Tax & admin Letitia Booty · 19 September 2017
Brexit planning hinges on small businesses being a collective
What sort of effects are we already seeing from Brexit on small businesses? The main effect is the weak pound, and clearly, were seeing that’s a good thing for some businesses and bad for others. If you are importing, the value of the pound is going to be reduced suddenly, you’re noticing a huge volatility in your margins. On the flip side, for those selling in Europe they’re enjoying a sudden surge because theyve become a lot cheaper. Overall, investment in SMEs is still pretty good. The latest figures around business mortgages are still looking pretty healthy. There’s no obvious dip there, which would be a warning sign. Small businesses are dealing with the obvious right now, which is the weaker pound. However, when you look at the overall picture, very few small business owners have really started to think about the wider issues. When you ask them if they have started any kind of planning around different trading agreements and tariffs that’s the bit almost everyone has ignored. It feels like it’s business as usual for most small business owners. Should SME owners be concerned about recruitment, post-Brexit? The SME clients that are most concerned are those which are heavily reliant on foreign workers, or the free market. You tend to find things like the leisure industry, restaurants, hotels, agriculature and pubs that have been reliant on foreign workers are quite concerned, because payroll is probably their single largest cost. I think those that are already in the UK now, are likely to be given permanent status going forward. However, potentially it’s going to become harder to recruit, because that supply could become severely limited. Businesses have got to start planning for it. Business owners need to start thinking about what extra money they need to put aside for wages, and how that will affect margins. There’s no magic bullet, a lot of those businesses reliant on European workers may get stung.
ABOUT THE EXPERTLetitia Booty
Letitia Booty is a special projects journalist for Business Advice. She has a BA in English Literature from the University of East Anglia, and since graduating she has written for a variety of trade titles. Most recently, she was a reporter at SME magazine.