Having read all sorts of doom and gloom and plenty of speculation since the UK referendum to “Brexit” or leave the EU. What does it really mean for small business and start-ups growing, selling and raising cash?
In the short term the biggest effect is simply confidence, or lack of it, in some quarters in the City of London and international markets. They hate uncertainty.
If you export or import materials and products then of course you are already ahead of me as the fall in the pound, to a 31 year low last week. Although it has climbed a little since then. This is good for some bad for others. The City and markets will calm but nobody I talk to is expecting the pound to gain to pre-referendum levels.
Apart from that its business as usual for 80% of small businesses I know, mine included. Confidence is something you and I make and I’m more worried about the CBI and other figures that show only moderate growth in the UK economy in the quarter before the Brexit vote.
The boss of the UK Start-up Loans Company, Tim Sawyer is quoted in the FT last Sunday as saying that demand for small business finance is likely to increase as many more consider setting up their own business. I think he’s right. We see continued strong demand here in the North. Although I do worry that bank lending may get squeezed again and George Osbourne seems to agree as he has already relaxed the capital constraints on reserves they hold.
That said, I feel business confidence is higher than most think. Sure there is uncertainty on how and when we actually leave the EU, but probably no sooner than 2 years. So as long as our politicians start showing leadership and negotiate an exit strategy, none is obvious so far, then we can get on with business.
We almost, as I write have a new Prime Minister, love her or loath her and she will focus on the Brexit cleanup. I just hope Labour will follow and sort itself out, we need a strong opposition to challenge and support the Government as needed.
Uncertainty is a fact of life in business. Sound out your customers and re-assure your investors. Re-project your forecasts and carry on!
The North East of England, my home and place of work, is doing well. There is an air of confidence here and it’s a great place to start a business.
It’s also a good place to raise capital for small business having benefitted from £142m of a mix of UK Government and EU cash over the last 6 years with a further £120m promised. This has assisted around 800 local businesses and attracted £150m of private cash in the past. I can only hope the Government secures the next 5 years of EU cash before we get out of Europe, or promises to underpin this with its own money. There is also a further £400m Northern Powerhouse pot at stake.
So locally we could lose out from leaving the EU but only if the Government in Westminster doesn’t support the North of England.