There are signs that European firms are avoiding taking on British suppliers owing to the uncertainties around Brexit.
A small services company tells Pound Sterling Live that they have experienced first-hand how European companies are becoming overly cautious when it comes to taking on UK suppliers.
42group - a full-service content agency based in Bristol - say European-based firms appear to be conserving their outgoings with British companies until more results are known.
“We’re an SME so we are used to uncertainty but Brexit itself has led to challenges. We lost 2 contracts as a result of funding tied to Europe drying up. This had an impact on us,” says 42group Managing Director Lawrie Jones who says the Brexit vote has already cost them money.
The firm, consisting of both full-time staff and freelance employees, does, however, believe they can continue to expand.
“We are a small business, and so our focus is more on growing existing relationships. We simply don’t have the scale or the budget to chase down European clients,” says Jones.
It’s a completely new direction that the company now find themselves in.
Previously, they were ideally placed for businesses who needed to cut their in-house teams, which is why the company predominantly runs with just 3 full-time employers.
The rest, (around 10-15 individuals) are independent creatives who join the team throughout the life of a project.
Jones explains to PoundSterlingLive.com what has changed since the referendum result:
“Our original focus was that we were better placed for times of uncertainty.
“The reason is that marketing and communications are often primed for cuts, but these jobs are essential functions of a company. When businesses cut their in-house teams, we often fill in the gaps.”
As a full-service agency that means Jones’s team can deliver both marketing, design and content where they work with businesses to tell their stories and engage audiences.
Previously, they have worked with clients such as the Alder Hey Hospital, Lenovo and OVO Energy while also continuing to work with businesses across the world including Europe, the USA and the Middle East.
But with funding to Europe drying up, the contracts they were working towards have been cancelled, leading to challenges for the company.
Ability to Scale Down is a Strength
However, in one respect the company is perfectly suited for this sort of event as staffing is kept minimal on purpose.
Jones explains “We are a small, flexible organisation that scales up and down, as required.
“We work with trusted and experienced freelancers to help us manage specific projects, and when we don’t need them they’re free to work on other things. It’s an arrangement that suits both parties. Beyond that, I think the future for small businesses is actually relatively positive, particularly in the creative sectors.”
The 42group are still projected to grow this year, despite the set backs as the fear of Brexit became apparent.
Jones agrees, “We are already seeing things moving, I think confidence will creep back in. A lot of people feared for the worst when Brexit happened but at the moment, we’re coming to the end of the financial year where our departmental budgets will be agreed and work can start again.”
Theresa May Hitting the Right Notes
Looking towards the Government, Jones has been pleasantly surprised by the new Prime Minister, Theresa May, and her commitment towards the business sector.
He says, “Teresa May’s strong words about potentially reducing corporation tax and a suggested reduction in VAT are also positive things for us as a business. After all, we work with science and tech businesses, many of whom could benefit from new funding if it is made available.
“However, what’s more challenging are changes to VAT and dividend rules which will hit smaller businesses. Big business will, inevitably, come out of this OK. What I want to see is some recognition of the SME sector and some support for us. In part this could be tax breaks or investment capital.”
Brexit isn’t the first storm the company has weathered, in a former incarnation (they have since rebranded), they were partly responsible for creating a controversial sexual health education film which was featured on the Channel 4 TV show Rude Tube.
Now, they take pride in focusing on innovative and dazzling campaigns in a notoriously competitive sector with strained budgets and conservative clients.
Jones says, “As a smaller agency people can contact the team directly, there’s no convoluted and bureaucratic process to what we do – that helps. Our philosophy is simple, we work with clients we enjoy working with. And if we don’t, we won’t.
“We will observe the fallout from Brexit negotiations closely, but until we see what that means for businesses, we won’t know.”
That’s not to stay that Brexit will stop the 42group from courting European business, but as May prepares to step up her negotiations and run her ideas through Parliament, Jones and his team will be looking for work closer to home.