The vast majority of small business owners say they’re confident of achieving their company goals in 2020 according to a new study.
The research, carried out by Vistaprint, quizzed 500 SME bosses on their primary goals for next year and their optimism for being able to achieve them.
And despite the ongoing Brexit uncertainty, the General Election and rising costs, 86% of respondents said they were confident of achieving their 2020 business goals.
The study found that UK business owners are more likely than not to feel ‘confident’, ‘prepared’ and ‘optimistic’ about the future, with just one in five saying they felt apprehensive.
Of the primary goals for SMEs in 2020, the most popular were:
- Substantially increasing revenue and growth
- Reaching a new customer base
- Surviving the year
- Generating return customers
- Breaking even
- Introducing new products/services
- Increasing social media presence
- Building or updating website
- Expanding marketing/advertising efforts
- Selling the business
However, despite the optimism, a quarter of firms expect a struggle in the year ahead, with half saying they’re concerned on how political changes will affect their business and 38% saying they may struggle due to bills and expenses rising.
Customer strategy and insights director at Vistaprint, Simon Baier, commented on the findings that: “While political changes and economic barriers are very real challenges facing Britain’s small businesses, our research shows that these factors haven’t dampened the UK’s entrepreneurial spirit.”
Read more: Exporting SMEs grow twice as fast as non-exporters
“It’s encouraging to see small business owners’ confidence and optimism going into 2020.
“The better they do, the more chance they have of generating jobs for local people, giving an economic boost to their community and continuing to provide significant value to customers.”
Perhaps the most pleasing statistic of the study, however, is that 90% of SME owners said they were pleased they took the initiative to start their own firm.
UK manufacturers are feeling the effects of a prolonged Brexit process as sales and orders drop into the negative, despite growth in the number of individual firms selling overseas.
The British Chamber’s Quarterly International Trade Survey for Q3 2019 found that the percentage balance of manufacturers exporting internationally reporting order increases dropped from 9% to -1%, indicating a decline in foreign trade.
Confidence is also hitting local demand with domestic orders falling from 8% to -4% in the balance analysis.
The state of cash flow for UK manufacturers also feel from 6% in Q2 to -5% – and down from 13% at the same time last year.
The export of services is still seeing growth, albeit slower, at 8% compared to 12% with export orders levelling out.
Adam Marshall, director-general at the British Chamber commented that: “A strong and balanced economy needs healthy exporters at its core. But while there are some companies bucking the trend, future sales and orders are now well into negative territory, after a steady downward trend in export performance this year.
“On top of Brexit uncertainty and global trade tensions, election turbulence won’t be helping. The next administration will need to most fast to restore confidence, with action to upgrade infrastructure, boost skills and cut business costs.
Read more: Number of exporting manufacturers on the rise
“Without urgent clarity around our future trading relationship with the EU, firms across the UK will increasingly struggle to fill order books, and jobs and prosperity in many of our communities could be at risk.”
The December election campaign is well underway in the UK with the two main parties set to pitch their financial agendas for the country today.
Triggered and still dominated by Brexit, the campaigns will also focus on some of the big areas that have had little discussion time in the last three and a half years, namely the environment, education, healthcare and public services.
However, talks of new hospitals, infrastructure programmes and wi-fi for all won’t matter all that much for UK businesses if the departure from the European Union isn’t sorted – quickly, efficiently and, critical for most, with as little disruption within the transition period as possible.
Business secretary Andrea Leadsom spoke to Management Today this week about the incumbent government’s Brexit positioning and noted five areas in which she thought British businesses would be better off after leaving the EU. Here’s a quick look:
1 – Ability to attract international talent
Leadsom notes that Brexit will afford local businesses the opportunity to shop for the best industry talent within a global pool of candidates, supported by initiatives such as the new fast-track visa route for scientists and an extended post-study work visa for overseas university students to stay within the UK and apply their learnings within the marketplace.
2 – Lead on clean energy
The government has set ambitious targets to generate £170bn a year from green economy exports by 2030, the date by which the UK has also targeted a net-zero climate change contribution.
“As the first major economy to legislate to end our contribution to global climate change, we are perfectly positioned to seize the opportunities of the global shift to cleaner technology.”
3 – New trade agreements
Freedom from legislative alignment and EU rules would allow more flexibility to reform regulation of emerging technologies and the pursuit of free trade agreements with North America and Asia-Pacific marketplaces, particularly in the development of renewable energy, clean growth and electric vehicles – also stimulating additional foreign direct investment.
