How to get your SME Christmas-ready amid Brexit uncertainty

6 September 2019

Posted in Newsroom

by Cecile Brisson (see media contact)

One in three micro SMEs (34%) say Brexit is bad for Christmas trading, while 6% say it is good, according to an AXA UK survey that suggests their main concern, if any, has to do with smaller consumer demand.

AXA UK is offering some advice for small businesses keen to avoid any potential supply chain disruption.

The survey

Almost 500 small businesses employing 0 to 9 people were polled as the UK prepares to leave the European Union, possibly on 31 October, with or without a deal.

Half the micro SMEs that bring in stock for Christmas plan to do so at the same time as last year but 22% will do it earlier. Two percent will do it later and 28% don’t know yet.

While the majority of SME owners (60%) expect Brexit to have no impact on their activity over the Christmas trading period, 18% expect it to have a negative impact and 5% to have a positive impact. In the short term, 21% expect smaller consumer demand, 11% delays for imported goods and 10% product shortages.

Those who prepare for potential economic consequences mainly do so by reducing their expenses and putting more savings aside.

The advice

However, SMEs can take other steps to stop a Halloween Brexit ruining their Christmas season.

Douglas Barnett, Director of Mid-Market and Customer Risk Management, explains how small businesses can prevent supply chain disruption.

Know your supplier (and your supplier’s supplier)

As an SME, you likely buy your goods from local wholesalers. But do you know who supplies them? You may want to ask them whether they expect any disruption, and if they have made provisions to bring in goods early or have set up any alternative arrangements. Looking now for alternative suppliers for stock your customers will expect would be time well spent.

Allow extra time or have a backup plan

If customs and excise carry out more checks, there might be backlogs at entry ports. In case your stock gets stuck on the dockside, you may want to allow for delays, or perhaps consider a back-up plan.

Get storage – and insure accordingly

If you bring in stock earlier, check you have the capacity to store it or find additional storage. If you use a different warehouse from your current one, or even your home, let your insurer know as they may want to inspect it. With a bigger stock in, update your sums insured to ensure the right level of cover.

Hire right

You may want to coordinate your staffing levels with your stock volumes and timings. In the hospitality and leisure sectors, you will probably find it more difficult to hire seasonal staff among non-UK nationals, faced with status uncertainties. This reduced availability might have repercussions in other sectors.

Buffer your cash flow

For many businesses, the Christmas season accounts for a large chunk of their annual income. If people spend less or if the buying peak is delayed, this will have an impact on your cash flow. You may want to buffer it.

The survey tables

498 owners of micro SMEs (0-9 employees) responded to this online survey, carried out by Taylor McKenzie between 9 and 16 August.

This year’s Christmas preparation are
The same as last year 76.50%
Slightly different to last year 19.30%
Very different to last year 4.20%
SMEs are bringing in Christmas stock
At the same time as last year 19.90%
Earlier 9.20%
Later 1.00%
Don't know yet 11.40%
Don;t buy stock 58.40%
How SMEs expect Brexit to impact their business volumes (or not) over the Christmas period
Positive impact (more business) 5.20%
Negative impact (less business) 17.70%
No impact 59.60%
Don't know 17.50%
In the short term, SME owners expect their business to experience these Brexit-linked issues
Smaller consumer demand 21.10%
More red tape 15.10%
Delays for imported goods 11.00%
Product shortages 10.40%
Difficulties exporting 6.20%
Difficulties hiring and retaining staff 4.40%
Difficulties to borrow money 4.00%
Difficulties to stockpile 3.00%
None of the above 59.60%
How SME owners are preparing for possible economic changes following Brexit
Reducing own expenses 27.90%
Putting more savings aside 17.10%
Looking for employment opportunities 12.20%
Preparing CV/browsing jobs 8.40%
Taking less salary/dividend from the business 8.40%
Putting investment plans on hold 8.40%
Putting hiring plans on hold 4.80%
Getting by with fewer staff 3.20%
Taking on extra finance 3.20%
Selling a property/shares/assets 2.80%
Cashing in pension 2.40%
Other 1.20%
Not preparing 55.00%
SME owners say Brexit is
Good for their business 10.40%
Bad for their business 27.50%
Neutral 49.00%
Don't know 13.10%
Expected impact of Brexit on funding opportunities for SMEs
More funding opportunities 6.20%
Fewer funding opportunities 33.90%
The same amount of funding opportunities 24.50%
Don't know 35.30%
How SME owners voted in the 2016 EU referendum How they would vote in a new referendum
Leave 42.60% 36.90%
Remain 43.20% 49.00%
Didn't vote / Wouldn't vote 11.20% 6.00%
Unsure n/a 6.60%
Would rather not say 3.00% 1.40%