By Ella Hendrix
However you feel about the referendum vote, and the decision to leave the EU, there’s no doubting the profound effect it will have on the UK economy
and, in turn, small businesses. Even while the UK remains nominally an EU member, we’ve already seen an economic downturn since the Brexit vote, most notably in the sharp drop in the value of the Pound and the effects of every Brexit-related announcement on the strength of the Pound against its currency partners, particularly the Euro and US Dollar.
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?
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 Global Entrepreneurship Index actually ranks the UK as the fifth best place to start a business in the world
, ahead of the US and much of the EU.
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.”
But forget growth for now, do the fundamental steps to starting a business actually need to change in Brexit Britain? Let’s see…
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.
Brexit will not 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 will likely have 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 – Blue passports
Writing a business plan
When you’re starting out, 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 in to 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.
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 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 open 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 in to 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 – and the market is volatile right now, so keep an eye on the latest rates
and seek guidance from a specialist 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.
A major cost to factor in to your initial outlay is where your business will be based. 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.
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. Who are your customers? What is your USP? 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 you’re ready to launch. 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 starting a business in Brexit
Britain. Not fundamentally that different from before, just a little bit more wary of what’s around the corner. And as Winston Churchill wisely put it: "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." Now, there's the spirit.
You can also keep up with the latest news on Brexit and how it affects the currency markets in our informative news