How entrepreneurs are facing up to a post-EU future

Some are confident in a short-term storm passing soon; others are worried their firms will suffer.

by Rebecca Smith
Last Updated: 06 Jul 2016

Image credit: William Murphy/Flickr

The dust has settled (sort of) and everyone, from politicians to businesses, is assessing their next move following the referendum result. For the entrepreneurs of Britain, who generally warned against Brexit in terms of the damage it may do to start-ups, the immediate outlook post-referendum is a mixed one.

Richard Branson has been one of the most vocal critics of Brexit and the effects it’s wrought already. ‘If we carry down the current path, we’re taking the country to a recession very rapidly,’ he warned at Virgin Media Business’s VOOM competition for entrepreneurs yesterday. ‘Within 48 hours, we’ve had to cancel massive investment programmes, we’ve had to put a job freeze on, we’ve seen the share price of one of our companies come down by 50%,’ Branson added. ‘$3tn got wiped off the global markets in the first 24 hours. We’ve lost more money in British shares than we’ve paid into the European Union since the European Union started, in one day. It’s been a bloodbath.’

Of course, not everyone has been so vehemently critical of the result and what it means for businesses. Trevor O’Hara, founder and CEO of online platform Workabode (pictured below), is pressing on, telling his 350 shareholders ‘it’s very much business as usual’. O’Hara has lived in countries across Europe and is bullish about Britain’s prospects. ‘I don’t believe that even Berlin will come close to the UK,’ he says. ‘Many of these countries are so deeply mired in red tape and employee protection that the UK will continue to remain strong.’

He sought to reassure shareholders that the firm has financial support from Innovate UK for product development and any overseas contracts were in pounds so as yet; there isn’t an exchange rate risk. ‘The only change in our situation is the reliance on freelancers through platforms such as Upwork where all agreements are in dollars,’ he says. ‘So we will be keeping a close eye on the outsourcing of some projects.’

Others have felt the uncertainty more immediately. Money transfer service Azimo has a workforce of 90; 60 based in Poland and 30 in London (77% are migrants). CEO Michael Kent found the result personally and professionally quite a challenging one, as employees haven’t been sure what this means for their future prospects. ‘Here at Azimo we passionately believe that the world needs fewer borders not more,’ he says. In an attempt to assuage concerns, the firm is making a concerted effort to ‘repeatedly let our staff know that they are our greatest asset’ and hold regular company discussions about what’s happening post-Brexit. ‘If we have to move the location of Azimo to keep them then we will do that,’ Kent adds.

For some, the result has been nothing short of unsettling. Liz Barnes (pictured below) started her business, the online retailer Swimdress Boutique, in 2011 when her youngest son was three weeks old. She admits to being ‘terrified’ that her business will suffer as a result of the referendum. ‘I have already noticed a slowdown in sales and am 25% down year-on-year for this weekend,’ she explains. ‘Whether this trend will continue remains to be seen, but my prices will almost certainly need to go up. I buy my goods in USD and sell them in GBP, I manufacture in China. The cost of buying my goods will go up along with the cost of transporting them to the UK.’ Around a fifth of her business comes from Germany and those sales have improved slightly, predominantly due to the weakening pound. ‘Because I am a small company I’m able to make quick decisions and changes of plans,’ which is a plus in such uncertain times. ‘Now I’m considering translating my website to German and opening an office in Germany to capitalise on this growing market and also to prevent Europeans from having to pay import tax on my products in the future.’

The prospect of a Brexit wasn’t the expected outcome for many people, despite the vociferous campaigning. ‘I certainly didn’t think we would end up leaving the EU,’ Barnes agrees. ‘Before the result, I was planning for huge investment into 2017 stock and a national advertising campaign, which may need to be scaled back now with a "wait and see" attitude.’ She worries that banks will be unlikely to lend to her, while angel investors will be ‘more cautious despite me having five years of excellent trading history’. TechCrunch’s editor-at-large Mike Butcher said on the day the referendum result was announced, he’d already been told ‘at least three UK start-ups lost deals from EU investors because funding was conditional on Remain to win’. On Twitter, several others responded that they too had lost out on funding due to the result.

While many entrepreneurs, including Barnes, don’t know if this may wind up being ‘a knee-jerk reaction’ to the outcome, the fear persists that the referendum result ‘will have a knock-on effect for thousands of small businesses like mine; the majority of whom will feel the impact considerably over the coming months’. O’Hara thinks there needs to be more positive sentiment among the negative clamouring. ‘London and the UK will need to have an extremely loud voice,’ he says. ‘A business voice like Richard Branson, who must work very hard to send a clear message that start-up Britain is very much open for international business. It’s critical that person starts to shout loud now.’


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