Whilst Brexit may have caused political paralysis in Westminster, the UK’s fastest growing small businesses see specific opportunities to exploit. New research explores whether further Brexit delay and protracted uncertainty will be well-received by small business leaders – who see opportunity from uncertainty and want to get on with growing their enterprises.
The findings are from The Business Barometer – quarterly research by Hitachi Capital Business Finance that has tracked the highs and lows of small business confidence since 2015. The latest study asked a nationally representative sample of more than 1,000 small business owners to reflect on the perceived opportunities that might arise for their business as a result of the public’s decision for the UK to leave the EU. Hitachi’s data revealed that small business views towards Brexit correlated closely to the overall outlook for their business. Those enterprises that were most likely to predict significant expansion in the months ahead were highly likely to identify tangible opportunities arising from Brexit (70%), whereas those predicting contraction (31%) or risk of closure (25%) were least likely to see any upside.
The five big opportunities for the UK’s fastest growing small businesses
Those predicting significant growth were able to pinpoint a number of tangible opportunities they could exploit from the UK leaving the EU. For most, the benefits had little if anything do to with politics – the opportunities were based on employing the advantages of speed and agility to grow and open new markets at a time of uncertainty and change.
A time to open up new markets
For fast growing small businesses, the biggest perceived opportunity related to building new partnerships and business relationships in non-EU countries (32%). In a fast-paced and digitised global economy, opening new markets is good for growth – and, for fast growing smaller companies, Brexit has been a trigger to encourage this. Overall, UK small businesses that predicted significant growing were 10 times more likely to say the possibility of new markets was an opportunity to be seized in the current climate (32% compared to 3% of businesses predicting contraction)
The weak pound
Whilst the weak pound has been a challenge for many, the UK’s faster growing small businesses again see the upside from uncertainty, highlighting the opportunity for exporting goods and building market share in overseas markets (31%).
Backing British busines
Overall, 29% of business owners that predicted significant growth were also most likely to believe that a dividend from Brexit was that the UK Government would be obliged to do more to support UK small businesses. In recent decades, the UK has sought to attract overseas businesses to locate to the UK – for example, in 2018 alone London welcomed more international financial services companies than any other financial centre. From Hitachi Capital’s latest research, it is clear many small business owners believe The Government will focus more attention on showcasing British success stories to the world and, in doing so, to do more to support the growth of domestic small businesses.
Less red tape
Small businesses predicting significant growth like to move quickly, they like efficiency and often play on agility – attributes that all make a virtue of their relatively small size. With this in mind, red tape is seldom welcomed – and one of the upsides that business leaders predict from Brexit is a reduction in rules and bureaucracy that would hold them back (28%). Brexit may or may not prove to reduce red tape for small companies, but the research underlines that anything that reduces it is welcomed – and specifically those that are growing quickly. The prospect of a reduction in red tape was also welcomed by seasoned, older businesses (those trading more more than 35 years – 26%) and enterprises in the agriculture (38%) and real estate (27%) sectors.
Taking on the big boys
Small business owners were also acutely aware of a domestic, tactical advantage presented by Brexit – that of stealing significant market share from bigger UK competitors that would be more distracted by Brexit (24%). This is perhaps a prime example of how the small business community can use their size as an advantage to grow during times of uncertainty.
Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance, commented: “It seems our smaller businesses have a “Business means Business” rhetoric. Over the course of the last few years we have asked how they have been feeling about Brexit and, contrasting to the wide-ranging – even exhaustive – national debates, small businesses have been remarkably calm and pragmatic, just wanting to get on with running their ventures.
“Our latest findings are more about change and protracted market uncertainty – and how small business owners see them as either an opportunity or a threat. As we have seen from our research in recent years, major events such as The Scottish Referendum, GDPR and Brexit can create a bigger ripple for large businesses as many either struggle to adapt or move slowly. In contrast, their small, nimble counterparts can react more quickly and seize tangible growth.”