One in three micro SMEs (34%) say Brexit is bad for Christmas trading, while 6% say it is good, according to an AXA UK survey that suggests their main concern, if any, has to do with smaller consumer demand.
AXA UK is offering some advice for small businesses keen to avoid any potential supply chain disruption.
The survey
Almost 500 small businesses employing 0 to 12 people were polled as the UK prepares to leave the European Union, possibly on 31 October, with or without a deal.
Half the micro SMEs that bring in stock for Christmas plan to do so at the same time as last year but 22% will do it earlier. Two percent will do it later and 28% don’t know yet.
While the majority of SME owners (60%) expect Brexit to have no impact on their activity over the Christmas trading period, 18% expect it to have a negative impact and 5% to have a positive impact. In the short term, 21% expect smaller consumer demand, 11% delays for imported goods and 10% product shortages.
Those who prepare for potential economic consequences mainly do so by reducing their expenses and putting more savings aside.
The advice
However, SMEs can take other steps to stop a Halloween Brexit ruining their Christmas season.
Douglas Barnett, Director of Mid-Market and Customer Risk Management, explains how small businesses can prevent supply chain disruption.
Know your supplier (and your supplier’s supplier)
As an SME, you likely buy your goods from local wholesalers. But do you know who supplies them? You may want to ask them whether they expect any disruption, and if they have made provisions to bring in goods early or have set up any alternative arrangements. Looking now for alternative suppliers for stock your customers will expect would be time well spent.
Allow extra time or have a backup plan
If customs and excise carry out more checks, there might be backlogs at entry ports. In case your stock gets stuck on the dockside, you may want to allow for delays, or perhaps consider a back-up plan.
Get storage – and insure accordingly
If you bring in stock earlier, check you have the capacity to store it or find additional storage. If you use a different warehouse from your current one, or even your home, let your insurer know as they may want to inspect it. With a bigger stock in, update your sums insured to ensure the right level of cover.
Hire right
You may want to coordinate your staffing levels with your stock volumes and timings. In the hospitality and leisure sectors, you will probably find it more difficult to hire seasonal staff among non-UK nationals, faced with status uncertainties. This reduced availability might have repercussions in other sectors.
Buffer your cash flow
For many businesses, the Christmas season accounts for a large chunk of their annual income. If people spend less or if the buying peak is delayed, this will have an impact on your cash flow. You may want to buffer it.
The survey tables
498 owners of micro SMEs (0-12 employees) responded to this online survey, carried out by Taylor McKenzie between 9 and 16 August.
| This year’s Christmas preparation are | |
| The same as last year | 76.50% |
| Slightly different to last year | 19.30% |
| Very different to last year | 4.20% |
| SMEs are bringing in Christmas stock | |
| At the same time as last year | 19.90% |
| Earlier | 9.20% |
| Later | 1.00% |
| Don't know yet | 11.40% |
| Don;t buy stock | 58.40% |
| How SMEs expect Brexit to impact their business volumes (or not) over the Christmas period | |
| Positive impact (more business) | 5.20% |
| Negative impact (less business) | 17.70% |
| No impact | 59.60% |
| Don't know | 17.50% |
| In the short term, SME owners expect their business to experience these Brexit-linked issues | |
| Smaller consumer demand | 21.10% |
| More red tape | 15.10% |
| Delays for imported goods | 11.00% |
| Product shortages | 10.40% |
| Difficulties exporting | 6.20% |
| Difficulties hiring and retaining staff | 4.40% |
| Difficulties to borrow money | 4.00% |
| Difficulties to stockpile | 3.00% |
| None of the above | 59.60% |
| How SME owners are preparing for possible economic changes following Brexit | |
| Reducing own expenses | 27.90% |
| Putting more savings aside | 17.10% |
| Looking for employment opportunities | 12.20% |
| Preparing CV/browsing jobs | 8.40% |
| Taking less salary/dividend from the business | 8.40% |
| Putting investment plans on hold | 8.40% |
| Putting hiring plans on hold | 4.80% |
| Getting by with fewer staff | 3.20% |
| Taking on extra finance | 3.20% |
| Selling a property/shares/assets | 2.80% |
| Cashing in pension | 2.40% |
| Other | 1.20% |
| Not preparing | 55.00% |
| SME owners say Brexit is | |
| Good for their business | 10.40% |
| Bad for their business | 27.50% |
| Neutral | 49.00% |
| Don't know | 13.10% |
| Expected impact of Brexit on funding opportunities for SMEs | |
| More funding opportunities | 6.20% |
| Fewer funding opportunities | 33.90% |
| The same amount of funding opportunities | 24.50% |
| Don't know | 35.30% |
| How SME owners voted in the 2016 EU referendum | How they would vote in a new referendum | |
| Leave | 42.60% | 36.90% |
| Remain | 43.20% | 49.00% |
| Didn't vote / Wouldn't vote | 11.20% | 6.00% |
| Unsure | n/a | 6.60% |
| Would rather not say | 3.00% | 1.40% |