Preparing your business for Brexit
As we near 29th March, with no clearer vision as to what the UK’s exit from the European Union will look like, we wanted to direct tech entrepreneurs to the available government resources designed to assist businesses in the event of a no deal Brexit.
Talking to the founders of some of the UK’s most promising startups, consensus shows that businesses want to prepare for all eventualities but that the current uncertainty is starting to take its toll.
Richard Potter, CEO of Peak, a data analytics AI business based in Manchester, explains: “The biggest issue Brexit is causing business is uncertainty. The prospect of leaving the EU with no deal seems like a real possibility and poses a massive risk to UK business and jobs. There is no way to prepare for that fully, however taking measures such as shoring up your balance sheet and putting yourself in the strongest position possible while we wait for clarity is the minimum any business can do.”
David Benigson, who co-founded Signal Media in 2013, said that his AI business’ recent expansion into the US and Asia Pacific regions was “all the more important thanks to a potential no-deal Brexit that would certainly limit expansion in the UK.” Signal is taking steps internally to protect its staff and ensure its products are compliant with EU law in the event of no deal.
Benigson says that hiring right now is proving difficult. “Talent from both within the UK and from the EU, and more generally abroad, is waiting to see what the outcome is of Brexit before they make any decisions about their next job. The uncertainty in the jobs market is coming from talent as much as companies and the concern from talent, not our future, is affecting us right now.”
Given the nature of the technology industry, it should be no surprise that the UK’s digital technology sector is very international in its make-up and that company owners are worried for their current employees, and how they will recruit in future.
Tech Nation research has found that 18% of tech directors are non-British, compared to 13% in all other sectors. In London, research for Balderton Capital found that over 40% of companies founded in 2015 have at least one founder from overseas. Some of the most successful companies founded in the UK in recent years – like Deliveroo, Farfetch and Transferwise – were started by immigrants to our capital city.
Some digital technology companies have already gone as far as opening an office within the EU.
Tugce Bulut, co-founder and CEO of Streetbees, the online research company, says: “We’ve opened an office in Lisbon, both to access the amazing talent there and to give our many talented employees from across Europe added job security. We wanted them to know that in a worst-case scenario, their careers with Streetbees are safe and we will do whatever we can to ensure they continue contributing to our success.”
Like many scaling companies Streetbees is still hiring, but Bulut says: “We are being even more careful than usual to make sure the roles we are hiring for are critical to the growth of the business.”
Music For Pets CEO Amman Ahmed, who is based in Manchester, says that since half of his revenue is in dollars and the other half in pounds, he believes he can make the most of currency fluctuations. But he has not ruled out moving the music streaming business out of the UK.
Ahmed says: “As it is fully automated and online I can just pick up and move my company to another country if I need to.” He does, however, worry about what less mobile businesses will do.
It is worth bearing in mind that the UK’s technology sector faces departure from the European Union from a strong position – with £6.3bn of venture capital invested here in 2018, more than in France, Germany and Spain combined. The UK is also home to 15 unicorns – 38% of Europe’s total.
We’ve pulled together the following resources, which may help to answer some of your immediate questions.
If you’re an EU citizen
The government has already provided reassurances to EU citizens living and working in the UK, that they will be able to remain and will be able to apply for settled or pre settled status.
In the event of a no deal
- EU citizens already in the UK
Although leaving the EU with a deal remains the government’s top priority, should there be a no deal scenario for EEA citizens who are resident in the UK by the time the UK leaves the EU, they would continue to be able to apply for status in the UK through the EU Settlement Scheme.
- EU citizens coming into the UK after 29th March 2019
The Home Secretary set out provisions for EEA citizens and their family members arriving in the UK from the EU in the event the UK leaves without agreeing a deal. In this scenario, free movement would end and there will be a transition period until the UK’s new skills-based immigration system is introduced at the beginning of 2021.
During this period EU citizens will be able to continue to enter the UK and would be allowed to stay and to work for three months. Those intending to stay for over three months would need to apply for three years of European Temporary Leave to Remain.
At the end of the three years they would need to apply for a fresh permission to stay in the UK under the new immigration regime. See our review of the immigration white paper, outlining the UK immigration system post Brexit.
How to prepare your business
In such uncertain times it is difficult to plan ahead for many businesses, particularly when it comes to smaller businesses that may not have the resources for scenario planning. In addition to the technical notices, which were put out last Autumn, government has launched the EU Exit Hub, which is intended to direct people to the correct information they need by answering seven questions depending on their sector, and predominant areas of concern.
In the event of a no deal, transfers of data between the UK and the EU will need a new legal basis. If you are a startup, the ICO’s six steps to take is a good place to start your preparations. The ICO’s interactive guide for small and medium-sized businesses is also a useful primer to help you understand what steps need to happen.
With all options still on the table, including leaving the EU without a deal, government has dedicated additional resource including staffing, infrastructure and policy should there be a no deal in order to ensure there is as much stability for citizens, consumers and businesses.
No amount of planning, however, can make up for the uncertain times that we currently live in and we will endeavour to continue engaging with Government to ensure that the views and concerns of our entrepreneurs are represented.
Should you have any specific queries or concerns please contact me on email@example.com.