Thursday November 1, 2018
The UK economy is in a state of flux at this moment in time, due to the approach of Brexit and the possibility of change and impacts on business. This has been highlighted in recent weeks by the announcement from major UK car manufacturers that the March deadline for Brexit will cause them to close operations for at least a month while they assess all implications.
Small businesses often rely on major local industrial or logistics businesses for trade and custom. So, the impact of any large company closing for just one month can be considerable for local economies. It’s important for all Staffordshire traders to remain up to speed with the Brexit impacts on the major employers in their area, in order to plan their own Brexit strategies successfully. Even local cafes, takeaways and electricians rely heavily on the cash flow within their local economy to supply customers for their goods and services. In this respect, Brexit is highly likely to cause significant impacts for most small businesses in Staffordshire.
Local Staffordshire businesses are sure to face a number of challenges at the time of Brexit and over future months and years, although this will depend on the nature of your business. Some likely impacts for Staffordshire business owners are discussed below.
Small to mid-sized companies (SMEs) are the very backbone of British industry, yet there has been very little focus upon potential Brexit impacts for small businesses in the UK. The UK has a total of 5.7mn SMEs amounting to over 99% of all companies in the private sector and creating 60% of total jobs. Since the year 2010, SMEs have created around 2mn jobs in the UK. How they respond to the challenges posed by Brexit will be critical for the ongoing success of the British economy. Some of the potential problems and challenges likely for Staffordshire SMEs are discussed below.
Naturally, one of the primary impacts faced by any local business will be felt in the arena of imports and exports. Of course, if you own a local plumber or hairdressing business you may well consider that Brexit impacts will be limited. However, any requirement to purchase supplies or equipment for your business could well involve goods imported from the EU. So, assessing the likelihood of any shortages of supplies is an essential aspect of Brexit business planning for local businesses of any kind.
The farming and horticultural communities in the UK rely heavily on seasonal labour sourced from within the EU and Staffordshire is no exception. If your farm or growing business requires seasonal workers, you need to put alternative measures in place for 2019. Although, it’s highly likely you’ve already noticed a reduction in numbers of available seasonal workers.
The same can be said for any small business in the Staffordshire area that has relied on EU workers over the past few years. This could include businesses in the hotels and hospitality sector or warehousing or logistics companies. It’s already been announced that Brexit will not affect the rights to remain for existing EU citizens living and working in the UK, so any worries on that score can now be allayed. In the future, though, the vast majority of any migration to the UK will only be for highly skilled workers with salaries at a certain level and EU citizens will not receive any preferential treatment. In the case of small Staffordshire tech or science companies looking for skilled employees from overseas, the UK visa requirements will need to be met in full.
Research has shown that most of the larger UK SMEs with ten or more employees view Brexit as a major challenge to ongoing business. This is generally because they are more likely to be involved in import and/or export. This is also the case for innovative and entrepreneurial companies within towns and city centres, as there are likely to be increased barriers to international trading. Many innovative business owners within the Staffordshire area may well be thinking about reductions in innovation and lower growth, as they could be unprepared to make the required capital investments to their business.
Worries within the hospitality sector about whether tourism from EU citizens is likely to be impacted by Brexit are likely to centre on exchange rates, and these cannot be quantified at this moment in time. EU citizens will still have the ability to travel to the UK for holidays, however, border restrictions and a slowdown in time taken for EU visitors to pass through Customs could also impact on their travel decisions. This may have a negative impact on Staffordshire’s traditional reliance upon the Potteries area and theme park Alton Towers for attracting holidaymakers, overseas visitors and local visitors. And, ultimately any negative impact of this nature will also be felt by local businesses in the surrounding areas.
Retailers already face a challenging environment in UK high streets, so any outlet that relies upon tourists or EU workers for income is likely to face problems from 2019. Planning for increasing local custom or expanding sales via the internet could be a potential solution. This applies to any sort of local trader in many ways. Buy-to-let landlords with reliance on casual, seasonal occupants of properties may also find there’s a reduced demand for their properties. In towns with high student populations, this is unlikely to prove problematic, however, where local economies rely primarily on the industrial sector this could cause issues.
Importance of inventory planning for Brexit cannot be stressed too many times
Brexit has the potential to impact on prices for a number of products, as already mentioned above with regard to import and export. So, inventory planning may be critical for any small business in any kind of sector.
Of course, Brexit will also offer opportunities to some canny local business owners. In areas where major industrial activities or logistics warehouses are situated it’s likely that employers will need to recruit workers from other areas of the UK. This could mean an increased demand for goods, accommodation or services within these localities. But, this is not a known factor at this moment in time. And, increased success and performance of the UK’s economy following exit from the EU, alongside higher national wage levels will obviously impact in a positive manner on most small businesses.
Any small Staffordshire business is well advised to keep a watchful eye on all local developments and news and make their ongoing trading plans for the future accordingly.