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The Impact of Brexit on Small Businesses

With the on-going political discussions and conflicting financial forecasts, there is a keen sense of ambiguity around the subject of Brexit.

Naturally, some level of apprehension is likely to be felt when calculating the repercussions of Brexit and how this could potentially affect a particular business or industry.

When looking to source reliable and pertinent information on the matter, you are likely to be met with a sea of opinions. To help cut through all of the aforementioned literary white-noise; we have compiled some of the key quotes and perspectives relating to the impact of Brexit on small businesses.

When will small businesses likely feel the true extent of Brexit?

With several key questions surrounding Brexit remaining unanswered; many small companies have been left wondering if and when their businesses will feel the true impact of Brexit. With a lack of concrete information from the government surrounding aspects such as, where we now stand in terms of the European Economic Area (EEA) and the Customs Union, this would prove a relatively difficult question to answer.

Other given variables such as; the type of industry or business, whether they have European employees, and how the company chooses to carry out trade may also affect the extent of the outcome. So what do we actually know?

Regarding actually leaving the EU (the long-term forecast):

As reported by the BBC:

‘A post-Brexit UK-EU trade deal might take 10 years to finalise and still fail, the UK's top diplomat in Brussels has privately told the government. Sir Ivan Rogers warned ministers that the European consensus was that a deal might not be done until the early to mid-2020s. He also cautioned that an agreement could be rejected ultimately by other EU members' national parliaments.’

Our thoughts:

Nationally, the actual extent of the impact is still yet to be known, however; the reality is, for some smaller businesses, Brexit has already proven to have had seismic consequences on their company’s trading patterns. Some of these changes have indeed been catastrophic yet; others have found the changes to work in their favour.

As reported by the Guardian:

“Martin McTague, policy director for the Federation of Small Businesses (FSB), claimed larger firms had stopped paying suppliers in order to protect themselves against a possible Brexit backlash.

Small business owner, Gary McDonnell of catering company Empty Plates, claimed he had lost almost £50,000 due to companies changing their name in order to avoid having to pay him.

He said: “It's daylight robbery. Even if I’m not bankrupt, I can say I’m company A today, but tomorrow I’ll be company B, and leave all that [debt] behind.”

The shadow chancellor told him Labour was looking at rewriting company law in order to stop the practice.”

Also reported by the Guardian:

“Andy Peck is the CEO at Brighton-based TrustedHousesitters.com, which he founded in 2011 and which employs 27 people. Peck was staunchly in the Remain camp. However, as a business offering house and pet sitting services, the weaker pound has helped spur both domestic and international demand.

As the pound weakens, the UK has become a great place for people to come and visit from overseas,” Peck explains. “Also, for people from the UK who have concerns over holiday costs, we’ve seen an increase in families and individuals who decide house sitting is a better holiday option.”

Our thoughts:

Statistically, it would appear that the majority of small businesses are currently defying the pessimistic outlook first projected after the announcement of the Brexit vote. Most seem to be going about their business as usual, and have seen little impact on their business (for better or worse) following the Brexit vote.

Which forecasts should I listen to?

Copious financial and political analysts initially projected apocalyptic scenarios for U.K’s businesses and the economy as a whole. Others spoke of liberation, freedom and opportunity; promising substantial improvements for all businesses. However, although a relatively short time has passed since the Brexit vote was taken; neither extreme has transpired.

According to the BBC:

‘Latest figures show the economy grew by 0.5% in the three months after the Brexit vote, powered by the UK's services sector. This was slower than the 0.7% rate in the previous quarter but stronger than analysts' estimates of about 0.3%.’

Big questions from small businesses

Presently, many small businesses feel that there has been a lack of transparency around the subject of Brexit. A lot of key issues and fears have not yet been formally addressed in a particular manner. This uncertainty in itself is enough to cause financial turbulence amongst some sectors as companies, and suppliers speculate how trade may be affected.

So what are some of the key questions small businesses would like to see answered?

  • There’s no guarantee that we are going to remain a single market, and if we do not, what will that mean?
  • Where do we now stand regarding the European Economic Area (EEA) and the Customs Union?
  • A large proportion of our workforce is made up of migrant workers; will they have the right to stay and work?

Our Advice

Already, some businesses have felt the knock-on effect of trading changes attributed to Brexit. It is advisable that should your business start to show signs that it may be struggling; you should seek advice immediately.

Specialists and experts; such as those working at The Liquidation Advice Centre are not only trained in matters of insolvency, but can also give advice to companies who wish to take pre-emptive action before accruing large amounts of debt, and can help to implement new strategies for meeting payment deadlines on-time.

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