk that the UK will require different product specification from the rest of the EU
• Changes in migration rules may affect staffing
• There is the possibility that trade with Ireland may be affected if border controls are not agreed
• IT system changes may be required
• Potential delays in trade may require larger storage spaces for products

Not only are major obstacles to business in the offing. The knock on effect of any strategies put in place to deal with them will also have to be managed. Scenario planning will have to consider the effect that each plan would have on the organisation as a whole. IT services will be impacted by most major strategic moves and could be rather costly.

Brexit opportunities

In times of changing policy, entrepreneurs thrive. Despite numerous articles on the subject predicting doom and gloom, there will be significant opportunities for businesses to capitalise on the uncertainty. Do not focus all of your planning on a defensive strategy, you might be missing out on a great growth opportunity for your business.

“The concern is that with only six months to go before exit day, we are now in a race against the clock to avoid a situation where we crash out of the EU causing significant damage to our smallest businesses. This must be avoided at all costs."

 FSB National Chairman: Mike Cherry

For more detailed information on Brexit planning for businesses the CBI have produced a white paper that may provide more guidance, assistance and ideas:

http://www.cbi.org.uk/cbi-prod/assets/File/FINAL-Brexit-preparedness-survey-write-up.pdf

If you are considering Brexit strategies for your business and are in need of expert financial advice or scenario planning, please contact our Managing Partner Melanie Richardson using the details below:

Melanie Richardson - Managing Partner

Email: melanier@swindellsaccounting.co.uk

Tel 01825 763366