How can small businesses cope with Brexit uncertainty?

Dun & Bradstreet’s report revealed that 40% of UK SMBs experienced slowed growth and falling exports due to Brexit uncertainty and a third felt that the struggle to calculate its impact was making planning and future growth challenging

After years of debate and discussion, the deadline for Britain leaving the EU has passed and yet there still seems to be no solution on the horizon. While a no deal, which was called potentially “ruinous” for the U.K. economy by Business Secretary Greg Clark, was avoided, another viable solution has not yet emerged.

In the UK, it is no exaggeration to say that small businesses are the backbone of the economy. There were 5.6 million SMBs in the UK at the start of 2018, accounting for 99.3% of all private sector business. While large companies such as Sony, Honda, Nissan and Airbus have announced their intentions to implement contingency plans and withdraw elements of their businesses from the UK, many SMBs have had no choice but to try and manage the impact.

To understand the current situation from a small business perspective, we talked to Duncan Geddes, Managing Director at Technical Foam Services. More than a decade of growth capped by a turnover of £25 billion in 2017 has turned the plastic manufacturing sector into one of the UK’s top 10 exports. Despite its successes, 69% of the industry’s trade relies on the EU, putting it in an ideal position to understand how small businesses are managing the uncertainty.

Proactivity

“With such close links to European suppliers and customers, manufacturing is an industry that might suffer a greater impact than most from the initial shock of a no deal.” Says Geddes. “The largest issue is not Brexit itself, but the level of uncertainty coming from Westminster.

“Future planning is essential. While discussions are likely to continue right up to the October deadline, SMBs do not have to wait for a resolution before they take some action.” Said Geddes. “The companies that will be least affected will be those that are able to react in good time. It would be a mistake to sit back and wait for a solution, and so it is down to the individual companies and the wider industry to operate in a positive and proactive manner.”

Communication

“Ultimately, the fundamentals of business will not change. You will continue to have clients and suppliers that have objectives for you to fulfil, Brexit will not change that. By ensuring you have strong relationships and clear communication then you can all work together to find a way around the challenges that may arise.

“One of the real benefits of a modern SMB is the ability to be dynamic and flexible in ways that larger, or older companies may not be able to. By looking ahead and planning in detail, you can make sure that you are looking to adapt to challenges and react quickly, should it become necessary. By coupling this with transparency and clarity, it is possible to retain the trust and support of your European partners.

Preparation

“The first step to preparing is to analyse your supply chain and assess the impact the Withdrawal Agreement or a no deal could have on your trade within the EU. When you have done this, you will be able to adapt your strategy to be as flexible as possible.

“Logistics are also a huge factor. By working out the actual effects Brexit may have on your day-to-day business, you can be better prepared. If your shipments to Europe are likely to be affected, consider transferring them through a different port. If you identify issues, do what you can to minimise the impact on customers.”

Resilience

In the three months to February, the UK economy grew by 0.3% due to manufacturers changing the timing of their activity. In other words, businesses are working hard to stockpile and prepare for potential disruption.

“I get the impression that, at this point, many small business owners would choose a deal and a transition period over increased uncertainty. A General Election or a second referendum could resolve the issue but is more likely to lead to further negotiations and continue to prolong the uncertainty.

“Over time, British industry will find its feet again and as soon as there is stability it will start to regain its strength. It could take years, but I believe in the ability of British business to weather this storm in the end. ”

LEAVE A REPLY

Please enter your comment!
Please enter your name here