In the modern era, there has never been a more challenging time for UK small businesses. The current political and economic climate, in particular Brexit-related uncertainty, is creating unique challenges for swathes of businesses across Britain, especially those trading with or using supply chains within the EU.
The impending end of free movement means certain businesses will have to rethink their recruitment strategies, particularly those in the sectors previously heavily reliant on EU workers, such as hospitality and agriculture.
The possibility of supply chain disruption is also an area which could negatively impact the trade and cashflow of businesses in the UK. Whatever the economic climate, businesses inevitably face set-backs all of the time, but confronted with this additional uncertainty, how can they best prepare to overcome them without going to the wall?
Here are just some of the strategies small businesses should be adopting to overcome set-backs and put themselves in the best possible place to steer through uncharted waters.
Cash in on innovation failure
Failed innovations are an inevitable part of business success, but they can also be catastrophically costly and spell the end of the road for some businesses.
Many business owners are unaware of their eligibility to claim for Research & Development (R&D) Tax Relief. Importantly, R&D tax reliefs, subject to criteria, are also available for failed innovation projects and many qualifying activities are simply classed as routine and don’t get claimed for.
Enlisting the help of a specialist tax consultant, Barth-Haas UK, saved £35K over 2 years for activities they hadn’t realised were eligible for R&D Tax Relief. There are different types of R&D relief according to the size of your company, including small businesses, and contrary to myth, R&D doesn’t only cover scientific research.
Find out more about the Government’s R&D Tax Relief scheme here.
Keep on top of cashflow
Cashflow is king when it comes to managing a small business. According to the Federation of Small Businesses (FSB), around 80-90 per cent of failures are due to poor cash flow.
It is now more important than ever that businesses reduce the cash cycle and improve their cash position.
The Telegraph recently reported that while UK banks are strong enough to survive a disorderly Brexit, “a chaotic no-deal Brexit would cause a significant shock to small business finance markets.”
Prepare for the worst
The Institute of Chartered Accountants in England and Wales (ICAEW) are urging any business in the UK that buys or sells from the EU to have contingency plans in place for a worst-case Brexit scenario. Businesses without a direct EU supply chain are also being advised to plan ahead and prepare for the worst. Any economic downturn will have an impact on B2B and consumer spend.
Keep your eye on economic indicators
There has never been a more pressing time to follow what is happening in the country’s and the global economy. Developing an understanding of the wider economy can provide context for critical business decisions . Forecasting and looking at trends can help you to guide your business and plan for any wider issues that have the potential to impact your business strategy.
Invest in your culture
Regardless of Brexit, the UK has suffered at the hands of an industry-wide productivity puzzle for decades. According to the Advisory, Conciliation and Arbitration Service (Acas) there is an over-riding consensus that the condition reflects “corporate governance arrangements and a financial system that encourage ‘short-termism’ and consequently a lack of investment in people as well as technology.”
Upskilling existing staff is just one way small business owners can pre-empt some of today’s recruitment challenges. Building a culture where people are trusted and given the opportunity to develop has concrete benefits for business. Investing in employees boosts capability, motivation and performance.
Ramp up your reputation
Consumers are increasingly worried about social issues and much more likely to recommend brands that care. Your reputation is your greatest asset for repeat business and attracting new customers. Your marketing plan should include strategies to actively manage your reputation and get your existing clients to say great things about you.
Continually review and refine your business plan
A robust and flexible business plan is paramount and essential for survival amidst such an uncertain economic time. Confronting change and ambiguity head on will determine success. In order to survive uncertainty business owners must be proactive and take difficult decisions to develop flexibility, innovation and resilience.
As the challenges of Brexit unravel, businesses must keep their wits about them. It starts with creating a high performing culture where talent wants to be and keeping a close eye on cashflow to enable greater resilience to Brexit turbulence.