Brexit worries impacting confidence amongst SMEs
Our Enterprise Index analyses the impact of Brexit, and Article 50 negotiations, on the confidence of scale-up businesses and entrepreneurs.
Small businesses looking to scale-up have suffered from the ongoing uncertainty, over Brexit and the triggering of Article 50, during the past year.
The EU Referendum served as a focal point in June 2016 and it is noticeable that there has been a wide fluctuation in immediate confidence and the long term economic outlook since then.
The Enterprise Index, a quarterly barometer of the confidence of SMEs and entrepreneurs, has not had two consistent quarters of growth, or decline, since the beginning of the 2015 election cycle and the Conservative promise of an In/Out referendum.
Our survey responses indicate a plateauing of the extreme emotions following the June referendum. There was initial panic following the Brexit decision, a huge and potentially overstated relief rally but now respondents are looking ahead with a measured and practical view.
Despite fluctuations in confidence, businesses can secure their future by developing internal plans and strategies. Having a secure, and regularly updated, business model will position a company to not only weather a storm but capitalise on any opportunities that may arise.
Businesses not feeling the support of the Government
Less than half of respondents to the Q4 2016 survey believe that the current government is supportive of private enterprise. This is the third quarter in a row in which our quarterly research has identified a decline in confidence in government policy. Over the past six months, belief in government support has decreased by 20% (to 49%)
The community has taken a number of hits over the past twelve months and is expecting to face even more over the coming year. Reforms of business rates, the apprenticeship levy, the national living wage, auto-enrolment and changes to the way dividends are taxed have all had an adverse financial or emotional impact.
It’s not that all SMEs regard these changes as negative, but the flow of new initiatives has been relentless. Like buses, they’ve all come at once. Many businesses are left struggling to keep up with the constant developments originating from the Government. Outsourcing key areas where an entrepreneur, or business owner, is not a specialist is a great way to ensure their business remains compliant and allows individuals to focus on their core areas.
Brexit, and what it may mean for an individual and their businesses, has been hanging over everyone for over a year and looks set to continue for, at least, the next two. Business owners wonder what might be required, what changes they may need to make and what openings could arise.
Optimism amongst SMEs own prospects returning despite Brexit uncertainty
At the beginning of 2016 nearly 80% of small business owners were optimistic about their own prospects over the coming 12 months. However, as EU referendum worries took hold, pessimism began to seep in.
Optimism returned as entrepreneurs realised that, until Article-50 is actually signed, very little has changed for them on a day-to-day basis. It’s vital that businesses remain open and optimistic about their future potential. While the landscape may change there will always be a number of opportunities out there for those with the entrepreneurial mindset to grab them.
Smith & Williamson will be providing regular updates, insights and an events schedule relating to the unfolding Brexit negotiations and the impact on the UK’s economy, businesses and individuals. Please register to receive notifications of these for your areas of interest.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.