Report shows UK small businesses unconcerned about no-deal Brexit

New research shows that small businesses that deal with exports and international trade are not unduly concerned about the possibility of a no-deal Brexit.

With the UK’s new Prime Minister Boris Johnson increasingly taking a no-deal stance on Brexit, it’s interesting to note that small businesses are more concerned by the global economic slowdown and US trade protectionism.

Global economy more worrying than no-deal Brexit

More UK SMEs say they are concerned with the US President’s ‘America First’ stance on trade, than leaving the EU with no deal, according to the survey by OFX. Furthermore, the survey shows that the majority of UK SMEs say the uncertainty over Brexit has ‘no effect’ on their international strategy and future plans.

Businesses in the UK are still optimistic about engaging in global trade. Just under half (48%) report increased sales over the last 12 months, with the average increase standing at £45,000. At the same time, 44% are planning to either begin or increase international trade over the next 12 months. Almost half (47%) of the UK SMEs in the survey say they intend to increase sales to Western Europe in 2020.

US trade policies cause for concern

However, despite the optimism surrounding Brexit, the survey does show UK SMEs are concerned about the trade policies from the United States. These include a threat of possible tariffs covering billions of pounds worth of goods from across Europe. This has resulted in a shift towards Western Europe as the ideal export market, and away from the US.

There has also been much in the media about the potentially negative impact of a hard border being imposed between Ireland and Northern Ireland. Despite this, the survey shows that just under half of SMEs in Northern Ireland are focusing trade attention on the Republic of Ireland over the next 12 months.

During the last 12 months, 68% of SMEs in Northern Ireland upped their international sales by £52,440 (on average). These results make it the fastest growing region for international exports from SMEs.

James Turner, Managing Director of Turner Little Limited says: “UK SMEs should continue to prepare for the possibility of a no-deal Brexit. However, this shouldn’t be the overwhelming issue facing small business owners. Putting Brexit into perspective is the key to working through other challenges presented by the knock-on effect to the global economic situation. It is possible that a global recession could impact currency and trade. The results of this survey are encouraging in that UK SMEs are working on protecting their interests so that they can continue trade as usual.”

“As the date for Brexit approaches, I’m encouraged to see how much confidence UK SMEs are showing across the country. This is particularly true for those in Northern Ireland, where small and medium sized businesses are embracing trade across the border regardless of the uncertainty caused by Brexit.

“Small businesses are leading the way by showing that taking sensible measures and adopting the mantra ‘business as usual’, will help the UK economy weather the storm of uncertainty.”

 

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, 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.

Turner Little advises small businesses on no-deal Brexit preparations

As the UK goes through a Tory leadership contest, it remains unclear how this will affect Brexit. Currently, Theresa May is acting Prime Minister until her successor is appointed. This means that the date set to leave the EU remains the 31 October 2019.

However, as this was an extension to the original date of 29 March 2019, it’s not yet possible to know whether the UK will leave with no deal on that date, or whether the new Prime Minister will alter the country’s trajectory somehow.

Could there be a no-deal Brexit?

While opinions remain divided both in the business and political sectors, as to when and how the UK should leave the EU, it’s business as usual for UK SMEs. The Institute of Directors (IoD) is now urging small businesses to return to preparing for the country leaving with no deal.

There are signs that Theresa May’s successor will pull the UK out of the EU regardless of a deal being finalised. At the moment Boris Johnson is leading the pack, and that is his stance. Should this happen, businesses must be as prepared as possible for its repercussions.

The IoD maintains that businesses must wait no longer for the Government and EU to formalise a final deal, but to step up their own preparations. Their figures show that less than 50% of businesses have firm plans in place.

Less than a quarter of UK businesses are planning for no-deal

The group surveyed one thousand companies and found that between January and April the percentage of those that had activated specific plans rose by only 5% (from 18% to 23%). They also found that just 4% say they will be using the time until October to speed up preparations.

