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Are small businesses really ready for Brexit?

Lisa O'Carroll Brexit correspondent
·6-min read
<span>Photograph: Robin Utrecht/EPA</span>
Photograph: Robin Utrecht/EPA

With just 29 days to go before the end of the transition period, the government is urging businesses to get ready for Brexit.

But how are small to medium-sized businesses – the family businesses that are the backbone of the country – faring?

We returned to businesses we spoke to in 2018 about the issue and the answers we got ranged from contempt about the “Westminster bubble” to multiple claims that hauliers, suppliers and courier companies were providing more information about the new import and export paperwork than the government.

Philip Rowell has already upped sticks and moved his company to Barcelona. “The experience has been 100% positive. I wouldn’t return to the UK now. In fact I’m doing everything I can to extricate my remaining financial ties with the country,” he said.

Businesswoman and TV Dragons’ Den panellist Deborah Meaden warned of disruptions to supplies deal or no deal

But what about others?

Sally Stephenson, The Pencil Case, Cowbridge, Wales

Sally runs a schoolwear and stationery shop selling everything from uniforms to pens but “hasn’t the faintest idea” of what to do after a German supplier told her she would have to be responsible for all customs imports procedures.

She buys from UK and EU suppliers but is particularly worried about suppliers of the popular German pen brand Lamy, and Depesche, “a really famous brand of children’s colouring books that people actively come to us for”.

Knowing change is coming and not knowing what to do about it, she decided to pile cashflow into buying four months’ worth of stock, “a tough decision” for a tight micro-business such as hers, which employs two full-time and two part-time staff.

“What I’ve been doing all week is ordering tons of stock to get in before Christmas so that it sort of buys us time for things to settle down and hopefully some sort of agreements to be put in place,” she said.

“There is no chambers of commerce in our town to help. The Federation of Small Businesses have been able to help with a few bits and pieces but we are all in the same boat as we’ve no idea what to prepare for and what conditions we will be trading in.”

What does she think of government support? “They’ve been absolutely useless. I’m getting more information from my German supplier and the courier company than I am from them.”

Peter Qvortrup, Audionote, Brighton

Peter has been running businesses for 40 years and employs 50 people in the UK and about 25 in two other sites in Lithuania and Austria for Audionote, a high-end audio company supplying domestic sound systems, ranging in price from £6,000 to £3m, to music professionals and wealthy clients.

“We have poured hundreds of thousands of pounds buying parts and putting them in storage since May. If there’s going to be a deal, it’s still going to be so narrow andit is not going to solve the problems of getting stuff in and out of the country,” he said.

He imports about 75% to 80% of the parts for the bespoke sound systems, with exports accounting for 95% of turnover.

“The most serious issue for us is: how does the regulatory environment look from 1 January?” he said.

“Even at this late stage – with four weeks to go – we don’t know exactly where we will be on 1 January. It may well be that we can’t ship anything into the EU for a year because the CE mark that we have on our products is no longer valid.

“The fallout from this is going to be significantly worse than the worst predictions.”

Asked what he thought about Michael Gove’s plea to business to get ready, he could hardly conceal his disdain.

“It’s all good and well to say: ‘you must get ready’, but I mean – get ready for what? It’s like saying get ready for school, but where are my clothes, where is my school?”

Mark Ormiston, Ormiston Wire, London

Ormiston Wire produces specialist cable and braid, and counts prestigious work in its portfolio including an umbrella installation in Heathrow airport and Thomas Heatherwick’s Bleigiessen sculpture in the atrium of The Wellcome Trust.

“The government is telling us to get ready for Brexit and they don’t know themselves if it’s deal or no deal.

“We have been totally ignoring all Brexit communications from anyone as, surprise surprise, we have more important things to worry about,” said the managing director, Mark Ormiston.

“This government is inept, especially dealing with business. We are getting in as much raw material in as we can from Europe before the end of this year as possibly it will be mayhem in the next.”

Julian Tandy, World of Water Beds, Pen-y-groes, Wales

World of Water Beds is a small family company with two main suppliers – one in Denmark and the other in Exeter.

Tandy said he was prepared. He has his Economic Operators Registration and Identification number to complete customs declarations and has investigated that the tariff rate for his imports is zero.

But he said his costs were going to go up by between 15% and 18% and that was going to hit the customer in the pocket.

At the moment they can order direct from Denmark with no import costs but the paperwork is going to add a cost per pallet whether there is one or 10 things on it.

“In a deal scenario we still have customs clearance and that is going to cost £25 to £50 per pallet and that will be passed straight on to the customer,” said Tandy.

He’s also concerned the facility to pay net VAT charges on a quarterly basis is going to disappear, eating into his cashflow. “That’s another financial burden on top of Covid,” he said.

“At the moment we don’t know what the situation is going to be so it means we are selling products without knowing how much it is costing you.

“If they were to say this is happening in January 2022 we could prepare but it is happening in four weeks’ time.

“It is completely unacceptable for any government to expect a business to run like that.”

Are you an SME with a Brexit story? Email, putting ‘SME’ in the subject line