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Brexit planning for small businesses, part 2: Unexpected costs

Brexit planning for small businesses, part 2: Unexpected costs

Brexit could result in some temporary costs that would be a stretch for many small businesses that have trading relationships within the EU. Will you need to build cash reserves or reallocate budget for new expenses? Here are a few areas you might not have considered yet, but it isn't too early to start looking at budget allocation or running scenarios to help you see possible outcomes. We would like to continue offering paperwork-free pallet delivery to the EU, and while we can't guarantee this will be the case, we can guarantee that we are looking out for the interests of small businesses – they make up the majority of our customers!

Legal or Accounting Consulting

As the process of transitioning out would take years, you'll have time to seek the advice you need. Many small and microbusinesses do their own finances or pay for basic bookkeeping services, but you could very well need the services of counsel or a chartered accountant. It may just be a matter of different paperwork or paying different fees – but you don't want to be missing important facts or funds when the time comes to make customs declarations or pay VAT.

You might be facing new regulations concerning the sources of your raw materials or what you are allowed to sell in certain EU countries. If necessary, you might want to research new sources and see whether the costs will be higher or if you could actually get some materials cheaper from elsewhere.

Seeking Financing

One of the biggest arguments for the leave camp is that the UK has contributed mightily to the European Investment Bank and received very little in return – small and mid-sized UK businesses have not received much external financing under the programmes administered by the EIB. So, the ‘good news’ here is that they wouldn't see a sudden drop in their financing options in the event of a leave vote.

The bad news is that Brexit could cause uncertainty in the financial markets, which commonly results in a tightening of lending and credit. SMEs and microbusinesses have already suffered disproportionately from these conditions over the past five years, so we hope the government will step in to make sure this huge sector of the economy doesn't pay an unfair price.

SMEs should start educating themselves now on options in alternative finance, which only a small portion of them have pursued, but which offers possibilities in financing that the banks don't provide. Between platforms for crowdfunded loans, invoice trading, and peer-to-peer lending, UK small businesses have many more choices than they did even just a few years ago. Better to explore now whether you might need financing than be caught out later.