What will Brexit mean for your small business?

5 February 2020

At 11pm on 31st January 2020, the UK ceased to be a member of the European Union (EU). This isn’t fresh news, and yet we still all face the uncertainty that has existed since the vote in 2016, whichever side you were on.

The media focus on Brexit has been and continues to be a pendulum, swinging between the sublime and the ridiculous, but what does Brexit really mean for your business?

What comes next?

Really, all that has been agreed is when we will leave. The next 11 months up until the end of the implementation period – currently set at 31 December 2020 and this is unlikely to change – will see the agreements needed to take our relationship with the EU forward.

A trading agreement is needed, as well as agreements on how we will regulate the UK going forward in areas such as with law enforcement, data security, safety standards and licencing.

There are many stances on how these agreements will affect businesses, particularly small businesses, where the impact may be more keenly felt.

Why will this affect small businesses differently?

It has been argued that the current EU regulations have protected the interests of large corporations at the expense of smaller UK businesses, giving competitive advantage to those that need it least.

At the start of 2019, 99% of businesses in the UK were deemed to be small. It is estimated that only 8% of UK SMEs export directly to the EU, and a further 15% are in the supply chains of other businesses that export to the EU.

In 2018, 45% of UK exports were with the EU. These statistics indicate that over 70% of UK businesses aren’t involved in exports to the EU and it is claimed that the EU regulations adversely affect their profitability in the UK market. Those who do import/export or are involved in the EU supply chain, are likely to be most impacted.

How can you prepare?

Generally, smaller businesses are more flexible and able to react to change more quickly. If you are able to embrace change and remain competitive in your market then there could well be more opportunities – certainly than for larger businesses.

The economy will continue to be uncertain and this could have an impact on your consumer audiences. For example, rises in unemployment due to larger businesses relocating could impact the income for individuals and therefore reduce the demand for luxury items, holiday travel, and non-essential goods and services.

For all small business owners, it is advisable to monitor the effects as and when Brexit unfolds, and remain alert to any changes that could affect your business. Considering staffing, tariffs, location and your customers is key for your planning.

If you would like to discuss how Brexit is already, or may be in future, affecting your business, please contact me or your local UHY adviser.