Despite strong affirmations from various economists, government groups and leading corporate figures, the long-term effect that Brexit will have on UK businesses is still largely unknown.
Much has been said about how Brexit will impact smaller companies, and this is a critical focal point as we come ever closer to life outside the European Union. After all, SMEs are the lifeblood of the British economy, making up more than 99 per cent of our private sector business landscape.
Brexit will undoubtedly bring its fair share of challenges for businesses. However, while leaving the EU may not prove to be the best course of action, it hasn’t thus far been the disaster many predicted.
Look below the surface and it’s clear that Brexit is poised to create huge opportunities for small businesses, but this has largely been ignored by commentators on the topic so far.
Below we will explore just some of these opportunities.
Increased scope for enterprise and inward investment
Capital is the lifeblood of any business, and raising it tends to be an area SMEs struggle with, particularly in the early stages of the business journey. This is underpinned by recent research which found that almost a third (30 per cent) of UK SMEs find raising finance to be the biggest obstacle to setting up a new business. This difficulty is exacerbated by the attitudes banks have to these growing enterprises; in fact, more than half of UK SMEs describe banks as being unfriendly to businesses.
However, the pound’s deprecation in value in the wake of Brexit may provide a solution to this issue by encouraging a fresh wave of inward investment, thus creating other avenues for growth.
As a result of the weaker pound, private equity firms will be able to invest far more in UK industries, thus being able to safeguard local businesses and keep thousands of jobs where they should be – here in Britain. For example, we at Isher Capital recently announced plans to invest £20 million in acquiring contact centres across the country; a move which will create and secure approximately 1,500 jobs over the next phase of expansion.
Another positive aspect of economic downturn, which is not often spoken of, is the growth prospects it creates for entrepreneurs and enterprise. Savvy entrepreneurs and small business owners have thrived during periods of financial instability, largely due to being leaner and more flexible than more established organisations so they can quickly and effectively adapt to changes in the market.
While starting a new business in the current landscape requires a great deal of energy, commitment and courage, those who opt to do so have a tremendous opportunity before them in the form of the internet; a huge source of competitive advantage which has made it easier than ever before to reach a global customer base.
Expanding into international markets
The fluctuating exchange rates created by Brexit have made British goods and services more affordable for international buyers, which provides additional opportunities for businesses who export their goods and services abroad. In fact, one in four SMEs report having enjoyed improved returns from exporting post-Brexit. This is further backed up by research from PayPal, which revealed that SMEs saw international sales treble due to the post-Brexit currency slump.
With this in mind, our impending divorce from the EU could act as a motivator for UK SMEs to expand into the international markets, taking advantage of the undervalued pound while it is low to reach an entirely new customer base.
Smaller businesses can prepare for this opportunity by adapting their online presence to allow international customers to browse in their own language and pay in their own currency.
Much of the UK’s ability to export goods and services in the future will depend on the outcome of the ongoing Brexit negotiations, particularly our access to the single market.
Plugging the talent gap with skilled domestic workers
Employment may also be severely affected after we leave the EU, and experts predict that we are heading towards a talent crisis. While this is a little sensationalist, these reports are not entirely inaccurate; we’re likely to see a shortfall in skilled workers once we leave the EU. Nearly half (47 per cent) of the highly skilled EU citizens currently employed in the UK are considering leaving the country within the next five years, and we must take steps to mitigate the negative effects of this prospective exodus.
Taking a more positive view on this, it could also present an unexpected opportunity for local growth. A shortfall in our imported workforce allows UK business owners to focus on up-skilling and cross-skilling their current staff, filling any talent gaps with skilled workers from the UK.
In my experience, staff are far more likely to commit their future to a company that encourages them to grow and explore new avenues for progression. This means that investment in the existing workforce will not only help to plug the skills gap on a wider scale but can also be an invaluable way to improve employee retention rates.
Growth opportunities exist for businesses who work towards instilling a culture of lifelong learning throughout the company. This means both up-skilling staff to fill immediate knowledge gaps, as well as continuing to actively support their learning through a mixture of on-the-job training and external courses.
Exciting times are ahead
While Brexit has been labelled by many as a crisis, there are without doubt substantial growth opportunities available for businesses forward-thinking enough to prepare for it.
As it stands, we still don’t 100 per cent know what the full implications of a Brexit Britain will be, or what our business landscape will look like even a year or so from now. However, our SME business leaders should not be put off by this uncertainty.
Now is the time for our entrepreneurs and small business owners to take action, by planning and then making the most of the growth opportunities presented by this upcoming sea-change. The resilient, entrepreneurial spirit which has made our country great will be required now more than ever if we are to not just survive – but thrive – in a post Brexit Britain.