The fate of Small and Medium-sized Enterprises (SMEs) has been questioned since Brexit was first announced, but it only got more complicated when the coronavirus crisis hit and many businesses found themselves unable to continue running, even with the aid of a government grant.
The Impact of Brexit
A study from academics at the University of St Andrews found that innovative small and medium-sized businesses could be the most negatively affected by Brexit.
Drawing on a previous government survey of about 10,000 SMEs, researchers analysed the potential impacts of Brexit on small businesses.
The analysis suggested that as a result of uncertainty caused by Brexit, SMEs could see reduced levels of capital investment, access to external finance, growth, product development and business internationalisation.
SMEs that considered Brexit a major obstacle were 26% less likely than other firms to make capital investments in the last 3 years.
The impact was greater for ‘innovator’ SMEs, which were 35% less likely.
Dr Ross Brown, reader in Entrepreneurship and Small Business Finance at the University of St Andrews, said:
“Perceived negative impacts appear to be foremost in the minds of entrepreneurs and managers located in the types of innovative and export-oriented companies, which are often viewed as the high growth ‘superstars’ of tomorrow.
In other words, SMEs thought to be the most significant for boosting productivity and economic growth may be the most negatively affected by Brexit.”
The Impact of the Coronavirus Crisis
Research found that many SMEs weren’t prepared for the Coronavirus crisis.
Mike Cherry, chairman of the FSB, said:
“The costs businesses face when their supply chains are impacted can be severe and therefore we stress the importance of planning for the future.
“Given the likelihood that an enterprise will encounter some sort of business interruption issue more than once in their life, it is key that firms are encouraged to consider all risks they could face.”
Unfortunately, this lack of preparation meant that when the coronavirus pandemic hit, many small businesses were negatively impacted and some may never recover financially.
Despite the government’s best efforts to support SMEs with the Coronavirus Job Retention Scheme, over 3 million self-employed workers have missed out on the support package due to being ruled ineligible or as a result of banks closing their doors to new customers.
This has meant that small businesses have had to put heavy investing towards enabling remote working, including new equipment such as laptops and computer programs. On top of this, 40% of businesses have provided staff with digital training to help them work from home in the most efficient and productive ways.
Whilst some small businesses may not recover from the financial strain of the pandemic, for many, this has been a wake up call that will encourage them to be more prepared in the future and will also enable staff to work more flexible now they have the correct setup to work from home.
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