What does Brexit mean for business and for small businesses in particular?
The result of the EU referendum vote has taken many by surprise and the financial markets, at the time of writing, have been marked down sharply. Those who are running small businesses might find the prospects confusing and worrying, with little hard information available to help plan for a post-Brexit future.
We have to assume that Brexit will proceed but, at present, it is far too early to know what the full implications are for business as the political process hasn’t begun and negotiating positions are unknown. We don’t know which of the free-trading or anti-immigration aspects of the Leave campaign will predominate. If it is the former, and the ‘Norwegian model’ is adopted, many things will remain the same and business to could expect to recover to something like pre-referendum norms. However, that doesn’t reflect what many voted for and we may end up with higher trade barriers and consequently greater challenges and uncertainties for business.
While most people in business dislike uncertainty, there are some things that businesses can at least think about to prepare themselves for the inevitable changes to come. We have addressed these in the form of questions you could ask yourself under our 5 Pulse topics
People + Processes
- If we employee EU nationals, what do we need to do to ensure we retain them? (at least until the legal position becomes clearer)
- If the current skills shortage is unlikely to improve, and may well get worse, what can we do better to attract new employees?
- Wage rates may come under pressure: the pound’s fall will raise the cost of imports, feeding into inflation – what can we do to ensure we remain attractive as an employer?
Utilisations + Outcomes
- Productivity is likely to be a key ingredient to future success, especially if wages rise – what can we do to improve productivity?
- Sales to overseas markets: can we take advantage of a lower pound and enter new overseas markets? And are there good alternatives to existing EU markets if our trading relations with the EU deteriorate?
- If market conditions are depressed in the short term, what are the implications of a lower growth trajectory (e.g. on staff incentives, investor relations and banking covenants)?
Logistics + Infrastructure
- Is our supply chain at greater risk of disruption (especially if we currently rely on EU suppliers) and what can be done to mitigate those risks?
- Do our business continuity plans adequately reflect increased business risks post-Brexit and during the transitional period?
- Do we need additional intellectual property protection to cover EU countries post-Brexit?
Strategy + Finance
- Do we need to update our business strategy for Brexit, and have we considered the implications of any short-term recession?
- When trading conditions are tough, cashflow management can make the difference between failure and survival – what can we do to improve working capital and cashflow?
- UK banks are likely to be under greater pressure in the short and medium term – what alternative sources of finance are available to the business?
Ethos + Relationships
- If we currently serve EU customers, what can we do to reassure them and retain their custom?
- We should bear in mind that many of our employees will be confused and anxious about their prospects – what do we need to do to reassure them and how could our employee communications be improved?
- In due course regulations will change (but probably not very quickly) – are we fully compliant today and how do we ensure we keep abreast of regulatory changes?
Taking one of our business health checks will help understand how your business is doing in each of these areas, and help you plan for an uncertain future.
The businesses that are most likely to rise successfully to these challenges are those that are well-prepared, by thinking through the implications and developing appropriate responses to each scenario, and are agile, adaptable and flexible to implement change quickly and effectively. So let us help you be one of those successes.