I voted Remain on Thursday and was astonished when I woke up (at 4.15am!) to find out the result. I’m sure you’re sick to death of the referendum campaign, full as it was of lies, exaggerations and fantasy so I’m not going to make any further comment on that – I want to look purely at the practical implications.
As of today, the main impact on craft businesses is the massive crash in the value of the pound against the dollar and euro. What that means, in practice, is that your pounds are worth less compared to other currencies. So, if you were importing (oh, I don’t know) $1,000 of candle fragrance into the UK, then this will now cost you more pounds than it did before. In January 2016, you’d have spent £666 on the fragrance whereas, today, it’ll cost you £100 more – no small cheese.
Conversely, if someone owes you money in dollars or euros, you’ll get more pounds – this might apply if, for example, you sell via Amazon’s European stores.
As a practical step, MakingYourOwnCandles.co.uk is suspending its US purchases until the rate recovers.
Aside from that, in these very early days after the vote and while things are so uncertain, you might notice that customers are not quite as prepared to spend money.
Looking forward, the impact on craft business will depend on how things work out. My suspicion is that the UK in five years from now will be very similar to the UK of today. It’s very hard to imagine that our government (don’t get me started) would sign off any deal that didn’t include free trade so nothing much will change in that regard.
All the risks seem to me to be short to medium term. A recession is possible but a slowdown more likely. The good news for craft businesses is that, in times of difficulty, customers like to treat themselves – this is why sales of chocolate go up in recessions. There’s a strong case for making sure you have quality products at a wide range of prices – whatever happens, plenty of people will still be well off so don’t slash your prices, simply expand your range from the bottom. However, do not use this as an excuse to race to the bottom – this is about value, not cheapness.
On the other hand, don’t expect any future relationship with Europe to mean you don’t have to abide by EU Regulations. For example, CLP is going nowhere, candle makers – either we will have to abide by CLP in its current form or the US system, otherwise we won’t be able to trade with any other countries.
The short version:
- Think carefully about importing supplies from the US and Europe – chances are the Pound will bounce back and they’ll cost you less so waiting will mean they’ll be cheaper
- In the meantime, think about your product range and how it works with the economic climate and national mood at the time
- And, most importantly of all, keep calm and craft on