The Storm on the Horizon28th November 2018
Some changes you can prepare for years in advance. Some you have to scramble to cope with.
For example, if an influential person suddenly decides they’re interested in what you do, and invites you to dinner … well, you’d scramble to clear your calendar, find the right outfit to wear, and prepare a pitch to present over dessert!
But that’s best avoided. You want to plan and then act, rather than being forced to make snap decisions in the moment.
Recently, I mentioned how Brexit is perhaps the biggest external issue on the horizon that’s likely to affect most businesses, especially if we leave with no deal.
Much will become clearer over the next couple of weeks, with the crucial Brexit vote taking place on December 11.
But whatever happens, you need to think about how your company is going to deal with Brexit, pronto.
It can affect you even if you don’t work directly with European companies. You might depend on funding from Europe, or perhaps you buy all your supplies locally in the UK – but you don’t even realise that they are imported from Europe.
If so, Brexit could create a swift and not entirely predictable change in your company’s fortunes, as your opportunities, challenges, and risks evolve.
Although a recent survey by the CBI found that 77% of the UK’s largest companies (those with more than 5,000 employees) have started planning for Brexit, only 47% of UK companies with 250 employees or less have made any headway with their Brexit preparations.
I understand why many smaller business (even those that are currently thriving) struggle to make progress with Brexit contingency planning. So much is still unknown, and remain unknown for the next few months.
But if you don’t start thinking through the possible scenarios now, you’ll be scrambling later on. You may have to adjust later, but as Dwight Eisenhower once put it (and you will have heard me quoting him before….), “Planning is everything – the plan is nothing.”
Some of the most vital issues to think about include:
- What if you need to change pricing for the post-Brexit marketplace? Could you do that instantly? How would it affect your revenues? What are the other financial implications for your business?
- If there’s no deal, the EU will expect your company to pay VAT every time you bring things in and out of Europe. How will you cover that extra upfront cost, and how will it affect your cash flow? If this doesn’t affect you, will it affect companies you buy supplies from?
- How can you prepare for customs declarations and regulatory checks as well as any other protocols the EU might impose? Might you need to invest in new software or services to support this?
- What will you do if things you’re importing get delayed on their way through the new customs process? If parts and materials you rely on get stuck at customs, your business could be in trouble (even more so if the goods are perishable)!
- Could you run into problems because of visa requirements, for example if you need to send a member of staff to France for a couple of weeks? How can you prepare for that?
- Are any of your employees or contractors from the EU? How might this affect your company? What if you could no longer hire EU nationals at all?
And those are only a small sample of the questions a smart business owners needs to ask (and be able to answer) about how they’ll weather Brexit!
Do you feel confident that your business will rise above a no-deal Brexit and keep on going strong?
If you do, fantastic. But if you don’t, I’d like to suggest a simple way to get that confidence: use our outsourced finance department to help you map out the financial issues, and create realistic plans for your company’s sustainability and growth.
Making sure you can weather storms is a vital part of financial management.
Let’s talk about how we can make that happen for you - because now’s the time for strategy, not scrambling.