Brexit continues to dominate the daily headlines and it has been a challenging couple of weeks for the UK Government; Theresa May’s deal was rejected in the biggest parliamentary defeat in history, yet she survived a no-confidence vote. The Prime Minister is due to return to Brussels to re-negotiate the Brexit deal with the European Union, but the future remains as uncertain for the United Kingdom as it did two and a half years ago when voters opted to leave the European Union.
Rick Smith, Managing Director of Forbes Burton, has over 20 years’ experience in helping businesses with financial difficulties and insolvency but is committed to a company rescue and recovery culture. Rick is a respected thought leader on finance, current political topics and regional business issues and has spoken about Brexit on BBC2 Victoria Derbyshire Show, The Politics Show and on Sky News. Rick suggests that companies need to avoid burying their heads in the sand, stay prepared and play to their strengths.
Ask any business about its Brexit preparations and most will respond with a troubled shrug, but how can they be blamed? How does a business prepare for an undefined future? Brexit uncertainty has been plaguing UK businesses for the last couple of years and, even though a no-deal Brexit seems unlikely, it presents a very real threat.
Not long after the UK voted to leave the EU, many businesses made quick investments trying to secure deals before the pound dwindled. Businesses are also performing knee-jerk reactions to the every-changing daily headlines on Brexit. Reports of stockpiling goods in the UK have already started, prompting national property consultants Lambert Smith Hampton to predict that UK warehouse demand is set to exceed supply by 2020. Key advice seems to be to tighten belts and batten down the hatches, yet these actions appear to be fuelled by panic rather than by careful calculation.
The biggest impact is likely to be on SMEs that engage in a lot of import and export work; trading tariffs could increase and cause costs to be passed to suppliers, smaller businesses and ultimately the general public. Businesses should also prepare for tighter border controls and delays in goods travelling to or from the country. It is therefore more advisable to invest in a company’s long-term future. UK businesses need to be ahead of the curve when it comes to Brexit; expanding a business and investing in UK manufacturing is bold but is likely to help its long-term sustainable growth.
Employment is also likely to be disrupted so it’s important for all businesses to review the immigration status and nationality of their staff. Businesses that rely on immigrant workers, for example in the health and social care sectors, could experience short-term staff shortages as Brexit could affect an immigrant’s visa or residential status. Businesses may need to explore apprenticeship programmes in order to find suitable UK workers.
Current contracts will need to be reviewed and could cause an issue; certain ‘forces majeures’ will inevitably be triggered by an event like Brexit. In some instances, contracts will be renegotiated or might even be terminated – being prepared is going to be crucial to compensate for any major fluctuations in currency.
Playing to strengths is an important survival skill in these uncertain times – address any knowledge gaps and concentrate on research and development. The UK is ahead of the game in technology, innovation and medical science, so it is worth reviewing any current European grants or funding a business might receive as this is likely to be affected.
Identify expenditure and keep controllable costs down, ensuring there is a healthy kitty to aid cash flow. It is important to investigate the costs involved for Making Tax Digital which comes into play in April 2019 – this will inevitably help with any knowledge gaps in the business but will predictably come with an initial set-up cost and an element of administrative housekeeping.
The Brexit date is looming, only a mere two months away, and it is important for UK businesses to keep calm and review the situation as it unfolds. Avoid risks, cut controllable costs, keep an eye on the competition, conduct a rigorous internal review and strengthen any current relationships with customers and suppliers. Whichever way the deal goes, Brexit is set to have an impact on businesses – addressing the situation head on is key to survival. Keep researching and don’t be afraid to seek advice.
Rick Smith, Managing Director of Forbes Burton
