The fifth anniversary last month of the Brexit referendum and the majority vote to leave the EU was cause for celebration for some businesses while adding anxiety for others.
The existential threat posed by Covid-19 has, to a large extent, distracted from Brexit concerns. Now that we are starting to see a way out of the pandemic, the focus will once more be on how British businesses can work with international supply chains while attending to domestic and foreign customers.
Coping with increased costs
With numerous trade deals in the mix, the transition to new regulations and processes was always going to be a challenge. Compounding this issue is the increased cost of doing business. Our research showed that 76 percent of SMEs reported price increases by foreign suppliers, a third of whom stated increases of more than 10 percent. Shipping costs also showed a reported upsurge.
SMEs can effectively absorb these costs by keeping a close eye on the latest Brexit and currency news to make the most of favourable exchange rates and keeping cash flow expenses in check. The business landscape for SMEs has changed dramatically, and business development roadmaps should allow for new opportunities and commercial partners across Europe and even outside the EU.
For small business owners, knowledge is power, but to expect them to fend for themselves is asking too much. Fortunately, there is government and other expert support available, and it would be well worth their while to make use of it.
In conjunction with the government support fund and helpline, financial service providers can help SMEs save money and streamline costly processes. These experts remain well-versed in the latest developments in real-time and can assist SMEs with appropriate decision-making.
Additional challenges
Apart from the impact of trade and VAT compliance matters and restrictions on people mobility, Brexit will present further changes and milestones. Therefore, businesses will need careful management during the coming months to avoid further disruptions. It will be even more vital once the current grace periods run out and the level of international travel increases.
The level of trading complexity is another major challenge. Since the EU is not a single entity, each member country has its own set of regulations and restrictions, complicating exports to multiple markets within the union.
Nonetheless, we’ve seen customer sales picking up as businesses get to grips with what they need to provide when exporting to their key markets. For example, more companies are integrating customs duties and VAT at checkout to avoid unexpected charges to customers down the line.
Batting through Brexit
While Brexit has undeniably put some businesses under severe pressure ‘ with 37 percent of Britain’s SMEs saying they could be forced to close ‘ several respondents expressed optimism. Nearly half (47 percent) implied that the EU/UK trade agreement could or has already increased their sales.
The past year has presented great uncertainty to businesses of all sizes, but SMEs ‘ the flag bearers for Brand Britain ‘ have proven their resilience. Armed with the appropriate pricing knowledge and prudent cost control, they will be well-placed to bat through the impacts of Brexit successfully.
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