The interim director of the IoD Edwin Morgan, in an interview with the Guardian, says that he believes it’s clear there is a possibility of a no deal Brexit, and that there is no absolute reassurance for businesses that an agreement will be reached.”

Furthermore, the group feels there hasn’t been enough support, particularly for SMEs for planning ahead for a no-deal Brexit.

What could a no deal Brexit mean for your business?

James Turner, Managing Director of Turner Little Limited says: “Obviously, we just don’t know the entire scope of a no-deal Brexit, but there are factors worth considering for businesses preparing for this possibility. No-deal Brexit doesn’t have one solution, just as it wouldn’t have a single outcome.”

“We do know that the Government will want to preserve some state of status quo so that businesses can continue to contribute to the UK’s economy. Over time, it’s likely that the Government would introduce specific solutions that will end up being positive for the economy. However, this is not as likely in the short term, due to the ongoing nature of negotiations.”

“All of this makes it difficult to plan ahead. UK SMEs should remain flexible, and ready for as many eventualities as possible. It could be that some businesses could face disruption in the short term, but in the medium and longer term, there could be opportunities for many. No country has previously left a trading bloc in the same way, so we don’t have a precedent to work from. This is why it is causing uncertainty for many sectors.”

How does ‘no deal’ stand for the EU’s position?

The EU issued Notices to Stakeholders, that cover all kinds of sectors and topics. These include the end of any existing relationships with member countries, and who is participating in Brexit committees.

For its part, the UK Government also issued documents, which highlight a high number of immediate ramifications from a no-deal Brexit. Third party countries are also waiting to see how long-term trade between the EU and UK will be affected before they begin any separate negotiations with the leaving country.

Adds Mr Turner: “When we have clarity on the leaving position of the UK, other countries will begin to open negotiations for bespoke trading deals. The EU has issued some information on interim measures that it would put in place, but these are going to be focused on limiting any problems for the EU, rather than the UK.”

Prepare now for a no-deal Brexit

While some, such as the IoD, are clear that a no-deal is the worst of the options available for the UK, others see it as a potentially positive move in the long-term. Either way, the IoD’s advice to small businesses in the UK is to begin preparations now.

Mr Turner says: “There is no doubt that preparing for Brexit in as many ways as possible is sound advice for small and medium sized businesses in the UK. The aim must be to minimise disruption, particularly in terms of exporting goods. Planning for manpower is also key, as it’s not yet clear the rights European citizens living in the UK will have after Brexit.”

“It’s a difficult and uncertain time for UK business in many ways, however, the frontrunner for Conservative leadership, and therefore as Prime Minister, believes that taking the UK out by 31 October 2019 is vital for public confidence in the Government. At the moment it’s a case of preparing for either eventuality, and carrying on as usual as much as possible.”

 

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, 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.

Barclays launches fund to help small businesses through Brexit

A new Brexit date of 12 April 2019 is the Government’s current target to get Parliament to agree to the Prime Minister’s deal. It has now been voted down three times, and a series of non-binding indicative votes have been on the table over the last week.

The votes of 1 April appeared to show that MPs are still divided over the best way for the UK to leave the European Union (EU). Whatever happens, and this could feasibly include a General Election, a People’s Vote, a customs union agreement or a no-deal Brexit, the small business sector must look ahead.

How a new fund will help small businesses through Brexit

To help the increasingly vital SME sector in the UK navigate the challenges brought by Brexit, Barclays has announced a new fund. It offers overdrafts, mortgages and loans to UK SMEs, as well as growth funding and cash flow.

Worth £14.7 billion, the Barclays Brexit fund is designed specifically to help small and medium sized businesses negotiate Brexit and plan for a future outside of the EU.

The fund will offer:

  1. Commercial mortgages, overdrafts and business loans up to a quarter of a million pounds working capital.
  2. Loans for innovate start-ups and established companies seeking capital, environmental investment and growth funding.
  3. Cashflow funding for investment in management buy-outs, growth and acquisitions.

