How small and medium-sized businesses should manage Brexit’s moving goalposts

How small and medium-sized businesses should manage Brexit’s moving goalposts

For a long time, it looked as if Brexit was heading towards a definitive resolution. Even when the March deadline seemed to be drifting towards a no-deal scenario, small and medium-sized businesses (SMBs) at least had a deadline to work towards when making preparations for life post-Brexit. But rather than bringing clarity, the prolonged doubt caused by an extension has plunged companies even further into the dark.

The short-term benefit of the delay is that many small businesses will be able to continue with business as usual for a few months more, but planning for 31st October should also be taking place. Of course, this is easier said than done – a general election, referendum or further extensions could yet see the entire process prolonged even further.

How many SMBs will have the resources to hire additional storage space for an open-ended and indefinite period of time to build up stock? How much stockpiling should SMBs do and when should No Deal plans be enacted?

Planning for No Deal

My company started No Deal preparations a little over a year before the 29th March deadline, in early 2018. While many imports and exports like food and medicine have a short shelf life, we are lucky to handle materials that are typically long-lasting, so potential delays at ports are not a huge issue for us, thankfully.

In the first few months of 2019 we took on an additional warehouse to enable us to increase our stockholding of raw materials. Whatever happens, we will still need to carry on supplying our UK customers and it is important that we keep a suitable level of additional stock to sustain their needs.

We are a classic case of a company that primarily imports our raw materials. While some fluctuation in the value of the pound is normal, there is a serious concern that the pound could take a tumble and take a very, very long time to recover. Due to our additional stock we would be able to continue for a few months, but we have finite financial resources. Keeping additional stock is vital to make the transition as smooth as possible, but it needs to be balanced with what is affordable.

Avoiding a skills gap

One tenth of the UK plastic industry’s employees are from the EU. The lack of certainty about the future is already slowing recruitment in the industry. If these people decided to leave to find work in another EU country, it could be a major challenge to replace them. Increases in training and recruitment would become essential, diverting investment that would otherwise be used for research and innovation.

Generally, I think the issues will vary on a sector-by-sector basis. Those looking for workers for packing or warehouse roles may have issues, while those recruiting highly-qualified EU nationals are likely to have fewer issues.

The growth of Technical Foam Services over the last decade would not have been so successful without our EU staff. We want to build on our success by retaining them and helping to improve their skills, while also recruiting new employees from the EU with the same outlook.

80% of our workforce are from the EU, but are UK-based. We are supporting them through the settled and pre-settled status process to secure permanent residency, meaning that our current workforce will not be affected by Brexit.

The importance of monitoring the supply chain

If a company were to begin Brexit contingency planning today, the very first thing to do would be to examine their supply chain closely. Investigate different scenarios to see what the effects are likely to be on existing European trade. Do you need to change the frequency of deliveries or secure stock from other locations? Identify the day-to-day issues and develop a strategy so these issues do not come as a shock.

Perhaps to minimise delays you might want to begin to route your imports and exports through minor ports. It is a small change to make now, but avoiding congestion at somewhere like Dover could prove invaluable further down the line.

The future of British industry

One of the real benefits of a modern SMB is the ability to be dynamic and flexible in ways that larger or older companies may not be able to. By looking ahead and planning in detail, you can make sure that you are looking to adapt to challenges and react quickly should it become necessary.

Ultimately, the fundamentals will not change. You will continue to have clients and suppliers that have the same objectives, Brexit will not change that. By ensuring you have strong relationships and clear communication then you can all work together to find a way around any challenges that may appear.

I get the impression that many small business owners would like to see the whole situation put to bed. But while a second referendum or general election could help to bring about a resolution, it could complicate things even further. It is likely that this limbo will continue for the rest of the year. Things may have changed a lot by then and there could be some difficult periods, but as soon as there is a semblance of stability, British businesses will show their resilience, find their feet and regain their strength.