Recent research shows that 88% of e-commerce businesses already sell overseas, and 45% see international sales as vital to the future of their business.
As overseas trade is so important to many small businesses, Brexit is a major concern. While uncertainty rules now, there are certain things we do know:
- VAT and import duties will probably change.
- There will undoubtedly be an increase in documentation on imports and customs clearance costs will probably change. It’s also probable that there will be delays on clearing customs.
- If sourcing from an EU country and then selling back into the EU, it’s probable that a reintroduction tax will be introduced. Higher delivery and fulfilment costs to EU countries should be considered, and there is still going to be volatility surrounding currency exchange rates, which will impact sourcing and selling prices.
- It’s possible that EU online shoppers may turn away from the UK.
What can small businesses do?
To mitigate the changes that Brexit will inevitably bring, here are some steps businesses can take:
1. Plan to manage currency risk
We’re becoming used to fluctuating currency values, and since Brexit, there is a greater awareness of this. How much this matters to your business depends on whether this continues in 2019, when we have left the EU.
There are some ways you can secure profits, cut potential losses and maintain some control. These include currency hedging, which allows you to fix currency costs in a similar way to fixing your mortgage, giving you certainty on monthly outgoings.
2.Consider local sourcing
Trade deals may well impact how you source materials, with the likelihood of new import charges and increased bureaucracy. Sourcing products from within the UK could minimise the impact of changes like this. If this proves impossible, then working to strengthen business ties with existing suppliers could help you negotiate better terms in future.
3. Concentrate more efforts on the UK market
The UK has the second highest number of internet users in Europe. We’re also home to a huge number of online shoppers – 77% of UK internet users bought something online in 2015. This makes the UK one of the leading markets in Europe. See if you can bolster UK sales by revisiting products, pricing and marketing.
4. Work hard to nurture existing customers
Strengthening your brand, improving the quality of your products and services and making your proposition more compelling can go a long way to keeping existing customers, both from overseas and in the UK.
5. Look at markets beyond the EU
There are other markets to consider beyond the EU, although it will always be our closest. Former Commonwealth countries such as Australia and Canada have possible markets to consider. Also research different marketplaces, such as Alibaba, Rakuten and Amazon. They’re so well-established that they will always have high traffic, and can give you valuable insight into that region’s market.
6. Remain flexible and adaptable
While Brexit might close some doors, it may open others. Make sure your business is as lean and competitive as possible now, so you’re ready when the time comes. Examine your processes that handle taxes, customs, legalities and import duties and decide whether they are flexible enough to handle change. If not, work to make them more flexible.
7. Nothing has changed yet!
The clock may be ticking for Brexit, but right now the UK still enjoys EU membership. You still have time to best position your business, plan ahead and be as prepared as possible to minimise any negative outcomes to the changes, and take advantage of the positives.