The fund takes advantage of the Enterprise Guarantee Programme. This is backed by the Government and is designed to encourage lending to small businesses by offering guarantees from the British Business Bank. It will be available to small and medium sized businesses that have a turnover worth up to £25 million.

And it’s not the only thing Barclays is implementing to deal with specific challenges caused by Brexit. The bank is running more than 100 SME seminars and clinics about Brexit across the UK. They will help businesses plan for managing their cashflow and working capital, how they will manage potentially restricted access to workers, supply chain management and exporting services and goods overseas.

Businesses divided on Brexit

Just as MPs are split on the best way to deliver Brexit, research shows that the business world is also somewhat divided. A survey from the Institute of Directors shows that almost two-thirds of small businesses would like to see a Brexit deal that allows the UK to be closely linked with the single market.

Its research finds that 58% want the UK to stay aligned in goods, and 60% in services. A similar number of small business owners (56%) say that they want a Brexit deal that makes sure the UK can align tariffs with the EU’s. The research targeted 1,400 IOD members between 14 and 21 March 2019 and could well have changed since the votes by MPs on since then.

While minds are changing all the time as events develop, businesses remain split on the length any potential extension period should last. Half say that there should be a short extension of no more than three months, while 40% say they want at least nine months.

James Turner, Managing Director of Turner Little Limited, says: “There is no doubt that MPs are currently dealing with important and difficult decisions. While the small business sector doesn’t have a completely unanimous view of the best course of action, it’s important that we all accept the risks and opportunities inherent in every course of action.

“Brexit presents the country with a unique, unprecedented opportunity for real, lasting change. It’s the small and medium sized business sector that will do the most to shape the change. This includes entrepreneurs, start-up owners, Fintech disruptors, builders, farmers, manufacturers and many others.

“It’s encouraging to see moves from the Government and the big banks that offer tangible assistance to the small business sector as it navigates the choppy waters of transformation. The fund from Barclays recognises that SMEs form the backbone of the UK’s economy, and that they are integral to a stronger, united country outside of the EU.”

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, 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.

What small businesses can do to prepare for a no-deal Brexit

Many small businesses in the UK are already planning for Brexit. Whether it happens on 29 March as planned, or there is a delay on Article 50.

At the time of writing, the Government is renegotiating the deal put forward by the Prime Minister. The possibility of a ‘no-deal’ Brexit is on the table, as far as it’s possible to ascertain. And of all of the Brexit possibilities, a no-deal scenario is the most difficult to prepare for.

Small businesses should prepare for changes

In many ways, planning for Brexit is the same as making any other business decision. It’s about managing risk, and all small business owners are familiar with planning for the unknown.

While Brexit is a new scenario for small business owners to deal with, there is no reason why steps can’t be taken to manage the risk. You should be aiming to make changes that have the largest possible benefit at the lowest possible cost. Recent research shows that 4% of 130 small businesses surveyed have started Brexit planning, and 80% have not yet made any changes.

‘Wait and see’ may well be enough for many small businesses, particularly those not involved with trading with countries within the EU, but proactive steps to manage potential risks is always a good idea.

Simple steps to take

Small business owners should consider Brexit in the same way they do any other time of uncertainty. It’s important to reassure suppliers, clients and employees that it’s business as usual for the most part. While there may be some changes and possible delays, all businesses in the UK are working to make sure they run as usual.

Assessing which business activities might be impacted by a no-deal Brexit is the next stage. Businesses should begin by understanding the different types of sales and purchases they make and learn the physical and legal flow of trade. A no deal Brexit is likely to include a customs border creating between the UK and other countries. Therefore, businesses that trade in goods will be most affected, and can expect changes to importing and exporting processes and a possible increase in VAT and customs duty.

Service businesses are likely to be more affected by access to the labour market and regulatory changes. It’s a good idea to plan future employee needs in order to work out how much freedom of movement could affect it.

Five actions small businesses can take now to prepare for a no-deal Brexit

  1. Learn the impact of likely regulatory changes

Will you still be able to sell your services and goods in the EU and vice versa? If not, find out Government advice on what you can do about it. It’s possible that an EU presence will be needed to satisfy regulatory requirements.

