How is Brexit Set to Affect Small Businesses?
The announcement of the Brexit results back in June of 2016, left us with all sorts of questions. What does this mean for the United Kingdom? How will things change? As UK citizens, would we still be able to move elsewhere in the EU? Now almost three years after the referendum, progress has been made and the reality of us leaving the European Union is beginning to catch up with us quite quickly. Despite the fact that the UK will no longer be part of the European Union as of next month, there are still lots of worries. There are a number of ways in which Brexit is going to have an impact on us here in the UK, and one category that may suffer more than others, are small businesses.
There’s still a lot of uncertainty around how things are going to differ for small businesses after Brexit, and so we wanted to clear a few of these things up for you and explain what will change and how we can find a way around some of the problems.
Additional VAT costs
A lot of small businesses sell products and goods that may be originally sourced from the EU. This means that once Brexit becomes fully into motion and we have left the European Union, all products that we buy from there will be subject to an additional duty tax and VAT payment upfront. Needless to say, this will make things significantly more difficult for owners and may leave them looking for an alternative solution.
As a small business owner, you will have to take these things into consideration and weigh up how it is going to affect the profits and financial outgoings of the business. Following this, you may need to conduct research on suppliers in the UK that still provide the same product and quality of service, but without the additional costs and hassle. Trading and importing from outside of the EU is going to change and become a lot more difficult and costly. It is up to small business owners to seek other arrangements or settle with the additional payments and impact to the company’s overall turnover.
Difficulty expanding into areas outside of the EU
If you own a franchise, it is possible that you may want to expand outside of the UK, or furthermore, you could be a small business owner looking to partner with somebody in another location. For example, you may want to open and introduce a sector of the business to somewhere like Spain, but with Brexit comes complications between EU and non-EU countries. These issues are similar to what we have mentioned above; trading and importing could prove quite tricky and may result in you having to use different suppliers to make this work.
Due to most of the raw materials and goods that we so heavily rely on, being sourced from the EU, this is going to result in a rise in cost after we leave. Right now, we trade with these countries being part of the EU ourselves, however come our exit in March, we will no longer be able to do this, meaning that the cost of these materials and goods being sold to non-EU residents, is going to be higher.
Furthermore, even shortly after the Brexit referendum result was announced, the value of the British pound took a dramatic decline. This means that with the pound being at a lower level now than it has been in many years, we do not get as much value for our money. The combination of this, along with the rise in costs, is going to make the outgoings of small businesses rise, meaning a potential decrease in profits.
If you would like any advice on your business’ digital needs or are interested in how you can help it grow with web marketing, simply get in touch with us via our contact page and we will be more than happy to help.