Following the Conservative Party victory at the general election, one would like to think that the uncertainty surrounding Brexit for UK businesses has at least eased slightly, especially as organisations will be aware of the government’s stance on Brexit and their commitment to the 31 January deadline. Additionally, there are a few reasons which should appease even the most pessimistic of businesses in relation to what the future may hold for them post Brexit.
Firstly, Sterling had hit an 18-month high against the US dollar and a three-year high against the euro after the Conservative party won the general election with a majority. Investors certainly welcomed the results as the Prime Minister’s majority sheds some clarity and certainty on the Brexit topic. UK growth should undoubtedly receive a lift from both the easing in Brexit uncertainty, which should boost business investment, and significantly higher government spending, although growth is still expected to remain quite sluggish. This is due to there being little spare capacity in the economy and an upturn in growth can only encourage the Bank of England to raise rates in a bid to prevent a build-up of inflationary pressure. Nonetheless, the certainty that comes with a five-year administration should create confidence and bring back the aspirational buyers and sellers that have been lacking since the EU referendum result.
Unsurprisingly though, there are still several businesses out there who are sceptical as to what the future may hold for them and whether they will be able to survive the reality of Britain leaving the European Union. Undoubtedly, many SMEs are concerned about what Brexit may mean for them and if the consequences of leaving the EU will be detrimental to the way their business operates. Whilst such reservations are to be expected during times of uncertainty, the old adage of “if you stay still in business, then you go backwards” will certainly apply to any organisation which fails to prepare or adapt to Brexit.
Brace for uncertainty
Although we would all like to delve into our crystal ball and know for certain what the impact of Brexit will be on business and the economy, we should be prepared to accept that a period of uncertainty or adaptation is likely to be experienced by several industries at some point pre and post-Brexit. There are, however, some obvious aspects which shouldn’t be ignored by business owners of SMEs, which if conducted diligently, will allow for a much better transitional process, regardless of the challenges which may lie in wait.
We have therefore outlined some useful considerations below, which we believe will go a long way in aiding owners of SMEs in planning for the future and to be as prepared as possible for when the UK does eventually leave the EU.
Protecting your supply chain
Supply chains are an integral component to how SMEs operate, and if this were to break down, it can severely impact small businesses. For example, it only requires one late delivery or breakdown to have a negative impact on your business. Simply put, if your customers are not receiving their goods or services on time, then it could have the added knock-on effect of your business being the one who faces repercussions, and not your suppliers. Therefore, small business owners need to be mindful of every step of the supply chain and begin discussions with current suppliers as soon as possible to fully understand their plans. If there are any hesitations on behalf of the supplier to maintain service levels or to discuss plans to combat various Brexit outcomes, it might be the right time to start looking for a new supplier.
Increase the amount of UK stock
If your business relies heavily on importing from the EU, you should be looking to increase the amount of stock you have in the UK. Not surprisingly, by maintaining good stock levels, it can act as a ‘buffer’ and give your business more time to prepare for an alternative if there is a deterioration with any of your suppliers. Thus, in the short term at least, you are able to continue to meet the demand of your customers whilst looking at finding a solution long-term. Another useful tip is to keep on top of all your invoices and payments owed, ensuring you have a strong cashflow which in turn helps increase your stock. You have also got to adopt a policy where your existing clients and customers make their payments on time, otherwise you will end up lacking the necessary funds to increase your stock if they are delaying payments to manage their own Brexit concerns. This should be viewed as priority and be seen as a wise investment for your business moving forward.
Familiarise yourself with your employee’s nationalities
As a business owner in general, it is important to understand the rights and statuses of any EU workers you may have at your business. Although talks are ongoing relating to the guarantee of rights of EU nationals already in the UK, you still need to be mindful of employee’s circumstances relating to immigration status, their employment contracts and where they work. Should they not be allowed to continue working in the UK, there are alternative solutions which you can implement such as planning for remote working, should you wish to retain those employees. With the advancement in technology over the past few years, this is relatively straightforward, especially with cloud-based software and online collaboration tools.
Remain focused on your customers
One of the key aspects to a successful business is to always look at satisfying your customer requirements. By continuing to be customer orientated and focused, you should continue to thrive if you are constantly innovative and adapting to changing consumer habits. The fundamentals of business are not going to change, regardless of Brexit so keeping focus on your customers is essential.
Provided that you don’t just sit back and wait to see what happens, taking a proactive approach will no doubt go a long way toward gearing yourself towards a better chance of dealing with all the challenges facing your business as a result of Brexit.
How SKSi can help
If you are the owner of an SME and are worried about how Brexit could affect your business, why not get in touch with us to find out how to best tackle any challenges that your organisation could be facing. We offer a free initial consultation and company health check which will provide answers for SMEs and their owners as to the ability to continue to trade, their viability and also available options.