Brexit export woes loom large for small business entrepreneurs

“There is still so much red tape that never existed before,” Harvey, whose head office is in York, said. “There are times when we still have to send from the UK because we’ve run out of stock [in the Netherlands’ warehouse] and that’s been a challenge.”

Byron Dixon, the 57 year-old founder of Micro-Fresh, did not hold back either. His company based in Leicester, makes an antibacterial coating that is added to products to protect them before they are sold. “It’s still a disaster. It costs us 10 to 15 per cent extra per invoice as a result of red tape, with things getting stuck at customs and extra duties. Sometimes we’re then having to send stuff by air to compensate our clients,” he said.

Another consequence of Brexit was the exodus of skilled labour as people returned to Europe during Covid and did not return. Katie O’Cearbhaill, the 44-year-old finance director of Excelsior Land, a builder of affordable and sustainable housing, said labour shortages in the building industry have been a “major issue” since Brexit. “I know it’s probably controversial, but loads of eastern Europeans have a better work ethic than English people.” O’Cearbhaill said she’s been working with councils in the West Midlands to visit schools and promote careers in construction, as well as considering how best to engage with other potential workers, such as former offenders.

Brexit aside, this year has also had its fair share of other challenges, including suppressed consumer confidence, rising late payments, increased staffing and raw material costs. But exports remained a big topic of conversation, especially with Donald Trump expected to impose trade tariffs when he takes office as US president in January.

John Stirling, director and co-founder of Arbikie Highland Estate, which produces gin, vodka and single malt whisky at its distillery in Montrose, Angus, said there was a huge amount of “uncertainty” about what will happen when Trump returns to the White House. “There were substantial taxes put on Scotch whisky [before] and that did have an impact.” He remains sanguine and said despite the challenges, America represented “the biggest export market” for his brand. “One of the advantages of exporting is that when one market is doing less well, another may start picking up again,” Stirling, 60, said.

Amber Hunt plans to expand into Poland next year. She is the managing director of Marshall Wolfe, a recruitment agency based in Ipswich that specialises in people with technology and digital skills, and says she’s “definitely seen a shift in the demand for recruitment”, downwards, in the UK this year. So she is looking further afield for growth. “We chose Poland because it’s a longstanding tech hub, so it feels like the safest option [to launch a European operation] before we go and replicate that elsewhere in the world. We’ve got clients that are already there and asking us to be there too,” Hunt, 32, said.

Tajinder Banwait, the founder of Urban Apothecary, a fragrance brand selling candles and home, bath and body products, said growing economic uncertainty in the UK has also affected her business. The Office for National Statistics said this month that the UK economy shrank in October for a second month in a row as households and businesses delayed spending over uncertainty about Labour’s economic plans. A grim survey from the CBI, the employer’s body, out on Monday, says companies expect a “steep decline” in activity in 2025.

“Consumers are still really cautious,” Banwait, 45, said. “We’re finding that people are buying but the spend isn’t £80 or £90, as it used to be. The shopping baskets have got smaller.”

Having also to contend with rising operating and raw material costs means this year has been “really tough”, she added. “As a manufacturer, making in the UK and producing products by hand, it is expensive, and labour costs have really caused a problem; they are going to continue to be a challenge going forward too with the increased NICs [national insurance contributions].”

One potential bright spot is the building sector. Sir Keir Starmer last week strengthened his commitment to a “stretching” target to build 1.5 million homes. For the three firms on the Times/Goldman Sachs 10,000 Small Businesses panel that operate in the sector, these moves are welcome but they want to see the detail behind the pledges.

“It would be amazing if the government would firm up the plans which would allow our clients, with public money, to give it to businesses like ours to help them build green, planet-friendly homes,” said O’Cearbhaill at Excelsior Land. She will be keeping a close eye on her margins if given the chance to tender for new projects.

“We only do them where we’re going to make money or it’s going to wash its face. So many people keep bidding for contracts without thinking about inflation. Last week we lost a £3.8 million contract because someone came in at £3 million. It just cannot be serviced £800,000 cheaper, we’re just backing up more insolvencies.” In the year to September, 4,264 construction firms collapsed, according to the Insolvency Service. This was a slight decrease on last year but a 32.5 per cent increase on figures before the pandemic.

Dorian Payne, managing director of Castell Group — which is a fast-growing builder of social and affordable houses, based in Swansea — agreed that the “past few years for construction from 2020 to 2023 has been the hardest time ever”. But he says the discipline learnt during the tough times is invaluable. “If we had started off making money from day one and had contracts landing on our desk, there would probably be more inefficiencies and waste,” Payne, 29, said.

Roni Savage, founder and owner of Jomas Associates, an engineering consultancy based in Uxbridge, west London, said the company had not grown by as much as she had hoped this year. But she is optimistic about 2025. “Rather than just working in the private sector, our real growth will come from doing big, chunky work in the public sector,” Savage said. She hopes that the Labour government will remove some of the administrative burden of the public procurement process for smaller companies. “There are more hoops to jump through with a box-ticking process that only benefits the big global engineering firms, which means you’re excluded [as a smaller company] for those big contracts.”

Initially disappointed about some of the anti-business measures in the budget in October, Savage, 44, said she is feeling more upbeat for next year.

“We’ve got to pick ourselves up, as we all do as entrepreneurs, and keep going. I’m fortunate that December is the end of my financial year so January is a time when we’re resetting. It’s a good time to be optimistic.”