UK businesses are watching events in parliament with growing frustration and alarm, judging by this statement from Dr Adam Marshall, director general of the British Chambers of Commerce:
“Businesses feel like Westminster is playing an endless game of political chess, while their futures and the health of the UK economy hang in the balance.
“Every move in this game is prompting more questions, not just amongst businesses here at home but also amongst their partners around the world. Out in the real world, continuing political turbulence is taking a toll on contracts, on investment decisions, and on business confidence. Three years on, the damage continues.
“The top priority for businesses and the economy is still to avoid a messy and disorderly exit from the EU on the 31st of October. Despite the noise, none of the events of the last few days have given businesses greater confidence that this will be achieved. Given this, it is essential for government and its agencies to further boost support for businesses through any scenario.
“Once again, businesses will have to try their best to prepare for an unclear future as the political process goes down to the wire.”
A renewed Brexit crisis increases the danger that Britain’s economy falls into a technical recession this autumn.
We learned earlier this month that UK GDP contracted by 0.2% in April-June, as companies ran down stocks build up ahead of the original Brexit deadline of 29th March.
If the economy keeps shrinking in the current quarter (July-September), then the UK would officially be in recession for the first time in a decade.
This all sounds pretty scary right? Here’s some ways to lessen the Brexit blow for your business and help you to deal with Brexit in the best way to help your business in the long run.
1. Protect your supply chain
Make talking to your supply chain your number one priority. Find out what they are doing to ensure continuity of service. Supply chain failures can be devastating for small businesses, even just one late delivery or breakdown can have a negative impact. If your customers aren’t receiving their products or service on time, it will be you that faces the repercussions, not your suppliers.
Everyone in your supply chain will be aware of Brexit. They should be devising their own plans to deal with its potential outcomes to deliver the same level of service moving forward. As a small business owner, you should consider every step of the chain and begin discussions with your current suppliers now, rather than waiting until after Brexit. Being proactive rather than reactive will help you stay ahead of any potential problems and give you more time to deal with issues that arise.
If one or more suppliers in the chain are unprepared, unwilling to discuss their plans to combat the various possible Brexit outcomes or have doubts around their ability to maintain service levels, it could be worth looking to switch. Knowing this in advance gives you the time to speak to and compare the other options, so you can hopefully find alternative suppliers who can guarantee a high level of service whatever the outcome.
2. Increase your stock held in the UK
Look to increase the amount of stock you hold in the UK – particularly if you rely heavily on importing from the EU. Good stock levels can give you more time to prepare an alternative if current relationships with suppliers deteriorate after 29 March. So, in the immediate aftermath of Brexit – whatever that looks like – your business operations can continue.
Again, this is a proactive approach. Don’t wait until after Brexit to discover you don’t have enough supply to meet demand because suppliers have let you down. Start planning now to grow your stock, as it will require paying more upfront to cover the costs of additional inventory. Keep on top of all your invoices and payments owed, making sure you have a strong cash flow to increase your stock.
As the UK’s departure will affect a lot of businesses across many sectors, you also need to make sure existing clients and customers make their payments on time. Otherwise, you could end up lacking the funds to increase your stock if they are delaying payments to manage their own Brexit concerns.
3. Research potential regulation changes
Spend time learning about potential regulation changes that could affect your business or its employees. There are lots of different scenarios that could play out once the UK leaves the EU. Being aware of these possible changes in advance will allow SMEs to prepare ahead and consider feasible solutions.
Minor amendments have already been made to the government’s health and safety regulations in preparation for Brexit. These relate mainly to removing references to the EU – there will be no changes to legal requirements and protections.
Other possible changes to regulation could affect anything from cross-border trade to travel between the UK and EU countries. For SMEs it is worth reading up on how the regulation that applies best to your business and industry could change for each of the possible situations if the UK leaves the EU with:
- No deal (default position if a deal cannot be agreed);
- The Prime Minister’s deal (renegotiated around backstop);
- Completely renegotiated deal (with potential Article 50 extension);
- The UK remaining in the EU (result of a second referendum/general election).
While details for each potential outcome are unconfirmed, you can research potential regulation changes and other issues for each possibility. Waiting to see which one plays out could be leaving it too late and result in reacting to events rather than actively adjusting to them.
4. Focus on your company’s strong points
Remind yourself what your company is good at and ensure you keep doing it in the future, regardless of the Brexit outcome. The fundamentals of business aren’t going to change, so keep focused on who your customers are and how you can meet their needs.
What helped your SME become successful in the first place will vary depending on the industry and its history. You need staff who come to work because they want to, rather than because they have to. Your employees should have bought into what you’re trying to collectively achieve and should want to be a part of that success.
Remember to focus on your customer base and do as much as possible to help them, even with Brexit going on in the background. Be prepared to adapt to everything that will be – or could be – thrown at your industry.
5. Take a proactive approach
Provided you don’t just sit back and wait to see what happens, you’re setting up your business to face post-Brexit Britain in the right way. Tackling the challenges Brexit could introduce with a proactive approach in mind is the best way to prepare. Keep up with the latest news and monitor developments relevant to your industry, factoring them into your plan as necessary.
Hopefully in the coming weeks the situation will become clearer and SMEs in the UK will be able to better prepare for the potential impacts of Brexit. By following the above tips, you should be in a strong position to best protect your business against whatever the impact will be for your industry, once the UK leaves the EU.
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