Despite endless discussions by government groups, economists and corporate representatives over the last two years, the actual effect Brexit will have on UK businesses remains mostly unknown.
As we edge closer to leaving the EU in March 2019, the effect of Brexit on smaller companies is a main focal point. Small and medium enterprises (SMEs) are the backbone of the British economy and represent more than 99% of the private sector businesses in this country.
Challenges and opportunities
It’s likely that Brexit will bring challenges for UK business of all sizes. However, while leaving the EU was touted by many as a complete disaster, this is far from being certain. Looking beneath the headlines, it’s clear that Brexit could actually create massive opportunities for small businesses in the UK. Here are some of the doors Brexit could open for SMEs in the UK.
More scope for inward investment and enterprise
Raising capital is always a tricky area for SMEs, particularly in the setup stages. Recent research has shown that 30% of SMEs consider raising capital as the biggest obstacle for starting a new business. In addition, more than 50% describe banks as unhelpful when it comes to lending capital.
However, as the pound has fallen against other currencies after 2016’s Brexit vote, this could provide a solution due to an increase in inward investment and new avenues for growth. The weaker pound means private equity firms will invest more in UK industries, which will protect local businesses and keep jobs in Britain.
There could be more growth opportunities for savvy entrepreneurs and small business owners, as this sector traditionally thrives during periods of economic instability. This is because they are generally more flexible, leaner and more adaptable than already established and larger businesses.
Potential to expand into international markets
The constantly changing exchange rates in the wake of Brexit have made many British services and goods more affordable for overseas buyers. This provides more opportunities for SMEs that export abroad.
Around a quarter of SMEs report improved returns from exporting goods and services post-Brexit. Research by PayPal also backs this up, revealing that SMEs tripled international sales during the post-Brexit currency slump.
Therefore, leaving the EU could be seen as a motivation for SMEs to expand into foreign markets, as they take advantage of a low pound to reach new customers. Small businesses can adapt their online presence to allow browsing by international customers in their own language and with options to pay in their own currency.
Employing skilled domestic workers
Employment is likely to be greatly affected after Brexit, with experts predicting a talent crisis in the UK. Allowing for sensationalist headlines, it is a real concern. It’s likely that the UK will have far fewer skilled workers when we’ve left the EU.
It is said that almost half of highly skilled EU citizens who currently work in the UK are considering leaving the country over the next five years. If this shortfall isn’t plugged with skilled UK workers, there could be real problems.
Conversely, this could be looked at as a significant opportunity for domestic growth. Businesses should focus on upskilling current staff and filling any gaps in their talent pool with skilled workers from the UK.
Investing in the existing workforce could pay off for many companies, as employees are more likely to commit to a future with a company that helps them develop their careers and offers opportunities in the future. Putting in place a culture of lifelong learning goes a long way to retaining and attracting skilled staff.
The future could be exciting
Despite the headlines filled with doom and gloom, it’s clear that Brexit offers growth opportunities for small businesses that are savvy enough to prepare for it. We don’t yet know with any certainty the complete implications of Brexit Britain, or indeed what the business landscape will look like in a year’s time.
However, we don’t think that SME owners should be put off by this transitional period. By preparing now for the changes to come, and by making the most of the unexpected opportunities this huge change will bring to the country, SMEs could find themselves thriving when Britain leaves the EU.
For advice and assistance in setting up a small business, including funding, legalities, Intellectual Property and more, talk to the team at Turner Little. We’d be happy to help.
About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction/repair, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.