How Will Brexit Impact Small Businesses?

The business world is changing, with new policies being made on a regular basis and new economies emerging. For the UK, the major game changer businesses are concerned about is the ongoing Brexit discussions. The question on every lip is: How is Brexit going to affect economic establishments in the UK, especially small enterprises?

Brief History of the EU

British Exit from the European Union, popularly referred to as Brexit undoubtedly can change the UK market in ways that are yet to be understood. The history of European Union dates back to 1958 when six countries came together to form the European Economic Community. Germany, Italy, France, Belgium, Netherlands, and Luxembourg created the EEC to boost the economies of member states and ensure higher standards of living for all their citizens.

Twenty-one countries later joined the EEC with the UK becoming a member in 1973, bringing the total membership to 28 member-states. The EEC was renamed the European Union in 1993 to reflect the diversification of its operations. From being an economy-only organisation, it expanded into other areas of policymaking: health, security, justice, environment and climate, migration. But running a single market has been at the heart of the European Union functions.

Benefits of EU’s Single Market for UK Businesses

The internal market system operating in all member states means there are no borders within the European Union. All EU citizens enjoy the four freedoms: freedom of movement of goods, services, money, and people. And the UK enjoys all of these. Statistics show the EU has remained the UK’s biggest single business associate. The single market accounts for 44% of the country’s exportation of goods and services.

Conversely, a market impact analysis says Brexit will close the EU export channel, causing the UK to lose £220bn while incurring at least £4.5bn every year in extra trade tariffs only, not to mention the cost implication of the huge administrative burden the new policy will cause.

No-Deal versus Chequers Agreement

Brexitnegotiations commenced between the EU and the UK on March 29, 2017, and are due to end at 11:00pm on March 29, 2019. The country is still struggling to get in-house support for the draft departure deal.

By March 29, 2019, if the UK does not have a signed withdrawal agreement, they will crash out of the EU on the set date. And this situation is known as No-Deal exit, and it automatically ends all ties on that day.

The Chequers Agreement is a draft deal that stipulates the future relationship the UK would have with the EU after Britain’s exit from the union. Theresa May, the British Prime Minister, issued this document at her residence.

If the agreement gets endorsed before the exit due date, activities will remain the same between the British people and the Union for 21 months to give Britain the opportunity to adjust properly before the new relationship comes into effect in 2020.

What Brexit implies for Small Businesses in the UK

• Fear of the Unknown

New policies bring with them the fear of the unknown. Reports show that the future isn’t going to be rosy for British enterprises. Whether Britain gets a No-Deal or the Chequers Agreement at the end of March, all UK SMEs need to get well prepared for Brexit immediately to avoid unpleasant surprises.

• Increase in costs

Besides general fears, the major implication will be that of cost. Since Britain will become the third country to leave the EU, trade tariffs will definitely increase. That means small exporters and importers get to pay more to sell to or buy from the EU countries. Small businesses’ cash flow will radically reduce.

• Extra administrative necessities

With the withdrawal come new policies in different kinds of trade. Depending on the business you run, you’ll need experts to help you handle complicated administrative matters to avoid legal entanglements.

• Limited access to workforce

With the restriction in the movement of EU citizens into the UK, small businesses will be stuck with a limited choice in labour as they must choose employees only from among UK citizens.

• Loss of inspiration

Ambitious small business owners draw inspiration from their bigger counterparts and always try to measure up to their standards. With Brexit, some big businesses will move out of the UK, especially those owned by the citizens of EU countries. This will affect the small businesses that are trying to model their operations after the well-established brands. Business coaches have advised that small enterprises should learn their art well and deliver quality goods and services. This coupled with exceptional business ethics will keep you afloat.