When it comes to the future of the UK economy, it can feel like everything is up in the air as the government continues to grapple with the issues that the referendum has created. The official Brexit date is now just a matter of months away on 29 March 2019 and an agreement being made between the UK and EU seems no closer to being made. With the decision affecting UK business, including SMEs, what does the outlook look like?
The deal struck as part of Brexit will impact on SMEs in plenty of ways, some are clear already while it’s not yet down the scope of the impact other will have. Even with the transition period, it’s difficult for SMEs to know how best to prepare, especially while the agreement between the UK and EU is still being worked on. But knowing which core areas you should be considering can help you steer your focus in the right direction.
1. Staff recruitment
Brexit will undoubtedly have an impact on staff recruitment, particularly for businesses that rely on European migrants to meet their employee needs. It’s unlikely to it’ll affect existing members of staff but it’s wise to start looking to the future, whether through hiring apprentices or providing training to ensure you have the necessary skills in-house.
2. Trade opportunities
When it comes to exporting, most SMEs do so with the EU. The trade agreement between the bloc and the UK is one of the most debated topics of Brexit and, as yet, we have no idea what the final agreement will look like. If you currently receive a lot of your business from the EU it’s a good idea to look at how different tariffs might affect your bottom line and consider exploring other international opportunities outside of Europe.
3. Capital investment
It’s clear that any EU funding that UK businesses may receive will be withdrawn. For some SMEs, it means the need to look for other sources of capital investment, while traditional lending may also decline as a knock-on effect. The solution here is to work with alternative lenders that specialise in SME finance, such as GIC Capital, to identify lines that you can rely on.
4. Weaker consumer confidence
If your business is affected by consumer confidence, expect it to be impacted by Brexit is some way. Whether it’ll be positive or negative is unclear and will remain uncertain while the government still works on the deal and it’s put into practice.
5. Supply chains logistics
Alongside the issue of exporting, you also need to think about your wider supply chain. A global economy has meant a competitive business world but it also means you’re likely to import or work with EU businesses along the way, even if you don’t export. It’s time to assess how your supply chain could be affected and plan out alternatives or back-up solutions.