Brexit has been the nightmare that we have all feared would not come true, Simon Willmett, financial director at Nucleus Commercial Finance wades into the argument of this Brexit business. What does he think about business preparing for the unknown?
Whether we end up with a ‘deal’ or ‘no deal’ Brexit, the general sentiment I’m seeing and feeling when working with businesses day-in, day-out, is one of uncertainty. What does it mean for their supply chain? Will consumers stop spending? And what about the multitude of EU regulations that reach into every part of our lives, both as business leaders and general consumers?
I very much hope that the Government is considering the needs and challenges of SMEs in their planning around Brexit – beyond the sector-by-sector view they’ve delivered so far. At the moment the debate is understandably focusing on high level negotiations and not on translating the impact to the everyday lives of business owners. The resulting lack of information that SMEs have isn’t ideal, but there are steps we can all take to practically evaluate the risks to our own businesses.
At a recent event we co-hosted with Gateley Plc and Trade Finance Global, which brought together both business advisers and business leaders, we polled the audience with the results revealed that over half (56%) of business leaders have not started to make plans for the impact of Brexit on their business. However, we should bear in mind that even less of our European partners and suppliers and will have done so. I encourage you to speak to your European partners now about how you can, and will, continue to work together post Brexit.
Many of us are seeking a level of clarity around Brexit that simply just doesn’t exist. But, as with any big event, challenge or hurdle faced when running a business there are still things you can do to prepare, plan and mitigate the risks. You know your business inside and out, and that is your advantage. Now is the time to think about your business plan and where you want your business to be in one, three and five years time. Take everything you already know about your customers, suppliers, risks and opportunities and project them into the future. Be visionary, exploratory and practical. And then look at it all again through a Brexit lens. For example what would be the impact on growth if a lack of consumer confidence dents spending in your sector? What would happen if you had to switch a major supplier? Or if you couldn’t secure the staff you need? By stepping back from the day-to-day you’ll have a more realistic view of the parts of your business that Brexit will impact and to what extent.
Those who attended the event revealed that their top concerns around Brexit are loss of customers or business (68%), increased costs (48%) and loss of international trade (32%). Almost a third of those who attended also revealed concerns about the financial pressures Brexit may contribute to including currency risk (28%) and managing cash flow (24%). To some extent these figures could be considered as low, as businesses who aren’t working directly with overseas suppliers or customers can still be impacted by currency fluctuations, slim margins and increased trade costs further down their supply chain.
With many SMEs not having dedicated finance professionals, external advisers and specialists can be worth their weight in gold. Their wealth of knowledge and experience will help to support you and build your confidence and knowledge too. Take the time to work with them, updating them on your business plan and seeking their view on the impact Brexit may have for you. They will support you in ensuring that you have enough capital within the business to protect yourselves and deliver your plans, with a ‘prepare for the worst’ mentality. They will also identify the role that external finance can play in financing your business and delivering greater growth. When looking to secure cash flow finance for example, advance forecasting and starting a conversation with providers early, will mean you have finance available should you need it. Having flexibility within your finances to deal with the unexpected, as well as funding in place to deliver growth plans such as increased staff, new premises and launching new products will ensure that your finances don’t hold you back.
To conclude, one side of the Brexit debate that I feel is underplayed is the fact that for some businesses Brexit will not impact on their plans for growth and their ability to deliver them. It will provide opportunities for growth that haven’t yet been explored or realised. By fully analysing the journey your own business is taking, and the hurdles Brexit may put in your path you may have a clearer view on any opportunities it presents. Whatever the outcome of this significant change impacting our political, economic and regulatory environments taking the time to plan for your business will only have a positive effect. As the date comes ever closer it has to move up your priority list. The power to prepare is in your hands – grasp it.