8 Challenges Facing Sussex Businesses in 2018

With more than 60,000 businesses worth £30 billion, and half a million people in employment, Sussex is one of the driving forces propelling the future growth of the British economy.  

Brighton and Eastbourne, in particular, is primed to be a major contributing factor over the course of 2018. This once small seaside town has evolved into an entrepreneurial hub, earning the moniker “Silicon Beach.”

The city, conveniently located less than an hour from the capital, is becoming known for its creativity and innovation. In fact, it boasts of the most number of startups per capita in the UK outside of London, and is unrivalled, in terms of business growth, in the South East of England.

Although a bright future may be ahead, it is not without its challenges. As 2017 draws to a close, it is imperative for Sussex business owners to anticipate potential issues and put in place a proactive plan to deal with them.

1. Brexit

The outcome of the Brexit vote rocked the financial markets in 2016 and they have yet to recover. In the wake of the vote, the value of the pound dropped rapidly and remains at one of the lowest rates in recent years, with its current value at 10% lower against the dollar and 15% lower against the euro. 

As the minutes to the March 2019 deadline tick away, business owners should brace themselves for the inevitable repercussions of Britain's departure from the EU. Outside of the direct blow to Britain’s economy, the after-effects of the final deal could mark a devolution of consumer confidence to an all-time low. Leaving many small businesses struggling in its wake.

For larger firms, studies have forecasted that profit growth will drop, with operations to either be delayed or migrated outside of the UK to mitigate further damage. Expected profit growth is set to be a comparatively lower 7.2% in 2018, as opposed to 19% in 2017.

Business owners should seek to strengthen marketing strategies and consumer relations ahead of time, and budget conservatively for 2018.

2. Trade Issues

The EU is a “single market” economy. Member countries allow the free movement of goods, services, money and people without border restrictions, which in turn boosted trade, generated jobs and lowered end prices for the consumer.

With 43% of exports and 54% of imports traded with member countries, the EU is UK’s largest trading partner. It allows for reduced costs—meaning cheaper goods and services for consumers, and better exports for UK business owners.

Currently, Pre-Brexit, trading is tariff-free and quota-free within EU borders. On top of that, the EU also has trade agreements with 52 other countries.

Post-Brexit, the UK now needs to negotiate new trade deals with the remaining EU members and non-EU countries. Implications may vary, as the UK will need to settle new agreements with the EU by 2019, but potential scenarios could be:

  • Tariffs imposed on both sides of the negotiating table. For instance, Brussels can impose a 5% tariff on UK car exports, while the UK can impose tariffs on BMW or Fiat cars. 
  • The EU may impose quotas, which could limit the number of goods and services that UK business owners can trade or sell into Europe.
  • Less trade, given the possibility of higher tariffs and nontariff barriers.
  • Optimistically, if the UK continues to gain access to EU’s single market, this would only result in a 1.3% fall in average UK incomes. Pessimistically, larger trade costs would lower incomes by 2.6%.
  • Without EU’s regulations, the UK can now negotiate better trade deals with non-EU countries. The downside to this is that the country will have less bargaining power, given that it only contributes 18% to the EU’s single market.

It is a possibility that status quo will prevail and the UK will continue to have access to the single market. If not, investors will continue to remain wary of doing business with the UK. On the other hand, Brexit could offer a valuable opportunity for small and micro-businesses to cut flexible trading arrangements with other countries.

3. Inflation

In the wake of Brexit, inflation hit a five-year high of 3% due to the increase in food and non-alcoholic beverage prices. This is the steepest rate since 2012, and well above the Bank of England’s target of just 2%.

Without a proper wage increase (which is just about 2% currently) to match inflation, consumers will be hard-pressed to make more purchases.  

On top of that, the separate Retail Price Index measure of inflation is at 3.9% - also its highest since 2012. Business owners in Sussex should expect a blow, since this figure will be put into account during April 2018’s increase in business rates. Brighton and Hove’s economy may also be affected by the change in business rates.

4. Supply of Talented Individuals

As the millennial generation continues to enter and dominate the workforce, business owners should be perceptive of the potential generational differences in skills, education and mindset.

If you employ a large number of millennials, understand that their approach to work is different from preceding generations. As such, they have different motivators to stay engaged and loyal. They are fast, responsive, collaborative, and can multitask. 

For 2018, invest in training and developing this generation, especially since the population of pensionable age in the UK is projected to outnumber that of the working age.

5. Funding

Securing funding may also propose an increased challenge to small businesses in 2018, especially as confidence in the bank and the stock market is set to remain at an ebb.

As such, there is a need for owners to get creative with their financing. Fortunately, Brighton offers plenty of options for entrepreneurial grants and funding, given the high number of start-up firms, a few of which include:

Thanks to support from local government and community, Brighton small businesses continue to have a high survival rate of 87%.

6. Government and HMRC

With an increasingly regulatory government at both the local and national scale, business owners may find themselves hindered by the bureaucratic process. For instance, the lack of local planning officers to hasten property development processes, or, the regular changes applied to tax regulations and procedures

Additionally, the lack of resources hindering HM Revenue & Customs tends to delay the full processing of enquiries. As a business owner, you are encouraged to insure yourself against the additional costs of tax enquiries through fee protection insurance.


By May 2018, regardless of Brexit, the General Data Protection Regulation (GDPR) will be implemented all over the UK.

All businesses will be mandated to demonstrate where and when customer data is received, and prove they have customers’ consent to be contacted for marketing purposes. Failure to comply can result in fines of up to 4% of the business’ annual revenue or €20 million. 

If you have not yet prepared your business plan for GDPR, your outbound and inbound marketing strategies could take a hit. You should consider implementing long-term integrated marketing campaigns; content marketing, social media, and event marketing are great places to start.  

Almost 80% of organisations may be fined for non-compliance by 2018, with lack of technology to process data as the top reason. So start with your IT, marketing, and legal obligations and set a business plan for GDPR.

8. Google’s Shift To Mobile Indexing

Almost 56% of all website traffic comes from mobile devices. This only further proves the fact that users are becoming more reliant on their smartphones and tablets, prompting Google to announce its mobile-first indexing in late 2016.

Gary Illyes, Google’s webmaster trends analyst, predicts that 2018 will be the best time to shift to mobile-first indexing, where small businesses can reap the most benefits.

All businesses, no matter how web-based, rely heavily on search engine rankings. With no end of informative resources online, it is worth your while to take the time to understand this upcoming algorithm update in order to prepare your website in advance. As any mobile page that does not include the same content as the desktop page will cease to be visible to mobile users once this rolls out, losing your business vital online visibility.

Sussex Business Resilience

Although UK’s business economy faces a level of uncertainty, recent widespread job booms prove the resiliency of the country’s organisations. However, complacency is not a privilege you can afford in these trying times.

As they say, forewarned is forearmed. Knowing the challenges that may come your way in 2018 will give you the flexibility and edge to keep up and turn a problem into an opportunity.