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The flip-flopping sentiment on Brexit: Where do small businesses stand now?

The EU referendum result sparked anguish at the time among small company owners, but with the UK's exit less than a year away, are they starting to come around to Brexit?

The flip-flopping sentiment on Brexit: Where do small businesses stand now?

Since the decision in favour of leaving the EU was revealed in 2016, the sentiment on Brexit among small business owners on how the result will impact them has truly been a mixed bag.

 

The day after the referendum vote on June 25th I spoke to a range of small company owners, and concern was palpable. Business owners’ worries ranged from the fluctuating value of the pound hitting import costs, concerns that UK exporters could face new tariffs and taxes, a lack of access to talented hires and an economic downturn leading to a squeeze on consumer spending power.

But there was also the feeling that, if the governance of leaving the EU was sound, the stormy waters could be navigated. David Raymond, managing director of Embark Resourcing told me, ‘As an owner of two small businesses I am concerned for the future, but so long as we have clear leadership and the process of our departure from the European Union is carried out in a careful and considerate way, then we can make this a positive outcome for the UK.’

Ah, so much for clear leadership. Having witnessed such a woeful negotiating strategy, or ‘strategy to avoid a strategy’ characterised seemingly by the willingness of Theresa May to take any deal on the table, as a nation there’s a feeling we are bumbling towards the abyss. Preparation for 2019 has demonstrated all the coordination of a giraffe on rollerskates, navigating its way down a freshly-oiled bowling alley. And the concern is that the lion’s share of the pins will be missed, by some mark.

But now, with the date for Britain’s exit from the European Union less than a year away, a section of the small business community seems to be feeling more chipper about the state of affairs.

The UK’s self-employed workers in particular appear undaunted by the potential impact of Brexit on their businesses. Research from Kensington Mortgages shows the clear majority (63 per cent) see exiting the EU as having no direct impact on their company, more than three times as many (20 per cent) as those who view it in negative terms.

The survey, based on more than 1,000 self-employed workers across the UK, actually reveals that nearly half of self-employed workers (47 per cent) expect 2018 to bring in more work than last year. When asked whether their business would be more profitable, 42 per cent are confident that they would make more money in 2018 than 2017, compared to just 21 per cent who aren’t confident.

If new work suddenly stopped coming in, 42 per cent of the self-employed say they would be able to sustain themselves for a period of six months or more.

Even in the smallest businesses of just ten people or less, 24 per cent feel they could last for a period of nine months or longer.

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These findings are significantly higher than the average UK employee, who only has enough savings to last them just 32 days on their current lifestyle if their income stopped, according to research by Legal & General’s ‘Deadline to Breadline.

The winners

So does the real-life small business feedback match the sentiment of the study? The answer, perhaps predictably, seems to depend on the sector. For TempaGoGo, a tech start-up helping companies recruit temporary staff, uncertainty increases temporary recruitment. ‘With Brexit comes political and economic uncertainty which drives many businesses to recruit temporary staff rather than permanent employees,’ says co-founder Caroline Pegden.

This point is backed up by the latest survey from the Recruitment and Employment Confederation (REC), the recruitment agencies’ trade body, which shows that 41 per cent of employers are using temporary agency workers to manage uncertainty, +9 percentage points vs last year.

Sophie Howe, director at Comtec Translations feels that despite current uncertainty surrounding the impact of Brexit on future European trade deals, it’s an exciting time to be expanding into international markets.

She adds that, following the Brexit announcement, the company recorded an encouraging 52 per cent year-on-year increase in the work undertaken across its key UK manufacturing clients in 2017. ‘It is very exciting to see such positive performance across the sector,’ Howe says. ‘Research shows that organisations which have made the conscious decision to invest in professional language services achieve a far higher export to turnover ratio.

‘We are therefore delighted to see that the value of translation services in maximising export sales post-Brexit is being recognised by such a broad cross section of our manufacturing clients.’

Others are indifferent. Ola Oloko, CEO and founder of Essex-based Gate Way Success says, ‘As a UK training provider offering our services to professionals living within the UK, I don’t think Brexit will have much effect on our business. Most of our clients are private or self-paying clients or companies & organisations who put their staff through trainings or other level courses or qualifications.’

The losers

Then there are the businesses for whom Brexit will be a brutal, unmitigated assault on livelihoods. Glyn Shemwell, of We Clean Any Home, runs a small domestic cleaning business with 20 cleaners on the books and only two non-UK citizens. Some 18 months ago, he tells me, the company had around 32 cleaners on the books and about 16 were EU nationals. You can see where this is going.

Faced with a ceiling on how much clients could be charged, and with a struggle to recruit the right people, Shemwell feels it’s likely the business will have to close. ‘Low wage sectors such as cleaning will really struggle as it is not a job being are rushing to get into despite the fact the demand from clients has never been greater,’ he adds.

‘We would love to pay our cleaners more and offer perks and incentives but at the moment it is impossible. I can only see this going one of two ways; either the going rate rises and people start to value the service more, which is hard to see while there are still so many black market cleaners, or agencies such as mine will go out of business, which at my age is a frightening prospect.’

For such businesses as Shemwell’s, the options admittedly look bleak, and questions surrounding Brexit and the impact it will have on doing business internationally remain unanswered. Understandably, this is creating more uncertainty and nervousness among the business community than was seen before the outcome of the vote was known in 2016. But as with any major political or economic change, businesses in general need to continuously adapt. Brexit must not be feared, but could simply open new channels for trade and business ventures sooner than they would otherwise be tapped into.