“This will give British companies the freedom to explore new markets and secure investment from every corner of the globe.”
4 – Investment
EU funding programmes, which have supported many British enterprises, will be replaced with domestic initiatives more aligned and focused on UK priorities, ‘ensuring Britain’s businesses and regions have the support they need to thrive and expand productivity after Brexit’.
5 – Fair and flexible labour market
Deregulation on worker’s rights has been cited as a real cause for concern in Boris Johnson’s current Brexit agreement with the European Union, but Leadsom says the highest standards are to be developed, including as part of the Good Work Plan.
“This will increase fairness and flexibility in the labour market by strengthening workers’ ability to get redress for poor treatment and increase transparency and clarity for staff and employers, taking account of modern working relationships and routines.”
Election outcome to dictate period of Brexit uncertainty
Whatever the potential benefits (and pitfalls) of Brexit, what has harmed British businesses most is the length of the period of uncertainty that’s followed the EU referendum some three and a half years ago.
The outcome of the election will likely dictate for how much longer that uncertainty continues. A majority Conservatives win would see Boris Johnson’s agreement the primary way ahead. A Labour win would see a further six months of talks with a new agreement forged and a referendum put back to the British people (with remain on the ballot paper). A Liberal Democrat win would see Brexit cancelled altogether.
Read more: Brexit delayed as EU grants extension: the positives and negatives for businesses
Whichever the outcome, what’s paramount is UK organisations are ready. Find out more about our Brexit consultancy services and how we can help your businesses prepare for whatever the outcome.
“Brexit has had more dates in the last year than I have” has been a popular quip on Twitter today following the EU’s announcement that member states have agreed to a new extension period.
The UK now has a deadline of 31st January to agree to a deal in Parliament. Just to add further intrigue, the deal is flexible and allows for Brexit to happen before that date should an agreement be reached. Entering a new term into the Brexit dictionary – ‘flextension’.
It’s a blow for Boris Johnson who’s primary message during his leadership battle focused on ‘getting Brexit done’ by the 31st October – no ifs or buts. And whilst his amendments to Theresa May’s deal, predominantly on arrangements on the Irish border, did garner enough support in Parliament to grant a second reading, the rejection of MPs to assess the new text in just three days has lead the UK to another position of uncertainty and, the word of the day – delay.
But is today’s news good or bad for British businesses?
The good news
The good news for UK firms is that a no-deal Brexit by the end of this week won’t be happening. Huge employers, particularly in the manufacturing sector, have been unified in their belief that a no-deal or ‘crash out’ exit from the European Union would be disastrous, cut jobs and result in further operational relocation onto the continent.
The delay also affords a further opportunity for SMEs who are still unprepared for an EU departure, whether on good grounds or not, to put some plans in place to deal with whichever eventuality comes from what will be by next year a near-four-year process.
It’s also worth noting that for many companies, Christmas is a critical trading period for which any disruption, including an agreed exit, would have proved extremely poor timing.
The bad news
What many business leaders have publically commented in the last few years is that it is uncertainty and not Brexit itself which is really harming UK business.
And for those businesses who have seen investment dried up or the firms who have growth plans stuck on pause, the wait for a clear and verified path forwards goes on.
Read more: No-deal red tape bill could cost £15bn
Ongoing delay also proves another blow to organisations who have invested millions in stockpiling goods and critical components who will now need to decide whether to continue paying to store them, start using them and buy further stocks next year or, indeed, try to get rid of what may now have gone out of date where perishables are concerned.
But for now, it’s as you were for UK businesses, and trade goes on.
The number of permanent staff hired by UK companies has dropped at the quickest rate in more than three years.
Research by the Recruitment & Employment Confederation, alongside a report from KPMG, has uncovered that the number of full-time recruits fell for six consecutive months to August, suggesting that ‘many firms [are] delaying hiring decisions due to Brexit-related uncertainty’.
And it’s not just companies tightening their belts as political and economical uncertainty continues. Candidates are also bedding in and staying put at their current organisations, whilst the number of available opportunities in the temporary employment market has also slowed – now at a six-year low.
However, new starters are enjoying higher salaries as competition for top talent continues to increase.
Businesses lacking confidence
Chief executive at the REC, Neil Carberry noted that: “The figures are a sobering reminder to politicians of all parties that national prosperity relies on businesses creating jobs and growing careers.
“Britain’s record on jobs is world-leading. It’s a key part of our economic success, with recruiters at the forefront of it. And there are still great opportunities out there for those looking for a new job and a boost in earnings.
