How can small businesses prepare for Brexit?

Unfortunately one of the most significant problems regarding Brexit is the uncertainty. It was in 1973 that the UK, along with Denmark and Ireland, joined the European Economic Community - as the EU then was. This was a time when the political, cultural and economic landscape was vastly different. As such life outside of the EU is a distant memory and, for some, an entirely new environment to traverse. For small businesses still in their infancy this is most certainly the case. Many, like the CEO and Founder of British Leather brand Maxwell-Scott William Forshaw, have been questioning from the time of the referendum result how to protect their businesses and employees. The key? Forward-thinking. Mats Persson, Brexit Strategy lead at EY, advises employing the minimal steps needed to mitigate against business critical impacts of changes following Brexit. For Forshaw, this first meant developing relationships with European partners. Maxwell-Scott produces in Italy, before shipping stock back to the UK to sell internationally online. Currently, with trade agreements and possible demarcation of the UK so unclear, the company has sought to increase warehouse inventory in key European markets in order to avoid possible future export and import tariffs. Understandably then, it is vital for similar small business to establish close relationships with those remaining within the EU to ensure that trade links remain open throughout. This small precautionary step could, after all, help prevent any loss in revenue when the new systems are put in place. The aim then for many small businesses appears to be to do their very best to seamlessly transition at the point of exit without drastically changing the status quo beforehand. Furthermore, crucially to further mitigate against any trade issues, it is important to increase awareness about trading across a customs border. With the UK and EU lastly having a proper customs border in the early 1970s, many small businesses do not have expertise in this field. Therefore, many are now having to learn practical operational tasks such as accurate classification of goods and filling out customs declaration forms. It is small steps such as these that Persson is advocating. Merely educational, the knowledge may be vital to a company especially in the case of a No Deal Brexit as increased paperwork would otherwise cause inefficiencies. Over time a lack of efficiency limits output and thus, the potential for profitable growth. Therefore, for small businesses in particular, efficiency is a powerful means of evaluating the performance of firms. A customs border is a distinct possibility and preparing for one now is a simple solution to future difficulties. Equally important for small businesses is to assure customers. Customers are central to small businesses which naturally build relationships with those they work with. Ergo, open discussions are vital. Though there may still be little direction from the government, small companies are finding it useful to share their plans to ease the minds of consumers. Since the referendum and adopting this new strategy, Maxwell-Scott sales have increased in Europe by 50% and, despite the threat of Brexit, they are still gaining new customers. Such a raise in sales is significant as, according to the Financial Times, the UK economy is approximately 1.5% smaller than it would have been without the Brexit vote (some statistics are as large as 2.5%), most heavily affecting small and medium-sized companies. Additionally, for small businesses with employees from the EU, forward-thinking in terms of retaining staff and continuing to attract talent from the continent is imperative. In regards to supporting current European staff members the advice follows that of learning how to deal with a customs border after all this time. It is essential for small businesses to become well-versed in the legal requirements of staff after the UK leaves the EU. After all, they constitute an important section of the labour force, as from October to December 2018 there were 2.27 million EU nationals working in the UK. The UK Government has set out an application process for settled status which fully opens for applications on 30th March 2019. Settled (or pre-settled if you do not have five years of continuous residence) status means that if you are an EU citizen you can continue living in the UK after 30 June 2021. For small businesses it is critical to protect and support European employees in this process as a strong, united employee base may be essential to traverse the already poignant potential effects of Brexit. Likewise small businesses will have to plan ahead to still attract talent from within the EU. According to the Business of Fashion: “London is a fashion capital because we have the best talent from all over the world — from the EU and beyond.” It is exactly the multi-national talent attracted to the UK which means that particularly small creative companies can thrive here. Unfortunately, at Maxwell-Scott, International Marketing Manager and EU national Julia Munder recognises the already pertinent effect of Brexit. She claims that since the referendum it is like a tap has been turned off. Consequently, it seems that small companies need to offer security to potential European employees. Once again, this means that preparation for Brexit centres around education - here understanding the possible options for workers with the possible end of free movement of labour. After all, talent is crucial to drive small businesses with new ideas and creative ventures. Innovation in general is key for small businesses to prepare for Brexit. Mark Brownridge, director general of the EIS Association, affirms that the benefit of being a SMEs is that they are nimble. Their small size is an advantage as it means that they can quickly adapt to the changing environment, employing new ideas in the process. Ultimately, in order to reach the position of a thriving small business, tenacity and drive have always been fundamental. Therefore, remaining confident and innovative in the face of adversity should allow small businesses to continue to push forward with their ventures. Regardless of what Brexit may mean in the end, this will enable small companies to practically and constructively approach the situation. In conclusion forward-thinking is vital for small businesses to prepare for Brexit. More specifically, this means planning small steps to best mitigate against the possible negative consequences. This can include building closer relationships and having open discussions with customers. Hopefully, such plans will limit the inherent uncertainty to Brexit. Though, it is also crucial to develop a greater understanding of the possibilities within the post-Brexit landscape. This relates to acquiring knowledge regarding how to trade across a customs border and how to support current EU national staff members. Likewise, the aim should be to establish a way to support future talent entering the workplace in order to continue to drive small businesses forward. Maintaining an innovative spirit has, after all, always been the way in which small companies are cultivated. This resilience, whatever the the political, cultural and economic landscape, should never be forgotten. By Holly Smith, who works as a content executive for British leather brand Maxwell-Scott, having recently graduated from the University of York with a History and Economics degree.

How can small businesses prepare for Brexit?

Check out our free weekly podcast

Read Next

A look at Mulberry’s financial struggles and future prospects

Five lessons from the demise of The Body Shop

How the Red Sea crisis could impact UK retail

WH Smith: new year – rebrand?

What went wrong with Wilko’s and who is next in 2024

A look at Mulberry’s financial struggles and future prospects

Five lessons from the demise of The Body Shop

How the Red Sea crisis could impact UK retail

WH Smith: new year – rebrand?

What went wrong with Wilko’s and who is next in 2024

Third spaces: The changing face of retail outlets

Today’s news in brief-21/11/24

Superdry warns of sales decline following stock exchange departure

Frasers calls on Boohoo to oust founder Kamani as row continues

Boohoo appoints new independent chair

Morrisons set to close Rathbones bakery, 400 jobs at risk

Check out our free weekly podcast

Read Next

A look at Mulberry’s financial struggles and future prospects

Five lessons from the demise of The Body Shop

How the Red Sea crisis could impact UK retail

WH Smith: new year – rebrand?

What went wrong with Wilko’s and who is next in 2024

Related Articles

Third spaces: The changing face of retail outlets

Today’s news in brief-21/11/24

Superdry warns of sales decline following stock exchange departure

Frasers calls on Boohoo to oust founder Kamani as row continues

Boohoo appoints new independent chair

Morrisons set to close Rathbones bakery, 400 jobs at risk