The UK’s exit from the European Union (EU) has entered a critical stretch. With the 29 March deadline for Brexit fast approaching, the coming days and weeks will see key decisions made that will determine the next steps for the Brexit process.
Sage is staying close to its customers throughout this period to ensure we support them with advice, information and innovation during this uncertain time.
At Sage, in December we asked 1,242 small businesses for their views on what Brexit could mean for their companies and the state of play with their preparations.
The survey showed businesses are as split as the wider population. The Brexit poll results revealed 43% say at this point they would support an option that would result in an exit from the EU.
This includes 20% who wished to move ahead with the current withdrawal agreement and a transition period, 20% who said a no-deal exit was best for their business, with 2.5% backing some form of European Economic Area (EEA) membership.
Meanwhile, 41% felt remaining in the EU was best for their businesses, with 6% preferring a people’s vote.
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The need for certainty
Regardless of potential outcomes, uncertainty about which direction Brexit will take – a withdrawal agreement or no deal – appears to be the biggest issue for businesses right now.
Businesses viewed potentially prolonging the Brexit process with a second referendum or an extended transition period least favourably.
These findings draw similarities with Sage’s Brexit survey we ran with SMEs in August 2018, where 45% of respondents in the UK said Brexit was impacting business confidence, which in turn was impacting their business.
Sage’s survey reported just 26% said they were preparing for a no deal. 33% of respondents who selected a leave option are preparing their business for a no-deal Brexit, compared with less than 20% of those that favour remaining in the EU, or who would like a people’s vote/second referendum.
Larger businesses reportedly have preparations well under way, with stories appearing in the press daily describing their progress.
Sage is in regular contact with the UK government and other business groups to understand how we can best support businesses, including SMEs, in their Brexit readiness.
We know that many have questions about VAT treatment, specifically postponed accounting, social security and customs declarations in the event of a no deal. We will be in touch in the coming weeks as we hear more.
But what should a small or medium-sized business be doing right now, despite the fact that as mentioned it’s extremely difficult to prepare? Here are five suggestions you can put into action immediately.
1. Dedicate time to prepare
Many of us have a cognitive bias when it comes to planning for the future. We prefer to make a decision to make plans, and then put it off, rather than actually beginning the hard work of doing so.
If you’re juggling a number of business priorities, it can be all too easy to fall into this trap and put off starting your Brexit planning and preparations.
But this would be foolish. At the time of publishing, there’s fewer than 70 working days until the UK is set to leave the EU on 29 March. That’s 14 weeks, or just over two months. Put simply, you need to start the hard work of your Brexit preparedness right now.
Not only that but you should resign yourself to the fact that Brexit preparations are going to be time-consuming, and will potentially require substantial administrative resources and even money.
It’s unfortunate but, as with so many admin tasks, it’s just one more requirement of running a business today.
2. Reach out to people
Businesses don’t exist in isolation. Everybody your business relies upon, and every outside entity, will be impacted by Brexit in some fashion. Examples include your suppliers, customers and service providers.
If you haven’t already, start a Brexit dialogue with all these people and organisations. But be wary of making your enquiries too general.
An email such as “How’s your Brexit preparedness going?” will almost certainly get a response, but one saying “Can you provide a guarantee that you’ll still be able to fulfil our regular order on time after 29 March?” is likely to provoke more thought and should inspire clearer answers.
Such specific questions might feel direct and demanding but remember these are extraordinary times that call for extraordinary measures. Brexit represents substantial risk to the future of your business, and you need to get assurances.
Before contacting anybody, make a simple list of what your business relies upon from them, or what they rely upon from you. Use this as the basis for your opening contact.
This is one example where emails and other forms of written communication are likely to be more valuable than broaching the subject in conversation, because you might have to refer back to promises made in the event that difficulties arise following Brexit.
If your supplier has limited resources following Brexit, for example, then the fact you can prove a promise was made to you via email now might swing their decision your way compared with those businesses that received unverifiable verbal assurances.
Some businesses might take this preparedness to extremes by paying a lawyer to create a contract to create legal assurances, of course.
3. Rehearse and access risk
At present there are two likely Brexit outcomes:
- a negotiated agreement, in which case business will continue as normal in the short-term during the transition period
- a no-deal scenario, in which case all existing rules affecting trade with the EU will terminate on 29 March, and processes such as customs and VAT collection for imports/exports to EU countries will also radically change.
