Gift Focus - May/Jun 2019 (Issue 113)

28 The Giftware Association’s CEO, Sarah Ward, breaks down the possible ramifications of Brexit, and what SMEs can do to prepare At the time of writing this article, the UK is in a bit of Brexit deadlock – in what some MPs have described as a constitutional crisis. With Brexit Day postponed until April or May, we are no closer to a deal as the Commons and the government tussle over the issue. Where does this leave the UK businesses, especially SMEs in the home and gift industry? We are all still a bit unsure of what Brexit could bring to the UK; how do you prepare for the unknown or for a multitude of scenarios? Most businesses have hopefully already adjusted their planning and strategies, preparing as best they can for a deal or a no-deal scenario. SMEs are predicted to be hit the hardest with the effects of Brexit. There are 5.7 million SMEs in the UK, accounting for more than 99 per cent of private sector firms and 60 per cent of total UK private sector employment. SMEs also account for 73 per cent of all net private sector job creation in the UK, creating two million jobs since 2010. With these SMES essential to the backbone of industry in the UK, what will happen after Brexit, and how can an SME prepare? Brexit will bring issues to a business that it may never have seen before or had a chance to prepare for, from staffing issues and skill shortages and drastic changes to import and export tariffs to a fall in general business confidence as other countries resist trading with the UK. We spoke to GA member Talking Tables, an importer and exporter certain to be affected by the outcome, about how it is preparing: “Brexit is causing significant challenges to us as an importer and exporter, principally around the uncertainty that there may be a deal signed or no deal. The current withdrawal agreement would allow us to plan the transition to being fully outside of the EU by the end of 2020. It would mean that free trade agreements with the EU could be put in place. What it would not deal with is the need for every small retailer we supply to in the EU to customs-clear and pay import VAT on every shipment we send them. The workaround for this is to establish a subsidiary company within the EU that would make the sale to the end customer. The subsidiary company would buy stock from the parent company and warehouse this stock on the EU mainland. Of course, this does come with a cost, but the EU market is significant enough for us to be actively exploring this route.” Creating a subsidiary company is one clear way of continuing to trade within the EU on the same business tariffs, but this still depends on the outcome of the government’s negotiations. The benefit of creating a subsidiary is having much better control over your business and its finances. Your investment will also demonstrate strength and stability in an unstable time, Preparing for Brexit Sarah Ward (right) and Amanda Fergusson (left), CEO of The Greeting Card Association