Valitor SMB solutions on why its time to get Brexit ready
Steven Stewart, Director, SMB Solutions at Valitor, comments on how the payment industry can help champion the SMB community.
What a year it has been for UK small and medium businesses. Just over halfway through 2019 and we have already seen big-name high street retailers hit hard times and well-known restaurant chains completely disappear. With the recent news that the UK’s economy shrank in the last quarter, 2019 is already shaping up to be one of change. And that is before we even get to the main event, which at the moment is slated for October 31st. Whatever your thoughts are about Brexit, it is going to have an effect on our small and medium businesses (SMB) community. With so much unpredictability surrounding Brexit and the lead up to it, it is no wonder that research by YouGov and The Telegraph suggests some 39% of SMB owners are worried about how Brexit will impact operations. However, life must go on either way, and SMBs need to start planning for its effects now.
The full impact of what Brexit we get is hard to predict, however already we are seeing signs that things are changing. Looking at the actual number of transactions made with SMBs leading up to the original March deadline we can see that consumer behaviour changed. Using our own Valitor data (which tracks the number of transactions made at 5,000 UK SMBs spread out across the UK) we found that the number of transactions between January - March 2019 did not drop or slow down until the actual week Brexit was due to happen. In fact, overall we saw an increase of nearly 23% in sales for the average SMB compared to the same period in 2018. However, in the week leading up to 29th March 2019, the week the UK was expected to leave the EU, these figures actually dropped a massive 76% compared to the same period the year before. Although we can’t solely blame this on Brexit, the figures do suggest the issue that SMBs could be faced with. Our findings are further supported by the British Retail Consortium which attributed annual consumer spending in June to be at its weakest since records began due, in part, to the need for clarity over Brexit.
Get ahead of Brexit
So with the possibility of further contractions in the UK economy and more uncertainty between now and then, the situation for SMBs is unlikely to improve. The good news is that already resources and initiatives are being developed and implemented to help SMBs prepare for Brexit – however it plays out. One of the key ones that has been started is by UK Finance and its “Let’s Talk Business” campaign, which is being supported by The Federation of Small Businesses, British Chambers of Commerce and the Confederation of British Industry. This initiative highlights to businesses who have not already prepared to seriously think about and get ready for the full implications of Brexit and provides advice and guidance on how to do this. However, while there are clearly some steps that SMBs can take, to fully prepare and be ready for Brexit and the uncertainty that currently surrounds it, they will need help from the private sector as well as the public sector.
One industry in particular that has a crucial role to play in helping SMBs as we edge closer to the October 31st deadline is that of finance. With funding for SMBs in particular expected to be hampered and disrupted, there is a need for the finance industry to come together and ensure SMBs are protected during this time. The reality is that without access to funding to cover expansion, cash flow shortfalls and possible disruptions, many SMBs could disappear. Beyond funding though, other financial service areas need to be thought about through the Brexit lens. Payment solution providers and other financial product providers also have a role to play. Given the amount of uncertainty currently surrounding Brexit, committing to a contract to supply a new payment system is a difficult decision for many SMBs to make. Yet a failure to invest in key technologies could see businesses miss out on a wealth of benefits such as an improved customer experience and access to valuable data insights that can be used to improve business operations and revenue. Payment solution providers also have a duty of care to ensure they themselves are Brexit-proof too, otherwise SMBs could be forced to switch suppliers sooner than they would like.
Rules and regulations
The other big issue that is going to hit SMBs is the uncertainty around the future regulatory landscape. SMBs do not have the time or resources to take a detailed look into the full legal or regulatory alignment that maybe need post-October 31st. While there will hopefully be plenty of advice and assistance from the government and industry bodies as the picture becomes clearer, SMB service providers themselves should look to help too. Simple things like taking extra time and communicating with SMB owners what the impact Brexit may have on the services they provide go a big way to helping. SMBs too can help themselves and remove much of the worry by seeking out providers who are already prepared and have Brexit-proofed themselves to begin with. By taking just a little bit more time to communicate clearly about Brexit finance, payment providers can evolve from being simple service providers to genuine partners and resources of information and assistance. This simple step can make sure SMB owners feel reassured they have the right partner, who is going to provide a helping hand through potentially turbulent times.
Looking into the near future, this greater focus on the specific and adaptable needs of the SMB community could well lead to the creation of more products and services that align much more closely to the unique needs of the SMB community. For instance, we could see further improvements in helping with cash flow management or ensuring that businesses receive their card payments in their accounts even quicker. Consequently, we may even look back on Brexit as a watershed moment as providers refocus on the needs of SMBs and adjust their products and offering accordingly. Hopefully, as a clearer picture emerges, innovations such as better funding options and potential contracts that match SMB needs will become the industry standard.
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Preparing SMBs for Brexit and the future of the UK economy needs to include all partners and stakeholder both public and private. This means that the government and local authorities can’t hide from their responsibility. There needs to be more listening and understanding about what the true needs of SMBs are. Simple steps such as having politicians and public servants going out to meet and speak with SMBs and industry bodies that represent them would go a long way to helping. This very point was actually highlighted in research by accountancy firm Moore and Stephens, who found that many SMBs currently feel overlooked by politicians. Only by bringing all the key stakeholders together can we ensure that SMBs can survive and thrive.
Adapt and Survive
The time for waiting and standing still about what may happen with Brexit has long since passed. The reality is that the clock is ticking for all of us now. Those that thrive will be the ones that are best prepared, willing to seek help and take a long term view. While the future may seem uncertain, the business and political worlds are slowly waking up to the needs of the UK SMBs and steps are being taken to help. However, that does not mean SMBs cannot help themselves. Ultimately, we all need our SMBs to succeed, as they really are the backbone of the economy.
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