Negotiations continue with Brexit after Theresa May’s failed attempts to reach a consensus amongst the MP’s in the House of Commons. As a result, the nation is suffering with the repercussions.
Scaremongering tactics by the press have unsettled the public and instilled a level of trepidation into business owners. The rumours and speculations are just that – there is no certainty regarding the outcome of the UK leaving the European Union. However, as a business owner there are certain steps you can take to ensure the survival of your business for Brexit amidst this political chaos.
1. Know your existing target markets and develop new ones
The uncertainty of the nation’s political and economic climate and the increasing likelihood of a no deal Brexit has put strain on businesses and their relationships with traders and consumers internationally.
Although the EU will remain a significant trading partner for the UK, focusing on your marketing strategy in the UK could prove more valuable and provide financial security against impact on international sales. It could also be worth expanding your current outreach to markets in the USA, Australia and China to gain wider access and the opportunity for regrowth for when the UK leaves the single market.
2. Secure the right funding
If a no deal Brexit goes ahead it could spark a rapid recession and a credit crunch which would affect funding options leading to insufficient lending – a potentially devastating eventuality for SMEs. It is therefore very important for business owners to educate themselves about the potential changes following Brexit and consider adopting new strategies and funding options to ensure the longevity and success of their businesses.
There are hundreds of loan providers and funding options to choose from and you can always use a price comparison website to help you refine your search and find the right funding option for your business. At present, the fastest and most innovative way to fund your business is with a business cash advance, or a merchant cash advance as it’s also known. As a fairly new financial product, you’d be forgiven for never having heard of this option before, but it has already proven very successful with the UK’s SMEs.
Perhaps the biggest perk is that you’re not charged any interest on the amount borrowed, instead you simply agree on just one fixed fee to pay back, along with the total loan amount. Repayments are kept flexible; you simply use a small pre-agreed percentage of your total daily card sales to automatically repay the lender. And because business cash advance repayments are taken as percentages and not fixed figures, repayments remain in sync with cash-flow. In other words, if your business makes less money one day, the amount you repay is also nicely smaller. All in all, it’s an affordable and flexible funding option that you may want to consider for the future.
3. Review your employees
It is vital that as a business owner that you educate yourself about the potential impact on EU citizens in your employment following Brexit. You need to review the number of staff who are EU citizens, know their immigration status and regularly review their employment contracts to ensure that you are employing them legally post Brexit.
It has been approved that under the Withdrawal Agreement, EU nationals and their family members who have lived in the UK for at least five years by 31 December 2020 will be able to apply for UK Settled Status. Those who have been here for less than 5 years, can apply for Pre-Settled status until they meet the full criteria. In other words, the EU withdrawal bill will implement most EU employment regulations into UK law and the Brexit divorce negotiations seek to guarantee the rights of EU nationals already in the UK.
4. Protect and manage your supply chain
According to a report published by the House of Commons, 60 percent of UK businesses whose suppliers are in the EU have reported that currency fluctuations have already made their supply chains more expensive. To make matters worse the potential changes to VAT for transactions between the UK and the EU is left undetermined due to the Brexit chaos.
This will unfortunately affect all exports and the importing of materials for businesses as trading companies will be charged VAT at the border. Therefore it is worth investigating your supply chain to find out how they will ensure continuity of service and to discuss potential contingency plans in case of delivery obstructions and changes to tariffs.
Your supply chain is the means to your business and so it is important to develop a strong relationship with your suppliers to continue trading in the future. It is worth considering paying your suppliers in their local currency to ease the temperamental fluctuations with exchange rates.
You could also look into which products you can source internally in the UK to minimise disruption and unprecedented costs. Sourcing your suppliers within the UK would also reduce the risk of dubious costs and payments as invoices would be paid in one currency. It would also be proactive to increase your stock held in the UK especially if you rely heavily on importing your goods from the EU. If your relationship with your suppliers deteriorates after the UK leaves the EU you will need to have prepared your business to meet demand, thereby having additional inventory in place your business operations can continue.
5. Research potential regulation changes
You should spend time educating yourself about potential regulation changes that could affect your business and employees. While most regulations will remain fundamentally the same until the UK breaks free from the EU it is important to familiarise yourself so that you are prepared to tackle potential new laws:
- Working Time Regulations have been reviewed and most of them will remain. However the maximum average 48-hour working week might be abolished and holiday pay calculations could revert to basic salary being paid as holiday pay.
- The Markets in Financial Instruments Directive is a regulation EU law that increases the transparency across the European Union’s financial markets. The biggest impact of Brexit on this law will be the loss of passporting rights.
- Data Privacy regulations will no longer apply to the UK on exit. That being said, provisions will continue to apply to UK companies offering goods and services to EU citizens.
6. Consider relocating
The Institute of Directors surveyed 1,200 business leaders and found that 16% already had plans to relocate while a further 13% were actively considering a move. UK businesses are planning to relocate some of their operations abroad or have already shifted them to cope with the increasing possibility of a no deal Brexit.
You may be faced with the hard choice of relocating to protect your company and change is more often than not a positive part of doing business.
The unavoidable disruption and challenging trade barriers that no deal would bring are damaging to your business and therefore relocating could be a suitable option. On the other hand you may wish to stay in the UK and hold out for the more flexible tax regimes and regulations post Brexit.
7. Develop a solid contingency plan.
Finally, whatever the outcome of Brexit on the UK, you will need a contingency plan in place to cover all possibilities and eventualities to ensure the security and success of your business. Your contingency plan will need to be sufficiently flexible to cope with a variety of outcomes and being as prepared as possible will allow peace of mind.