There’s been much discussion in the business world about the future of the UK’s small enterprises in post-Brexit Britain.
The good news is you’ve got time to prepare before any changes take effect. We've put together some small business suggestions, as well as some of the potential benefits, to help you create a two-year Brexit strategy.
Shake up your supply chain
The pound has dropped substantially (around 12%) since Brexit; you'll notice the price difference if your supply chain includes companies based abroad. It's worth shopping around and searching for local suppliers, instead – this will also safeguard against possible tariffs in the event of Britain leaving the single market.
Explore new markets
A weak pound might not be all bad news, however. It also offers an opportunity for exporters looking to broaden their markets – both within Europe and globally. As other currencies are stronger, British products and labour are slightly cheaper and consequently more attractive. Tourist spending in the UK has risen by 7% as a result.
Woo big businesses
Whatever form Brexit takes, inter-British trade has the potential to surge. It's possible that big businesses will hedge their bets and start scouting for suppliers at home over the next two years, so now's the time to ramp up your networking and work on your pitch.
Minimise risk
We're heading into unchartered waters, and it's time to make sure your vessel is secure:
- Protect existing contracts. Meet your clients face to face to discuss the future. Have a firm business plan in place so that they have no doubts about renewing contracts.
- Use FinTech to protect your money from volatile exchange rates. Financial technology can offer help for small businesses by making the tricky world of foreign exchange easier. Use these systems and apps to future-proof your transactions.
- Make sure your insurance is adequate. Small business insurance (such as professional indemnity insurance and public liability insurance) is always worth having regardless of what changes Brexit may bring.
Continue employing
If your company is ready to expand, Brexit doesn't have to stand in the way. Nothing much will change in the way of employment law or freedom of movement over the next two years, although beyond that is difficult to know for certain.
The economic fortunes of the retail sector have shown a few positive signs since the UK's vote to leave the European Union at the start of the summer.
After a 0.9% decline in retail sales in June, sales for non-food products jumped by 1.4% in July. This boost took economists by surprise, as they predicted sales would only increase by 0.2% in the month after the Brexit vote.
It raises an interesting question: could Brexit actually have a positive impact on retail, or is this growth in sales was caused by something else?
Weak pound: bigger tourism spend
The weak pound might have been bad news for Brits heading abroad, but for foreign holidaymakers coming to the UK it was a real boon. Evidence suggests that tourists were taking advantage of this and spending more money during their visits. The biggest increase in profits was reported by luxury retailers such as jewellers and department stores. Tax-free shopping by international visitors rose by 7% year-on-year during July, with strong growth from the USA and Asia. Spending by Japanese tourists was up by 96% compared to July 2015 and Indonesian tourists spent 88% more than they did last year.
It was, however, not just about tourists spending more money per capita – international visitors were arriving in London in higher numbers as well. According to research by Tourism Alliance, the number of foreign visitors increased by 18% year on year while Airbnb saw an increase of 24% on London accommodation bookings from June to July.
Great weather: higher footfall
Glorious summer weather saw most of the country swelter in a heatwave, with recorded temperatures higher than the Algarve in some parts of the country. The warm weather encouraged people to get out and about during their lunch breaks and at the weekends, meaning more opportunities to pop to the high street for a bit of shopping. The weather and the weaker pound may also have been instrumental in keeping Brits at home, with Tourism Alliance reporting 11% more British tourists in London since last year.
Heavy discounts: increased interest
Although the summer turned out to be glorious, The Industry reports that poor weather at the beginning of the season encouraged many retailers to bring their sales forward and offer deep discounts on summer lines. As little has happened yet to change the financial circumstances of most British households so far, it's likely that familiar factors such as a few good sales were at the bottom of the retail boost rather than the Brexit vote.
Be cautious
While a bit of optimism is welcome, it's important not to get too excited by the increase in consumer spending as it's unclear what's going to happen next. Low interest rates, rising wages and a high level of employment could continue to keep the economy running smoothly with no impact from Brexit, while increased tourist spending continues to benefit retailers.
On the other hand, the full impact of the vote won't be felt until Article 50 is triggered, which will begin the two-year process of the UK leaving the European Union. If import costs rise and businesses respond to uncertainty with redundancies, consumer spending could drop.
If you want to ensure your business is protected against all eventualities, why not get a business insurance quote here.