“But all this rests on business confidence – the confidence to invest, to hire someone, to try something new – and it’s clear that things are getting harder. Permanent placements have now dropped for six months in a row and vacancy growth is slowing.
“While we continue to benefit from the flexibility of our jobs market as demand for temps holds steady, today’s survey emphasises the real-world impacts of the political and economic uncertainty businesses are facing.
“The first priority should be avoiding a damaging no-deal Brexit and giving some stability back to British businesses, so they can drive the prosperity of the whole country.”
Employees concerned by Brexit
As mentioned above, employees are also feeling the added worry as the Brexit saga rolls on.
A poll by Gartner found that on average, employees spend almost an hour each day worrying about how Brexit will affect them, their families and friends.
That’s 12% of the working day which will directly affect productivity rates and employee wellbeing.
If your business is falling behind in Brexit planning, see how our Brexit consultancy can help.
The Department of Agriculture has suggested it expects the pattern of trade to change following Brexit and warned that ‘not all exports can comply with new post-Brexit rules’.
Businesses exporting agri-food products into the EU which are not member states will require an Export Health Certificate – an official document which carries an authorised signature such as from a vet which proves that food or animal exports meet quality and health requirements of the importing country.
Trade cannot happen without an EHC and it’s estimated nearly two million will be required to accompany every agri-food export into the EU.
The Department of Agriculture stated that: “The best thing agri-food businesses can do is to prepare for these changes – as not all businesses will be able to meet the new Export Health Certificate requirements.”
However, some experts have warned that the resources don’t exist to deal with the extra paperwork – let alone enough vets to carry out the checks – and could severely disrupt Northern Irish trade in particular.
And it could see the competitiveness of local businesses in the EU market take a hit.
Peter Hardwick of the British Meat Processors’ Association told the BBC that: “I think you have to draw the obvious conclusion that you can’t do the business, that you will lose that business.
Read more: UK exporters step-up Brexit preparations as AEO applications surge
“There will be competitors in the EU who are no doubt chomping at the bit, who don’t have to jump through those hoops and they’ll be in a prime position to take it away from us.”
The CBI has launched a report with some 200 recommendations and actions for businesses and governments to take as the likelihood of no-deal Brexit increases.
The report, titled ‘What comes next?’, unveils a detailed analysis of advice for its members and the wider business community, covering everything from the movement and regulations of goods to Northern Ireland and data.
The report introduces by stating that: “The CBI has analysed the no-deal preparations of the UK, the EU and businesses in 27 key areas of the economy and we have concluded that – despite existing mitigations – disruption is likely in 24 of those areas immediately after no deal.
“At the moment, this analysis shows there are no areas of relevance to the economy where the UK, the EU and the business community are all prepared well enough for no deal. In all 27 areas analysed, negative impacts are anticipated in either the short or long-term.”
Of the 27 noted key areas, areas the CBI deem the UK is ready are a common travel area in Northern Ireland, broadcasting regulations, competition within the people market and security of current residents.
Red flags include tariffs, the Irish border and free trade agreements.
The report suggests that the EU is even less prepared, with 15 key areas rated as wholely unprepared including customs, haulage, financial services and people mobility.
Overall business-readiness fares slightly better than both the UK government and the EU, although four key areas remain unprepared, 10 areas where some preparations have been made, nine areas of good short-term planning and four areas with sufficient long-term strategy to mitigate Brexit-related issues is in place.
Read more: 500 new Brexit laws passed in H1 2019
The report also goes on to make four critical suggestions for businesses, which are:
- Immediately resume no-deal preparations
- By the start of September, if resource allows, have made plans to communicate additional needs for mitigations to the UK and the EU governments
- By the middle of October, have agreed and reinforced communication routes into government
- If no-deal occurs, prioritise people
If your business is lagging behind on its Brexit preparations or needs expert guidance and roll-out plans for whatever the eventuality, talk to Go Exporting about or Brexit audit and consultancy.
UK businesses are stepping up Brexit preparations and looking to prove their exporting credentials as the number of AEO applications surge.
Authorised Economic Operator (AEO) status shows that a businesses role within international supply chains as being secure – compliant and up-to-speed with customs controls and procedures.
UK firms have lagged far behind in AEO applications, just 537 in February 2017 compared to 6,031 in Germany in the same month.
However, with 31st October Brexit deadline fast-approaching and political rhetoric strongly suggesting an exit from the EU come-what-may, registrations have increased 26% – albeit to just 679 compared to 6,330 in Germany and 1,556 in the Netherlands.