Even though you might not directly import or export goods or services, it’s likely you’ll rely upon goods or services that cross the EU border at some stage, or staff from EU countries.
You should start rehearsing for either of the two realistic eventualities mentioned above – although no-deal is perhaps the one that requires most attention.
What’s a rehearsal? Well, it’s ultimately a form of elementary risk analysis where you either sit down with your staff in a workshop-style environment, or set aside an hour or two of thinking time if you don’t have any employees.
Then you should go through all of your businesses processes. This will help you see how your business functions and tasks will be affected by the potential Brexit outcomes.
Don’t forget to consider any non-typical processes, such as the occasional huge order you might get if you’re a retailer, or dealing with an extraordinary customer requirement if you’re in the services industry.
4. Monitor information sources
There’s already a wealth of advice available about Brexit preparedness.
For example, the UK government has created a quiz-like website where you can input details about your business and then be directed to sources of information about how to prepare.
Many of these documents relate to no-deal Brexit, while others such as those relating to EU immigration outline proposals that have yet to pass through parliament.
The EU has also published a series of documents with advice for businesses although again, most of these relate to a no-deal scenario.
Some of the large financial institutions and services firms have produced Brexit analysis white papers, or even entire websites full of information and guidance.
Some larger businesses you utilise may have produced Brexit preparedness statements that you might be able to find on their websites. If you’re a member of any trade associations then you might also consult their recent list of publications.
And take a look at the Sage Brexit hub for advice on how we can support your business.
5. Look for the business potential
With Brexit, while there may be tough times ahead, there’s also a world of opportunities and potential.
Brexit will force upon everybody new processes and in doing so create new needs and requirements among customers or clients. How can your business provide them?
Regardless of whether you favour remain or leave, it’s worth maintaining a sanguine outlook for your business.
Ask yourself how many times your business has existed within a perfect environment. The answer will probably be “never”.
Yet your business still exists today, and it might even have thrived during those times when it seemed the world was conspiring against it.
Necessity is the mother of invention and often the barriers that we encounter can force evolution and start the creative juices flowing.
This is certainly the view of many within our Sage Business Experts panel. When asked about what Brexit means to them, most echo the same concerns felt by most businesses, especially with regards to uncertainty and lack of confidence.
However, many offer a positive, proactive note.
Jon Kandiah, of The Scale-Up Strategist, says: “Control what you can and be ready for the unexpected.”
He adds: “We’re ensuring we build strong customer relationships, working with organisations that understand Brexit will help to identify and take advantage of opportunities as they arise.”
Steve Johnson of Graphite Web Solutions suggests embracing customers or clients even if they can only see the downsides of Brexit: “Turn that on its head and talk positively about how great the Brexit opportunity is.
“It gives you the opportunity to concentrate on UK-based businesses but also allows you to review how you do business with the rest of Europe and pivot to meet the new requirements post-Brexit.
“Talking positively can make you stand out and can help make people want to work with you, especially if you solve a problem for them post-Brexit.”
Neil Cattermull of Frontier Technology highlights the freedom that Brexit could bring.
He says: “In a post-Brexit scenario, there will be opportunities of structuring business that would be attractive to investors/markets outside the UK that current businesses fall foul of with the overly burdensome EU dictates.”
Alina Cincan, of Inbox Translation, says: “Brexit has meant, for almost two years, putting our lives and businesses on hold before starting to think of solutions.
“You cannot plan for the unknown, and planning for every possible scenario is a way of going nuts. I am still very upset and disappointed, but life is not always a bed of roses, so the only way is onwards and upwards. That is, seeking new opportunities.”
Final thoughts on Brexit
Even the question of whether Brexit is going to arrive remains a hot topic for debate but, as one of our Sage Business Experts mentions above, we must avoid trying to consider every possible eventuality.
This can lead to chaotic thinking and a stalled or even frozen thought process. Instead, we must stick to the facts.
The first is that Brexit is happening on 29 March. The second is that we will have either a negotiated withdrawal of some kind, which will bring with it a withdrawal period of just under two years that will give businesses some breathing room to prepare, or we will have a no-deal Brexit.
Even the most ardent leave supporter is unlikely to welcome the additional administrative work preparing for Brexit involves but ultimately, businesses have no choice.
Starting sooner rather than later will reveal any issues early so you can deal with them.