Small business owners all over the country continue to worry about Brexit. Businesses in the manufacturing sector did okay for a few months while some companies with funds chose to stockpile as much as they could ahead of Brexit. However, now there’s so much uncertainty; no one really knows what will happen to the small business economy when the UK eventually leaves the EU.
In this blog article we have some Brexit-proof tips to safeguard your business so keep reading. 🙂
So what’s at stake for anyone in business in UK post Brexit?
Well, there are jobs – lots and lots of jobs. If Brexit makes life too difficult for small businesses, then many people could be out of work. We can’t predict the future, but we do know there are already some significant changes – particularly with regards to VAT on imported EU products.
Small businesses will have to pay VAT upfront on all imported goods from the EU after Brexit. Alongside this, there will be additional duty tax, plus the cost of the product itself – which could also rise. As you can imagine, this puts an increased strain on your business finances, making it harder to make the same profits as before.
New growth forecasts indicate a lack of investment in UK businesses, which could also spell trouble for small companies. The growth expectations have been revised downwards for years 2020 and 2021.
Its growth expectations for the UK in 2019 is now 1.3%, from 1.2%. But it has downgraded its growth forecast for 2020 to 1.0%, from 1.3%, and to 1.2%, from 1.4%, in 2021.
So, what can you do to safeguard your small business against the potential risks that Brexit creates?
Look At Different Supply Chains
A lot of small businesses have suppliers in EU countries, which means you’ll have to adhere to the new VAT rules in the future. This can cause cash flow problems, so you should protect against this by looking at different supply chains.
Where possible, opt for suppliers inside the UK. Not only will this avoid the VAT on imported products, but you could potentially save money by not having to transfer your payments into Euros, then back into Pounds, and so on.
Re-Assess Your Target Markets
If a lot of your sales go through the EU, then you might get hit with a decline in sales following Brexit. To safeguard this, it’s a smart idea to re-assess your target markets.
Think about who will be interested in what you offer, then try and focus on this target market within the UK. Along with this, think about international markets as well – you can still trade outside of the EU without complications.
Diversify your market away from the EU, so you’re not as severely affected when Brexit comes.
Think on the bright side; Brexit might shut down some avenues in the EU, but it could help conjure up new trade deals between the UK and other international countries.
Stay updated with any possible trade deals so you know of opportunities for your small business to take advantage of.
Make Sure You Have A Good Cash Flow
Brexit uncertainty can cause your company to slow down just a little bit. As such, it’s crucial to have a good cash flow in your business.
If you still have a good flow of money coming in, then you can prevent instances where a slow period after Brexit leaves you with lots of expenses and no money to handle them.
The best way to improve cash flow is by ensuring your clients pay you on time.
Set up a system where you get paid for jobs as soon as you do them. Also, ensure any late payments are all chased up now, so you’ve got a good flow of cash.
In summary, we can’t know for sure how things will be when the UK leaves the EU.
Early signs indicate issues for small businesses – especially with regards to VAT on imported EU products and general business investment. It’s vital you safeguard against Brexit, so use the advice above to protect your small business.