The uncertainty around the UK’s future relationship with the EU drags on, with the departure date, what form of deal or no deal will be secured and whether Brexit will happen at all no clearer than it was six months ago.
As a result, small businesses remain none the wiser around what it will mean for their future, including the viability of their supply chain, growth opportunities and general economic prosperity.
So, in these strange times, how are small businesses dealing with the Brexit era?
The Federation of Small Businesses (FSB) provides a good barometer of small-business sentiment in its quarterly small-business index. The most recent index found that the number of small businesses reporting falling revenue and putting recruitment on hold has reached record levels.
More than a third of the 1,100 businesses reported falling revenues in the first quarter of the year – an all-time high – with export expectations for the next three months also at their lowest point in the nine-year history of the index. Meanwhile, 90 per cent of firms said they have paused recruitment.
Following talks between Prime Minister Theresa May and Labour leader Jeremy Corbyn aimed at breaking the Brexit deadlock,
FSB national chairman Mike Cherry, said: “Small firms are fed up of waiting for politicians to act and are desperate for the uncertainty to come to an end.”
The FSB has previously called for the government to hand out Brexit vouchers for businesses to access advice, equipment and upskilling as trade arrangements change.
The organisation has also pointed out that small businesses have enough challenges to deal with, including the requirements of the Making Tax Digital programme, the continuing late payments crisis and the knock-on effects of major manufacturers, such as Honda, leaving the UK.
Other potential implications for small businesses if the UK leaves on the terms set out by the withdrawal agreement negotiated by the government include a potential reduction of the threshold for small-business VAT exemption, forcing hundreds of thousands of traders to add VAT to their products and services.
Brexit isn’t helping stress levels among UK small-business owners either, with 11 per cent of the 500 SME owners recently saying they feel vulnerable to economic conditions.
But it’s not all doom and gloom for small businesses: Investment firm BGF revealed that a ‘high potential’ group of more than 13,000 SMEs in the UK has experienced combined revenue growth of £44 billion over the last three years, with 65 per cent saying they’re actively hiring.
“Revenue growth like this, generated in such an unpredictable landscape, is a significant indicator of activity, productivity and progress”, said BGF CEO Stephen Welton.
Barclaycard found that three-quarters of Britain’s SMEs are confident about their growth prospects, while Hitachi Capital Business found that 68 per cent of small-business owners have plans to grow their business over the next three months, with 59 per cent of those who fear they will struggle to survive in an uncertain year working on positive plans to turn their business around.
Among the plans being made by UK SMEs are plans by manufacturers to move their supplier base out of the EU and back to the UK and to invest precious cash reserves in stockpiling raw materials.
While there is some positivity, a significant proportion of small-business owners who voted for the UK to leave the EU in the 2016 referendum have changed their minds, with 34 per cent saying they would vote for the country to remain if given the option to vote again.
Whatever the political views of small-business owners, the current climate is forcing small businesses to take steps to protect themselves from the potential impact of Brexit. For some, their survival will be at stake, while others will diversify and look at different ways of operating to successfully navigate their way through.