“Getting Brexit done”
– this was current PM Boris Johnsons’ key slogan for winning the December election, following over 3 years of setbacks and numerous deadline extensions.
With the deadline being pushed back yet again to the 31st January 2020, we wanted to capture the impact that the uncertainty surrounding Brexit is having on the UK’s small business economy and exactly how small business owners are feeling about leaving the EU.
Just like the referendum, the impact of Brexit so far has split small businesses. Our recent survey of 600 small business owners in the UK found that Brexit has had little to no effect on half of small businesses, with the other 50% already feeling a negative impact – with us uncovering this result before the UK has even left the European Union, we knew we had to dig deeper.
By amplifying small businesses’ voices, thoughts and opinions on the ongoing Brexit related debates through our survey findings, we hoped to paint a picture of how confident small businesses feel regarding their futures, what they have done to prepare and adapt their business to change and how they’d ideally like Brexit to play out. We hope that by sharing our findings, small businesses can take solace from the fact they aren’t alone and take guidance from what other businesses have done to weather the tough political climate.
Here’s what we discovered…
The Current Situation
We wanted to start out by asking small business owners how they feel currently and what they’re doing right now to prepare for leaving the EU.
What is the Definition of a Small Business?
A small business in the UK is usually defined as any business with fewer than 250 employees, and includes the subcategory of micro-businesses (businesses with 0-9 employees). According to the UK parliament briefing papers, as of 2018, there were 5.7 million small businesses in the UK. This makes up 99% of all UK businesses, making them a huge driving force behind our economy, which is why we wanted to get their views on the current political climate.
How Do Small Business Owners Currently Feel About Brexit?
As anticipated, only 1 in 5 businesses feel prepared for Brexit, with an overwhelming 80% stating that their confidence in their business’s future has been knocked because of the ongoing uncertainties, political bust ups and economic instabilities.
When asked what in particular is making small businesses lose confidence, we were met with resounding answer of uncertainty for the future, with responses such as:
- “If Brexit brings on another recession – the lack of people spending money” – Eve Reeves, Photography Industry
- “I think the economy will suffer hugely with knock on effects for all businesses” – Liz Gilbert, Technology Industry
- “Loss of earnings and work opportunities. The music industry, while one of the biggest sources of income for the country, is one of the most threatened by increased costs to musicians and companies making touring more expensive and discouraging European support and creative relationships due to visa implications as well as many other unknown administrative costs making you a less favourable candidate compared to those within the EU. ” - Eleanor Penfold, Retail industry
- “If the economy crashes it will affect my business because my product will become a non-essential/luxury” – Lynn Adams, Education industry
- “Current forecasts of increases in costs across the board and customers having less disposable income.” - Phill Pavey, Food Industry
Despite this, some of the business owners we surveyed were confident. When asked, our confident respondents beamed with positivity over the changes Brexit could bring for their business:
- “UK business, when they know what is happening, will roar ahead, making up for the last three years” – Chris Garrod, Marketing Industry
- “I’m expecting a rise in exchange rate, with a strengthening pound and weaker Euro” – Otto Faithorne, Retail Industry
- “I believe that despite the fear at the moment, things will work out in the end. I'd rather think positively and hope for the best!” – Amy Williams, Marketing Industry
- “I look forward to the dust settling and a renewed sense of positivity, productivity and pride when we start trading on better terms with countries outside the EU. I hope the UK can reduce corporate tax rates and become and highly competitive place to do business.” – Melissa Bragg, Marketing Industry
- “We are in an extremely good position and that will enable us to adjust to suit variances overnight. We are also extremely prepared; no preparation will lead to failure.” – Michael Richards, Property Industry
When split down by region, we found that the north/south divide is as prevalent as ever, and reflected in small businesses’ feelings towards Brexit. Businesses in the south are less prepared (32%) than their northern counterparts (24%). Although it would be easy to put this down to the assumption that ‘northern England’ automatically means ‘pro-Brexit’ (with all regions in northern England voting to leave overall), both northern and southern businesses are in agreement that their businesses will be worse off following a no-deal Brexit (69% and 63% respectively).
These figures also differ vastly depending on size of the business, with results suggesting that 72% of sole traders are left feeling the least prepared, with 44% of them claiming that Brexit has already taken its toll.
Freelance photographer and instantprint customer Martin Jones said “The unrealistic expectations and promises set out by the Government that have caused the people of the UK to crash head first into reality is to blame for the current state of things. To prepare, I’ve been saving as much money as possible, upgraded as much equipment as I can and taken on as much work as possible even though by business growth is slightly behind (year on year) as a result of uncertainties around Brexit.”
Who or What Do Small Business Think is Behind the Delay?
When asked who was to blame for the delays with Brexit, the two most (or least, depending on how you look at it) popular options were the Conservative Party (44%) followed closely by the European Union (33%), with the Labour Party taking third place (18%). Fingers were also pointed at David Cameron (13%) and Theresa May (9%).
So, What Does This Mean for Small Businesses?
