How should your business plan for Brexit?
Four weeks on from the EU referendum vote and the details of how Brexit will proceed are still unclear. Whilst the new government has said that “Brexit means Brexit” and given some indications that it won’t be hurried, solid information to help businesses plan for the future has not yet emerged.
We are unlikely to learn anything concrete from the government until the autumn, and perhaps even until the end of the year. Official data relating to the post-referendum period will not be published for a few months. Market reaction and surveys of business sentiment may give some guidance – a downturn in the short-term is the current consensus – but these based on hunches, not data.
So what can you do to prepare your business for the inevitable changes Brexit will bring when useful information is scarce?
The first point to recognise is that the Brexit process is likely to take two or three years and its full implications will not become apparent for some years after that. So this is a case for long-term planning.
Second, this lengthy timescale is not an excuse for doing nothing. Waiting would mean missing opportunities and playing catch-up later. Nor should you necessarily defer investment decisions. What is needed is a realistic assessment of potential outcomes and how your business could react to Brexit. You should use the current period of uncertainty to take stock of your business, develop ideas and work up game-plans for a range of scenarios.
A third concern is not to jump to conclusions without hard evidence. Over-reacting to limited data is also dangerous, particularly if that cuts off other possibilities. If you do need to make any big decisions in the near future, be rigorous in your analysis and critical of all assumptions.
We’ve already set out some questions to help you plan in an earlier post. These will build a better understanding of your business strengths, weaknesses, opportunities and threats.
The next step is to consider how the business environment will develop. All aspects of the economy will probably be affected by Brexit, so many established assumptions around your business may need to change. External factors to review include macro-economic (consumer demand, price inflation, labour mobility, wage rates, terms of trade, interest rates, credit availability and the relative value of Sterling); governmental (regulation, public investment and taxes); and market-specific (competition, new entrants, substitutes, productivity and the supply chain).
Taking one of our business health checks will help understand how your business is currently doing and how prepared it is for the challenges posed by Brexit. Our Gold business health check specifically includes the scenario planning that is most beneficial when faced with great uncertainty.
We think that the best ways to face those challenges are to plan ahead, keep options open, and to maximise the agility, flexibility and adaptability of your business.
Click here to start a Company Pulse Business Health Check.