  1. Think about incorporating an EU company

This is easier and cheaper than you might think. Ireland will be the largest English-speaking country within the EU post-Brexit. Having a subsidiary or overseas office there or in another EU country will mean your business has a legal presence within the bloc. If you go down this route, consider how this will affect the infrastructure of your business.

  1. Open a bank account in the EU

In the short term, it could be useful to have a bank account within the EU. Opening it now will mean you’re ahead of a potential rush to do so after Brexit and could save hassle down the road.

  1. Apply for an importer reference number

As the UK is currently part of the Customs Union, businesses don’t need to ‘import’ goods. A no deal Brexit would change this, and the UK will need to import and export goods with the EU. This means your business will need an EORI (importer reference) number.

  1. Check workforce needs against your business plan

If your business employs lots of EU workers and you’re expecting numbers to drop, how will you deal with the deficit? Consider apprenticeship schemes and how you will source employees.

James Turner, Managing Director of Turner Little Limited says: “The key for small businesses in preparing for a no-deal Brexit is to remain calm, take a ‘business as usual’ approach, but ensure sensible steps are taken to mitigate potential problems. A no-deal Brexit is difficult to prepare for, but while we wait for clarity from the Government, it is important to start preparing now. For those UK based companies trading with the EU, either selling there or sourcing product from there, the suggestion of incorporating an Irish company is both sensible and relatively inexpensive.

The leave date of 29 March 2019 is fast approaching, and while there may be a possibility that Article 50 will be extended, we just don’t know. In the meantime, making adequate plans for importing and exporting and ensuring workforce numbers can be retained remain the most important steps for small businesses. Those companies that don’t rely on importing from or exporting to the EU may find that the impact is negligible, but for those that do, following this advice could make the transition out of the Customs Union easier. Brexit should be seen as an opportunity for small businesses in the UK, as we stand at the cusp of a new era for the country.”

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, 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.

What small businesses will thrive after Brexit  

According to media reports, the UK Government is still trying to thrash out a deal for leaving the EU in 2019. While some accuse coverage of scaremongering, others are concerned about the increasing likelihood of a ‘no deal’ Brexit and what that could mean for the economy.

Whether the UK leaves with a deal or not, it seems that things will change for businesses and people investing in certain asset classes. For example, it’s likely that financial services businesses that rely on easy access to the European market will suffer. However, there will be winners too. Specifically, the opportunities presented by Brexit to small businesses.

SMEs could form the backbone of the economy post-Brexit, and the Government is certainly taking this stance. For those looking for financing, there are positive options such as the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). This is because we are witnessing a time in the market where businesses are looking for investors, and investors are seeking out opportunities, leading to a ‘sweet spot’

Investment opportunities

Small and growing businesses offer investors the kind of opportunities that will continue to appeal after Brexit. These are the businesses that will flourish when the UK has left the EU, for various reasons.

The first is that they often operate in niche areas, specialising in specific sectors or services. This gives a measure of protection against any Brexit fallout, as they will still have that niche afterwards. Small businesses are also agile, flexible and able to adapt quickly to changes. This is one of their standout advantages over corporate giants.

Smaller businesses have an ability to pivot quickly, if necessary. Should circumstances demand a change in product or service, they are better placed to do so without enduring major adverse effects on their bottom line.

Strong Government support

The final reason for small businesses’ strong position as the UK heads towards Brexit, is the Government’s support. There is a renewed vigour in the support for entrepreneurship and innovation since the Referendum. Ministers are increasingly keen to encourage small businesses to continue to innovate and exploit niche opportunities, and to expand into larger markets.

In the current market climate, smaller firms that are potentially disruptive are increasingly attractive to investors. Entrepreneurship is at the heart of growth businesses, and the opportunities for financing are stronger than ever right now. The support available is not limited to funding, as many investment funds are providing mentoring which can be just as important as the funding itself.

