60% of London’s tech entrepreneurs have found it harder to attract overseas talent during Brexit negotiations; a quarter of tech companies say that Brexit has lost them investment deals.
With more than 216,000 new businesses being registered in the Greater London area last year, the UK prides itself on having a culture that nurtures and springboards start-ups. These start-ups are vital to Britain. As of 2016, it was reported that start-ups provide a £196bn boost to the UK economy.
Brexit uncertainty and unaffordable staff are having an increasingly negative effect on many SMEs in the UK. Recent research by Tech London Advocates has unveiled the true effect that Brexit uncertainty is having on small businesses in the UK. Almost 90% of technology businesses believe that Brexit has damaged the international reputation of London and 60% of tech entrepreneurs said that they have found it harder to recruit during Brexit negotiations.
Another problem that start-ups face is affording highly-skilled staff. As with any knowledge intensive sector, the vital requirement for specialist employees is relentless, but often comes with a salary price tag that is simply not feasible for SMEs in their early stages of growth.
When looking at the average salaries and bonuses of Intellectual Property Managers, IT Directors, Chief Information Security Officers, Chief Marketing Officers and Financial Directors, it was found that businesses would need to pay £415,000 a year for these five roles alone.
Many businesses need this talent, but do not necessarily require them on a full-time basis. Flexible working and freelance contracts allows SMEs to hire these highly-skilled employees only for the time they are needed whether that be in daily, weekly or monthly timeframes.
Nick Woodward, CEO of ETZ Payments, has been looking at the problem:
“Brexit has been dragged out for far too long and the uncertainty is having a drastic effect on tech start-ups across the UK. Britain has a fantastic entrepreneurial culture and is internationally renowned for this. For the sake of not losing this reputation and with an economy so reliant on tech start-ups, the government needs to ensure that Brexit is resolved in some form with haste. In the meantime, start-ups need to be aware of other ways of raising funds such as debt-funding, which allows companies to retain full ownership of their valuable IP.
“In order to afford highly-skilled staff, SMEs need to utilise the gig economy and pay these employees on a freelance basis. This structure also proves to be extremely lucrative for the freelance community, who in many cases are able to acquire multiple clients according to their increased availability.”