Despite lagging far behind European partners, this increase indicates a clear step-change and that some firms have started to get their act together and cover as many Brexit bases as they can.
Lesley Batchelor, Director General of the Institute of Export & International Trade, commented that: “UK businesses are now realising that they will need to prove their competency in customs procedures when Brexit comes around – whatever form it may take.
“This surge in applications is encouraging, but there’s much more to be done before we catch up with our European counterparts, who will soon be our competitors.
“Attaining AEO status will be a useful exercise for exporters, whatever our future arrangement with the EU will be. The application process allows businesses to fully examine and ensure that its customs regime is up-to-scratch.
“Doing this will also put businesses in a strong position for other customs arrangements, including the Trusted Trader scheme.”
Read more: 500 new Brexit laws passed in H1 2019
Businesses are hopeful that applying for an AEO will ‘safeguard their attractiveness in the supply chain post-Brexit’.
Your businesses can apply for an AEO on the HMRC website and will be eligible if your firm is involved in the international trade of goods with non-EU countries.
The pace of the government’s legislative preparations for Brexit has surged in the first half of this year with four times as many Brexit-related bills passed compared to H2 2018.
Thomson Reuters reported that 488 legislative pieces were passed from January to June, compared to 112 in the latter stages of last year.
The first six months of 2018 saw just one Brexit-related bill passed.
The increase in activity shows how much is being done to prepare for Brexit, but there is a lot more left to do.
Key legislative pieces, such as The Trade Bill which would enable the government to roll over existing EU trade deals still need to be passed, as well as The Financial Services Bill which would grant powers to implement future EU financial service regulations.
Establishing settled status for EU nationals living in the EU is also yet to be passed in The Immigration Bill.
Legislation department manager at Thomson Reuters, Charlotte Brady, commented that: “The uncertainty around the timing and manner of the UK’s departure from the EU has led to a significant proportion of drafters’ time being directed towards preparing UK legislation for Brexit, which has resulted in a reduced focus on the domestic agenda.
“This trend looks set to continue as even after Brexit, there will still be Brexit-related legislation which needs to be passed in the immediate aftermath of the UK’s departure.”
Read more: UK businesses reliant on EU imports ‘not even close to ready’ for no-deal Brexit
The surge in legislative action from the government should carry a warning for UK businesses about just how much work is needed to ensure as seamless a business and trade environment as possible following Brexit – especially those who are yet to begin preparing.
According to the FSB, only around one in seven small firms are ready for a no-deal Brexit, despite over 40% believing it would have a negative impact.
If your business needs support as 31st October approaches, find out more about our Brexit consultancy.
Irish exporters to the UK are facing a ‘severe threat’ as sterling hit a two-year low.
With the arrival of new Prime Minister, Boris Johnson and a more steadfast approach to 31st October as Brexit day, the pound saw its value slide with the possibility of no-deal becoming increasingly likely.
Marry that with comments from Michael Gove that the government is assuming that no deal will happen, and the markets were more than a little concerned that the UK really could crash out of the European Union without a transitional agreement in place.
The Irish Experts Association has said that they are deeply concerned that the impact no deal would have on Irish exporters into the UK and the adverse effect of a weakening Euro-Sterling exchange rate.
Simon McKeever, chief executive commented that: “We note with deep concern the trajectory in the Euro-Sterling exchange rate over the past 36 hours. The profitability of Irish companies exporting to the UK is heavily dependent on the exchange rate, particularly at these levels.
“This recent sharp adverse movement, caused by the increased likelihood of a no-deal Brexit, is a serious threat to many Irish exporters if not sufficiently recognised, managed and mitigated.”
Read more: UK businesses reliant on EU imports ‘not even close to ready’ for no-deal Brexit
With Halloween fast approaching, many commentators have urged businesses to prepare now with figures suggesting just 23% of businesses have activated contingency plans.
Interim director-general of the IoD, Edwin Morgan said that: “With business costs rising in many quarters, and management time precious, it’s understandable that firms don’t want to put resources towards preparing for something we still hope won’t happen.
“But the risk of no deal is very real and so we’d urge all businesses, if they haven’t done so already, to carefully consider their exposure and draw up mitigation plans now.”
If your business is yet to fully prepare for Brexit, especially a no-deal outcome, then time really is running out to make sufficient progress. Find out more about Go Exporting’s Brexit consultancy and help to mitigate the risks – and capitalise on the opportunities.
