Most SMEs are Unprepared for a No-deal Brexit

January 3, 2019 Categories: Money, Tax
Most SMEs are Unprepared for a No-deal Brexit

Will they or won’t they get a deal? It’s not clear at this time and Brexit negotiations have certainly been a trying time for the politicians and a busy time for the media.

Prime Minister Teresa May’s negotiations were always going to be tough and the Government has already published a range of notices (totalling over 100) to cover areas from flights between the UK and EU how we’ll apply for pet passports and the impact on exporting organic food.

Like any change affecting business, this could bring good or bad outcomes. Negative stories abound, including Jaguar Land Rover who announced 5,000 job losses and the travel industry who predict larger job losses and hikes in holiday fees.

But with all this work, politics, and media frenzy, are SMEs getting ready and do they really understand what they’re getting ready for?

… apparently not.

Largely because currently there’s still no confirmation of whether and how Brexit will actually happen.

 

No plan for no-deal says FSB

The Federation of Small Businesses published a report recently that showed 86% of businesses had no plans in place for a no-deal Brexit, despite the fact that 48% of those actually fear that it would have a negative impact on their business.

This grew to 66% for SMEs that trade with the EU, and to 61% who hire from the EU.

The report, which surveyed 1234 business owners, asked them for their thoughts and possible actions should the UK have a no-deal Brexit. It found that most SMEs are ‘woefully unprepared’ for Brexit, given the attention Brexit has had.

Most SMEs have no plan whatsoever come March 29th 2019 when the UK is scheduled to leave the EU, which follows the vote in referendum of 23 June 2016 when just over 50% of voters asked to leave the European Union.

Fun fact: Interestingly, despite the media noise surrounding Brexit, the UK is not the first country or state to leave the EU. In fact when we leave they will be the fourth to leave since the agreement after the second world war. Due to different factors Algeria, Greenland, and The Caribbean island of Saint Barthélemy have all left the EU since the 1950s deal was set up.

 

Most are unsure what they’re planning for

In the report from the FSB, FSB National Chairman, Mike Cherry said:

“At this stage, it is understandable that some small businesses haven’t starting preparing as they aren’t actually aware of what they are planning for.”

This makes perfect sense given that hardly anyone from Theresa May to Government pundits and experts can truly predict what Brexit (deal or no-deal) will mean for any business, let alone SMEs. If you’re an SME, maybe you’re just waiting for the storm to blow over or at least wait for direction, rather than be swayed by media headlines or hearsay.

Mike Cherry added:

“Our small firms are not prepared or ready for a no-deal Brexit and the impact 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 threat to your business.

“The prospect of a no-deal Brexit is seeing many small firms shelving business decisions, pausing investment and thinking about cutting staff.”

One other concern here is that businesses aren’t growing through lack of action due to the unknown outcome and this adds to the worry of Brexit as it appears to be turning SMEs into rabbits in EU headlights, leaving growth a concern in the backbone of the UK economy.

This is despite the fact, as we recently shared, that getting a loan of finance as an SME is getting easier.

 

Is it all bad news?

One in 10 business owners who completed the FSB survey were positive about the changes and said that they believe a no-deal would actually have a positive impact on their business, rather than a negative one.

According to entrepreneur and CEO Reuben Singh, there are other opportunities to thrive in a post-Brexit landscape too.

 

What’s next?

The British Chambers of Commerce have released a helpful checklist for business planning which we hope you’ll find useful.

We’ll keep an eye on the affects of Brexit on your business over the coming year and of course if you need advice or help for your business please do contact us.