Two key issues small businesses need to consider post-Brexit

There is a tinge of doom hanging in the air when it comes to UK businesses and Brexit. Despite Boris Johnson’s happy-go-lucky optimism, industry remains largely on the pessimistic side of the spectrum. The prospect of a no-deal to many businesses across a broad range of sectors, from agriculture and manufacturing to tech, is hugely concerning. 

The question is how much of Johnson’s Churchillian self-promoting heroism around Brexit is actually true? Will UK business actually ride the wave if we crash out of the EU on the 31st October? Johnson seems to think Britain is capable of anything. But are we really ready to trade on World Trade Organisation (WTO) rules and leave the EU with our noses in the air? 

The full outcome of leaving the EU, whether we reach a deal with them or not, is yet to be seen. All businesses can do is try to prepare – probably it would appear for the worst.

In the main, big business has largely remained steadfast in their view that Brexit will threaten future investment in the UK. However, the sentiment of small-business owners is rather more mixed.

Not all business owners are pessimistic about the Brexit outcome and many actually voted Leave. 

Eurosceptic SME leaders, speaking in a YouGov poll taken prior to the referendum, said:

“I think the original economic purpose of the union has been subsumed by a political agenda which I don’t agree with. I think predictions of economic disaster if we leave are just scaremongering.”

Another SME leader said, “The European Union has created some huge obstacles to small business, such as clumsy regulations for sellers of electrical equipment such as myself (and no clear ideas of how to comply with the regulations). Free movement of people across borders is also now out of hand.”

Mike Knivett, MD and co-Founder of Artemis Marketing is optimistic about the future, saying “Of course some businesses will lose as a result of us leaving the EU, but we are not living in an EU bubble. Competition in the digital age is a global phenomenon. This has been the case for years. Weak businesses will go to the wall whether we leave the EU or not.

“There will no doubt be fall-out, but new UK companies will form as a direct result of Brexit. We are a forward-thinking market economy. There are always opportunities. 

“Our business is all about getting SMEs noticed online. Given that the UK economy is largely made up of SMEs, we remain optimistic about building working relationships across Britain in the future. Any company that innovates will survive Brexit. Being an optimistic pragmatist, I am sure of it.”

Whichever side of the fence you are on when it comes to leaving the EU, businesses need to prepare. Here are two key areas that all small business leaders need to consider.


For businesses reliant on EU workers (agriculture, hospitality and healthcare, amongst others), there could be a period of staff shortages as a direct result of our exit from the EU. In fact, this is looking ever more likely as the end of free movement is currently strongly advocated by the new Home Secretary, Priti Patel.

Tej Parikh, chief economist at the Institute of Directors, said to the Financial Times, “Slamming the door shut as the UK leaves the EU will only exacerbate skill shortages.”

Mike Cherry, national chairman of the Federation of Small Businesses (FSB), also warns of the challenges small business face when it comes to employment: “Brexit-related uncertainty is causing a serious skills shortage right across the country. If we crash out of the EU, those shortages will become more acute.”

So, what can small businesses do about the employment crisis? Attracting talent and looking at staff retention is key. Businesses with a great culture and a good reputation for looking after their people will be the ones who hang on to good staff and find it easier to recruit. 

A report by the Chartered Institute of Personnel and Development (CIPD) on Tackling post-Brexit labour and skills shortagessays “Businesses need to focus on investment in their talent to ensure they build inclusive, engaged, skilled workforces.” Upskilling within businesses is key.

Remote working and flexible working hours are other areas that may attract more people into the workforce. Students and parents returning to the workforce should be accommodated through flexible working patterns. 

Travelodge is one such company in the UK that is eyeing parents as the answer to post-Brexit staffing gaps. They are pushing ahead with new hotel openings with a view to recruiting parents with hours to fit around the school run.

Remote work is another possible answer to the Brexit recruitment crisis. Tech companies especially should be tapping into the global talent pool by hiring remote teams.

Cross-border trade and regulatory compliance

Bearing in mind that many UK businesses rely heavily on exports to the EU (the UK exports at a faster rate than it imports), trade is a key area which is likely to bring disruption to small businesses in the UK.

With a no-deal Brexit (an increasingly likely option), the UK will revert to WTO rules when they exit the EU (unless another agreement is reached). 

This means Britain will no longer be bound by EU rules and UK businesses will be exposed to the EU’s trade tariffs and custom-handling fees. How much this costs UK businesses will depend on the trading model adopted.

It is likely though that tariffs and custom duties will apply after Brexit, which will make EU trade more expensive.

Product compliance may also become problematic in future trade arrangements with the EU. It is entirely possible, if there is a no-deal Brexit, that UK assessment and certification arrangements may cease to be recognised in the EU.

At the moment cross border trade with the EU operates with a complex set of regulations including quality control, health and safety, and other harmonised European-wide standards. The current rules in Britain are likely to be replaced with new ones when the UK exits the EU, but this could cause confusion for businesses in the future if food and product standards aren’t closely aligned with those of the EU.

What can UK businesses do to prepare? Businesses who are trading with the EU will need to get a UK Economic Operator Registration Identification number (EORI). Business owners must decide whether they will handle customs declarations in house or through a third party and should keep updated on eligibility for simplified customs procedures, tariffs that will apply and any duty relief schemes.

The British Chambers of Commerce advise that all business trading with the EU should train a member of staff in customs and export – this is valuable advice. The Government have produced a partnership pack explaining how UK businesses can prepare for changes at the UK border after a no-deal Brexit. Businesses who do nothing will suffer.

The most significant changes will include:

  • Customs, trade tariffs and VAT
  • Document requirements
  • Vehicle standards
  • Controlled products

There is also the complex issue of the Irish border with Northern Ireland. As well as the obvious concerns around what Brexit could mean for Irish peace and honouring the Good Friday agreement, there are practical issues for businesses.

Agenda NI, Northern Ireland’s leading business and public policy magazine, warns that “More onerous customs procedures, whether measured as number of documents, length of time or monetary cost, have been shown to have a negative effect on exporting and more specifically to prevent smaller firms from becoming exporters.” This could also apply to any business in the UK.

It is impossible to predict the outcome of Brexit for the UK’s small businesses, but preparation for change is essential. As for the rest, we will just have to wait and see.

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