More than one in three SMEs are changing their strategy post-Brexit

Study shows

More than a third of UK companies (35 per cent) with fewer than 250 employees are changing their business strategy as a result of Brexit, according to new research from Albion Capital, the independent investment manager.

The Albion Growth Report 2017, launched today, surveyed more than 1,000 SMEs and found that of those changing strategy because of Brexit, over a fifth (21 per cent) are investing in new offices or existing operations outside of the UK. This compares to less than one in ten (8 per cent) investing more in their UK operations.

More SMEs believe Brexit will hinder companies looking to enter new markets (46 per cent) than help them (30 per cent). Yet significantly, businesses planning to enter new markets in the next two years are prioritising new domestic markets within the UK (26 per cent) and new markets outside the EU (20 per cent) over expansion in EU markets (14 per cent).

Of the SMEs that believe Brexit will negatively affect businesses entering new markets, 85 per cent cite political uncertainty as a worry, 71 per cent believe the number of export markets will be restricted, while 67 per cent are concerned that their choice of workforce will be reduced. However, for businesses which see Brexit providing expansion opportunities, 87 per cent believe it will open up new markets to trade with and 46 per cent feel that it will reduce export regulations.

For businesses changing their strategy or plans as a result of Brexit:

  • They are most likely to be abandoning product and service developments (21 per cent), reducing operations and supply costs (17 per cent), or expanding their online presence (17 per cent)
  • Younger business leaders are more likely to change strategy than older entrepreneurs (42 per cent of under 35s and 48 per cent of 35–44s, as against 33 per cent of 45-54s and 29 per cent of over 55s)
  • Manufacturing (46 per cent) businesses are most likely to change their strategy
  • Business in London (45 per cent) are most likely to change their strategy, followed by the North-West of England (40 per cent)

Patrick Reeve, Managing Partner, Albion Capital, says: “This year’s report reveals an interesting disparity between businesses which are optimistic or pessimistic on the opportunities available to them in the post-Brexit environment. 

“SMEs are understandably anxious over the decision to leave the EU, which has cast doubt upon many growth plans, including expansion into new markets, the development of products and services, and staff recruitment. But it is encouraging to see that a significant portion of businesses are responding to the opportunities offered by the current landscape, and investing more into new operations. Despite the uncertain political backdrop, SMEs which invest in growth have the potential to create real lasting value.”

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