With the election of Boris Johnson as the new Prime Minister last month and the upcoming deadline of the 31st October, the news is once again filled with all things Brexit. In particular, the fact that a ‘no deal’ situation looks ever more possible.
The CBI has recently warned that small businesses will be especially vulnerable in the event of a no deal Brexit and that they are being hampered in their preparations by ‘unclear advice, times, cost and complexity’
We look at what the potential impacts and opportunities of Brexit could be for small businesses.
What impacts could Brexit have on small businesses?
Brexit will have far reaching consequences for small businesses and businesses of all sizes. None more so than if we do leave with no deal.
Including (but not limited to) some of the following:
Brexit preparations – Ahead of Brexit, the financial implications of preparing for a no deal situation (which may not occur as we are still in a state of uncertainty) could be significant, especially given the often-limited financial resources that small businesses are working with. Yet, there will most likely be consequences if as a small business, you do not put any plans in place for both Brexit eventualities
Movement of Goods – it is thought movement of goods will become more expensive and more difficult in the event of a no deal brexit. The addition of extra customs checks at the border could have significant impacts on the time and ease of moving goods between the UK and the EU. It is thought this could particularly impact those working with perishable goods.
Tariffs and Taxation – it is expected that additional tariffs may be placed on goods both imported and exported between the UK and EU. It could mean goods exported to the EU by UK businesses become more expensive and less appealing and likewise, it could mean that UK businesses who import goods from the EU or manufacturing purposes could see an increase in costs.
Labour – Access to people could also be impacted by Brexit. Some industries, including the haulage industry, have already issued warnings that EU workers employed in the UK are choosing to leave and go back to their home countries or other EU countries to work. Businesses could therefore find it more difficult to find sufficient labour to fill staffing vacancies.
Insurance – many companies are reportedly stockpiling goods ahead of Brexit over concerns about supply chain management. But as a small business, did you know that doing so could have implications for your insurance coverage? Many insurance policies will define a sum insured amount, so if you are considering increasing your stock holdings, do check your policy to ensure you stay within you insured limits. The last thing you want is to find yourself in a position of being underinsured should you need to claim.
Brexit opportunities for small businesses
Despite the potential for small businesses to be impacted by Brexit, there is also a feeling of optimism being reported amongst SME’s.
A recent study by Enterprise Nation found that amongst those questioned, 29% reported exporting to the EU and beyond, with 39% expecting to export over the next 6 months. A sign of being undeterred by Brexit.
Likewise, a study by OFX found that amongst small business exporters, Brexit wasn’t their greatest worry when it came to their business performance and for many surveyed, businesses reported that Brexit uncertainty had had “no effect” on their company’s international strategy.
Opportunities to increase trading internationally, to upskill home grown or currently employed workers, and to take advantage of increased inward investment if fluctuations in the value of the pound should occur as some suggest, are just some of the possible opportunities that small businesses may be able to embrace following Brexit. Due to their smaller size, some sources suggest SME’s may also find themselves more agile at adapting to any effects that Brexit does have on the UK.
What Brexit resources can you refer to as a small business?
It is clear Brexit is going to have a significant impact, positive and negative, whether we leave the EU with or without a deal. So, it would seem that the most important thing you can do as a small business is increase your awareness of all things Brexit and plan as best you can ahead of the 31st October.
The CBI have put together a comprehensive guide looking at the steps businesses, (as well as the UK and EU as a whole) can take to minimise the impact of a no deal Brexit. If your small business is looking at the possible impacts of Brexit currently, it really is worth a read.
Likewise the gov.uk website has a guide to preparing your business or organisation for Brexit which you can find here.
We understand that Brexit is a big issue on the agenda of all our customers businesses at this current time. That’s why we are keeping up to date with everything happening and constantly updating our Brexit implications page to offer practical information and advice to all of our customers. If you have any questions about your business insurance and how increasing your stock levels may impact your policy then don’t hesitate to get in touch with us.