With half of the UK’s small businesses allegedly suffering from the negative impacts of Brexit, we wanted to know what’s causing this feeling. And our respondents were more than happy to give the low down…
While the majority claimed that customers are more cautious about how they spend their money, others also blame rising prices on raw materials, breakdowns in relationships with EU clients and worries over the cost of taking on more staff.
Business growth has also taken a direct hit, with 79% of small businesses’ claiming growth has been halted thanks to Brexit. 1 in 5 of these respondents even go so far as to claim that growth has declined as a result of the delays.
However, it’s not all doom and gloom! 21% of small businesses have said their business has grown. One possibility for this rise in business could be due to more customers shopping locally, as one respondent told us “Off the back of Brexit, I’ve seen a rising trend in customers supporting local businesses, and have seen growth in the local area. This trend will surely continue to increase after we leave the EU.”
Our results also showed that the south have taken a bigger hit in terms of business growth than the north, with 53% of southern business owners claiming to have felt the effects of Brexit already vs 47% of those up north.
And it’s not just dwindling customers our small businesses have to face either. To make matters worse, around 43% have had a disagreement about their Brexit views with a colleague in the workplace.
Northerners have been revealed as the most argumentative over Brexit, with half of all northern small business owners having experienced a Brexit bust-up in the workplace, compared to 1 in 3 in the south.
What Do Businesses in the EU Think?
It’s not only small business in the UK that are being affected by Brexit. We also wanted to find out what EU businesses thought of the delays to Brexit and how this might affect our relationship with them. To find out more, we spoke to Lee Finbow, Owner of EasyMerchant, a supplier of millions of pounds worth of building goods across the UK and Europe. He told us:
“The biggest problem in trading we are likely to face is how our suppliers are going to be hit with EU tariffs and then subsequently pass these costs on to us.
We buy literally millions of pounds worth of goods from our suppliers who are UK based, but they buy their raw materials tariff-free from the EU.
Once Brexit happens and the UK suddenly starts charging tariffs on EU raw materials, our suppliers will have to pay more to make their products and this will filter down to the prices we pay.
Ultimately it will be the end customers who pay more as we will need to charge more for the products to maintain our own margins. This means building materials become more expensive for extensions or building homes and it can have a knock-on effect for the housing economy or construction trade as everything suddenly becomes costlier to do. This can prevent projects from going ahead or budgets for ongoing projects spiralling out of control.
The issue for us is we don't necessarily know what our supplier's margins are or how they are likely to be hit so we can't predict what the knock-on effect for us will be. It literally is extremely difficult to plan for Brexit because of so many unknowns."
So, what does this mean for the future of small businesses? We wanted to know what the best outcome of Brexit would be for our business owner respondents.
Who Do Small Businesses Want to Deliver Brexit?
So just who is the best person for the job? The votes are in and current Tory PM Boris Johnson takes first place with 45% of the vote, with Lib Dem’s Jo Swinson the runner up at 27%, - a mixed result that reflects the constant struggle between Swinson’s exit from Brexit policy and Johnson’s ‘we’re leaving, come what may’ approach. Labour Party’s Jeremy Corbyn was lagging behind in the poll at 18.8%.
However, when quizzed on whether they’d prefer a no-deal Brexit or cancel it all together, over a third of small business owners would want to call the whole thing off.
We wanted to know who else small businesses would like to take hold of the Brexit reins. As well as themselves (or other small business owners they admire), the survey revealed some extremely interesting results:
In 1st Place, it's business owners themselves at 51% followed by:
Could these public figures negotiate Brexit better? Let us know your thoughts by tagging us on Twitter at @instantprintuk.
What Are Small Businesses Doing Right Now to Prepare?
To start your own successful business, you’ve got to have a proactive, go-getter attitude – something that’s apparent in our survey respondents’ responses. Although it’s easy to get bogged down in the uncertainty of Brexit, we couldn’t help but admire all the hard work and effort that small businesses have put into preparing as best they can for all possible outcomes.
Here are just a few examples of exactly how UK businesses in different industries are preparing for Brexit as best they can.
“I have chosen to focus online on UK clients as I refuse to operate in a state of limbo, or without adequate information about EU relationships after Brexit.” – Dawn Calder-Murphy, Technology industry
“I have tried to find more additional streams of income (freelance teaching) in order to reduce the debt I currently face, though this is another area of business threatened due to people tightening their belts.” – Eleanor Penfold, Retail industry
“As a charity, we’re working towards creating alternative funding sources and looking at how we can best support our members with some of the difficulties a no-deal Brexit will create for them.” – Rhona Murdoch, Charity sector
“We attended a workshop with a legal consultant to help employees get pre-settled or settled status; most of our employees in the UK are European.” – Anaïs, Early Metrics, Finance industry
“I’m a small creative business and I honestly don’t think anything is going to change for me. Companies and people will still need things creating and producing. Business goes on!” – Nigel Cooper, Nico Design, Marketing industry
Do you own a small business but you’re not sure what the next step is for getting ready to leave the EU? Check what you need to do here.