Planning for Brexit
As we enter 2017, the “Brexit” issue is still very topical, and despite much media attention, little is really yet clear about the government’s strategy.
Theresa May recently stated that “Brexit means Brexit” and indicated that Article 50 (required to trigger Brexit) would be invoked by the end of March 2017. Whether that is still intended is another matter. The government is due to clarify the Brexit plans during February, with negotiations expected to begin sometime during this coming summer. The government is under pressure to at least agree a transitional deal twelve months before the official date, so that businesses have time to prepare and make necessary changes.
Given the general uncertainty, and a variety of possible outcomes, most planning activity focuses on identifying the potential issues so as to be prepared for action at the appropriate time.
So, what can small business owners actually do to try to prepare for eventual Brexit? Here are a few thoughts distilled from a variety of commentators.
• Whilst much is unknown presently, small businesses in particular should try at least to put in place some kind of short term and long term plans.
• A starting point could be simply evaluating what changes each business might be vulnerable to, and planning what might be done about them, for example spreading customer risk, reducing order sizes, or trying to fix certain costs.
• Given the uncertainty of exchange rates, for those businesses affected, reviewing currency dealings, assessing the best mix of spot trades, forward orders, limit orders and hedging must be a crucial action.
• Again, for businesses specifically affected by labour issues, consider how changing immigration legislation might affect the business, and plan how to combat that.
• The drop in the value of the pound has been positive for businesses selling products and services abroad, so this is a prime opportunity to look at the potential for starting, or increasing, export business.
• Last but by no means least, particularly for smaller businesses where small movements in costs can have a disproportionate effect on profits, all measures must be taken to improve productivity, increase efficiency, and continue to drive down costs.
So far, notwithstanding the clear adverse effect of the referendum on the value of the pound, the UK economy generally has shown remarkable resilience in the face of uncertainty over both the direct and global effects of Brexit. Uncertainty continues to be the main enemy, with no clear understanding of how things will develop, but what is clear is that inaction is not an option, some form of even rudimentary planning is essential.
13 January 2017