James Turner, Managing Director of Turner Little Limited says: “These small, disruptive, niche businesses will form the economic backbone of the UK after Brexit. There is no doubt that the economy and market is experiencing a time of uncertainty as we wait to find out the Government’s final exit deal, but small businesses can mitigate the risks by securing funding and mentorship at the same time.

“SMEs must also retain their flexibility and ability to adapt to a potentially fast changing market. The reality is that no-one can yet forecast exactly what will happen to any business sector when the UK is out of the EU, but by focusing on being adaptable, agile and staying alert, small businesses can weather any potential storm.

“As we approach Brexit, investors should be turning more to these kinds of businesses, as they offer the best chances of thriving in the new, post-EU business landscape.”

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.

How prepared are small businesses for a potential ‘no deal’ Brexit?

The closer we get to the date specified for Brexit, which is scheduled for 29 March 2019, the more unclear it all appears. With the Conservative Party Conference underway now, and Prime Minister Theresa May apparently facing revolt from both ‘Remainers’ and ‘Brexiteers’ in her party, there has been much media speculation that the UK will be heading for a ‘no deal’ Brexit.

And while it’s also unclear how prepared anyone is for this scenario, according to research from the Federation of Small Businesses (FSB), few have started serious preparations.

No deal, no problem?

Just 14% (one in seven) small businesses has begun planning for the scenario of a no-deal Brexit, according to the research. The FSB’s report shows that while another 41% of small businesses think that a no deal Brexit will adversely impact their business, they haven’t yet started planning in real terms for this eventuality.

One in ten small businesses (10%) said that they think a no-deal Brexit will have a positive effect on their business. On the other side, nearly half of small businesses in the UK (48%) think that a no-deal style Brexit will negatively affect their ability to do business.

When considering small businesses that trade with the EU, this figure increases to 66%. For SMEs that employ people from the EU, 61% think no deal means problems ahead for their business.

Planned actions

As well as discovering the percentage of small businesses who are concerned about the potential impact of a no-deal Brexit, the research also breaks down what they’re planning to do about it.

It shows that just over a third of small businesses (35%) are planning to postpone major innovations, research and development and businesses decisions. Just over a fifth (21%) of small businesses likely to be affected by a no deal Brexit will be cutting expenditure and staff between now and the time the UK leaves the EU.

Michael Watkinson, FSB Development Manager for Nottinghamshire and Derbyshire, believes the findings show that small businesses are not prepared for the potential chaos that could arise from a no deal Brexit. He said: “Looking at this research, it’s obvious that our small firms are not prepared or ready for a chaotic no deal Brexit and the impact that it will have on their businesses.”

The Government appears to confirm that a no deal Brexit is likely, with Dominic Raab, Secretary of State for Exiting the European Union, saying today (1 October) that the UK could be “left with no choice but a no-deal Brexit if the EU tries to lock us in to a customs union”.

Government support

James Turner, Managing Director of Turner Little Limited said: “Small businesses that sell products to the EU, rely on employees from the EU or buy products from the EU are understandably concerned at how a no deal Brexit could affect them. It’s clear from research like this that many feel they are in the dark about what to expect and how they should prepare for it.

“It’s particularly concerning that small businesses are electing to delay business decisions, stopping investment and, perhaps most problematically, cutting staff. Small businesses form the very backbone of the UK’s economy and the Government must listen to their concerns as we head towards Brexit.

“With so much unclear it’s not surprising that SMEs haven’t started preparing for Brexit, as no one knows what to prepare for. In the ideal scenario at this stage, the Government would talk to and work directly with the small business sector in the UK to make sure that they are properly supported if a no deal Brexit continues to become the most likely scenario.

“We only have about six months until exit day, so it’s very much a race against time to avoid a situation where the UK will crash out of the EU in a way that will damage small businesses. It will be interesting to see what arises from the Conservative Party Conference as this is a key time for the Prime Minister’s current plan.”

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.

Turner Little