How to start a business after Brexit in the UK in 2021
However you feel about the UK’s decision to leave the EU, there’s no doubting the profound effect it will have on the UK economy in 2021. Small businesses and people looking to start a business after Brexit are set to be particularly impacted.
Now that the UK has left the EU and is formally no longer a member of the European parliament, the economic turmoil caused by Brexit’s twists and turns raised a considerable level of uncertainty for entrepreneurs looking to start a business after Brexit.
It is clear that Brexit had a considerable influence on the UK economy which consequently scares people looking to invest in a new business. But do not worry! Here at Halo Financial, our currency experts have taken in considerations all the risks that could affect your project. So, if you find yourself with the same doubt, here is our guide to starting a business after Brexit in 2021.
Should you start a business after Brexit?
The current climate of uncertainty might lead you away from starting a business in the UK right now. However, there are still many factors that make the UK a favourable environment for entrepreneurs.
Helped by our finance culture and tech sector, the study conducted by the Legatum Prosperity Index ranks the UK above France and Germany as the best country to start a business:
Indeed, its entrepreneurial culture is one of the strong hands the UK can justifiably claim in the face of Brexit. The Small Business Minister, Margot James, recently noted the need to nurture entrepreneurship. “This government is committed to ensuring the UK remains the best place in the world to start and grow a business,” she stressed. “That means identifying and then helping those high-growth businesses to scale-up, go global and invest in their future.”
What do business owners think about starting a business after Brexit?
What will happen to the UK post-Brexit remains a point of contention and business owners are similarly divided. According to research from Informi, 37% of business owners believe that Brexit will make it harder for them to thrive, whilst 33% take the opposite view, and believe it will make things easier. There are plenty too who really have no idea. And who can blame them?
Another interesting survey conducted by Statista in 2019 showed that 16% of business owners participants planned to relocate their business somewhere else, while a staggering 62% were not planning to relocate their operations abroad after Brexit.
Find more statistics at Statista
The chart also shows that 13% are considering to relocate and 6% are relocating but not because of Brexit.
Further professional guidance can be provided by our own currency consultants, please feel free to give them a call if you have any post-Brexit business concerns.
Placing growth and statistics to one side, do the fundamental steps to starting a business actually need to change in Brexit Britain?
Step by step guide to starting a business after Brexit
1. Finding an idea
A business idea doesn’t have to be unique or original. What matters is that there are enough people who will pay for your product or service for it to generate a profit and for you to earn a living. Depending on your ambitions, you’ll also want to consider if your business is scalable.
When planning to start a business after Brexit, the economic or political consequences that will follow won’t change these considerations. Businesses that have always met the needs of the public will still be in demand. What may change is how much pressure external factors place on your ability to make a profit. For example, previously successful businesses who rely heavily on imports are beginning to put their prices up, which may then have an impact on consumer sales. Conversely, there will be opportunities for businesses to fulfil the new needs presented by Brexit.
2. Writing a business plan
When you’re planning to start a business after Brexit, writing your business plan is the first step towards transforming your idea into a reality. It’s an opportunity to think about every aspect of your business and outline your overall vision backed by real objectives and tactics. These details can be crucial in helping you win backing from potential investors and key stakeholders.
Brexit should be factored into the economic data within your business plan. You’ll need to show the reader that you understand the potential implications of Brexit on your business model. Whilst you can’t be expected to determine exact outcomes, you should plan for best and worst-case scenarios. For example, if your income relies heavily on consumer spending consider how things like inflation might have a knock-on effect.
3. Funding your business
Unless yours is a low-key operation, most start-up businesses will need some kind of cash injection to cover initial launch costs. The good news when deciding to start a business after Brexit is that there are many places to turn to for funding, and this is unlikely to change even with Brexit. A loan courtesy of the bank or from your family and friends is a good option to explore initially. However, there are many non-traditional routes now available to start up a business. Peer-to-peer (p2p) lending and crowdfunding have really opened the playing field and there are also a large number of government grants available, ranging from cash awards to soft loans.
One thing to be mindful of is the likelihood that interest rates will be raised by the Bank of England in the next few years. Analysts consider this very likely to happen so make sure you’ve factored this into your projections if you are borrowing funds.
Another key consideration is, of course, currency exchange. Are you planning to import or export as part of your business? Any large or regular international payments will be subject to the ever-changing exchange rates. With the market currently volatile, it’s important to keep an eye on the latest exchange rates and seek guidance from a currency specialist. Expert guidance can help you to make the most of any payments you need to make now and after Brexit. You’d be amazed at the difference it could make to the bottom line of your business.
4. Setting up
A major cost to factor in when planning to start a business after Brexit is where you will base your operations. If you need to be located in commercial premises then you will need to find and pay for a site of some kind. A cheaper alternative is to find a co-working space or, alternatively, minimise your costs entirely and run the business from home. Whilst you might think you need premises, there are many costs involved, not least the burdensome business rates tax, which can also really eat into your bottom line.
If you need to hire staff, you should also consider the impact that Brexit has already had on recruitment. Industries that are heavily reliant on migrant labour, for example, agriculture, have already reported a drop off in numbers and this is likely to increase when controls are tightened post-Brexit.
5. Branding and marketing
Building a successful brand is not something that happens overnight. However, the foundations should be put in place whilst you’re setting up your business after Brexit. Who are your customers? What is your USP (unique selling point)? Why are you the right person to solve their problems? These are all things that you’ll have thought about when writing your business plan and now will really help you to shape your brand identity.
Choosing a name and a business logo are key parts of your brand identity. But you’ll also need to think more generally about the key messages you want to convey and how to convey them. The latter point, your tone of voice, should thread through all your marketing activity and give it a consistent feel. From here, you’ll be in a great position to establish your digital presence, i.e. setting up a website and social media profiles. Only once you’ve got these things in place should you start spending any money on advertising.
You’re nearly there. However, there are some admin and finance-based activities you’ll need to do before starting a business after Brexit. One of the most important is which legal structure you choose. Whether you set up as a sole trader or a limited company will have a major impact on your tax and compliance responsibilities – so it’s worth speaking to an accountant. They can also help to advise you on setting up a bookkeeping system to record payments entering and leaving your business.
Finally, you’ll also want to determine internal processes, for example, your payment terms, and familiarise yourself with key financial documents such as delivery notes, invoices and budget sheets. Not the most exciting of tasks, but you’ll be grateful once your business is up and running.
So, there you have it. Your guide to know what it takes to start a business after Brexit. Whilst it’s not fundamentally that different from pre-Brexit days, it crucial to be mindful of what could be around the corner, given that we are still early days after the transition period.
And as Winston Churchill wisely put it, “a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”