The year 2020 is one many will want to forget, and with 2021 on the horizon, businesses across the country are similarly thinking of new beginnings and a fresh start in the year to come. But the new year will undoubtedly bring with it significant challenges for the Irish economy – and the small and medium-sized businesses that form its backbone – as well as opportunities for those businesses that use a changed landscape as a chance to innovate.

Covid-19 has had a devastating effect on SMEs around the country, but the increasingly positive news around potential vaccines has given businesses some hope of a return to normality in 2021. Brexit, however, has the potential to cause more lasting damage to the sector.

For weeks now, businesses have watched on as the prospects of an EU-UK trade deal have see-sawed wildly. Brexit has been a foregone conclusion for some time, but the future nature and shape of trade between Ireland and the UK has remained up in the air.

Now, however, it appears there is reason to believe a trade deal will be reached in the coming days. However, while the stakes in these negotiations are certainly high, Irish businesses and SMEs in particular will be facing a drastically altered economic and trading landscape regardless of whether a deal is reached or not.

According to the Revenue Commissioners, there are in excess of 90,000 Irish businesses that traded with the UK last year. Many of these rely on imported goods or raw materials, and are set to see their supply chains face significant disruption either with or without a trade deal. To understand the impact of this disruption, let’s consider the retail and wholesale sectors.

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Overall there are roughly 3,000 wholesale and retail businesses exporting goods to the UK each year, and the majority of these are small businesses, employing fewer than 50 people. Once the UK has left the EU, they are facing additional costs and challenges in importing the goods and materials their businesses rely on – whether that be in for the form of additional taxes or customs charges, delays to sourcing and securing goods, or even being priced out of the market.

Businesses trading in perishable goods will also be more exposed to the harmful effects of delays. And, apart from the wholesale and retail sectors, agriculture, food, tourism and transport are all areas where SMEs may face difficulties in the new year.

However, there are a number of steps that all businesses should by this stage have taken to mitigate these effects and bounce back strongly – possibly as early as the second half of next year. But to do so, they will have to take the necessary steps to plan for renewed growth today.

These include carrying out a detailed risk assessment of the business, that also takes stock of the likely impact of Brexit on competitors, and the business’s ability to develop alternative routes to market.

Embracing alternative ways of safeguarding cashflow, including products such as Trade Finance, should also be considered. This allows SMEs to buy, take possession of and sell goods before needing to pay for them. It also means that businesses can pay suppliers on the same day that goods are shipped – helping to smooth supply chains and get the cycle of payments moving again.

Foreign exchange services are another option that can be of particular benefit to those businesses citing currency fluctuations as a key challenge. These allow SMEs to take advantage of spot conversions for immediate use or forward contracts, helping to remove some of the uncertainty that variations in currency values can introduce.

For businesses looking to keep the show on the road as seamlessly as possible, and avoid any dips in reputation among their customers, these measures could make all the difference.

With a Brexit trade deal within reach, and the roll-out of a Covid-19 vaccine in the works, Irish SMEs should enter the new year with renewed resolve to hold strong and plan for growth in 2021. By taking steps to protect and enhance their business today, SME owners can give themselves the necessary shot in the arm to ensure that their best days still lie ahead.

Photo: Mark O'Rourke, managing director of Bibby Financial Services Ireland