What can small business owners do to prepare for Brexit despite endemic uncertainty? Head of business services at law firm Irwin Mitchell, Vicky Brackett, provides her tips to readers.
Six months after the political curveball that was Britain’s EU referendum, a lot of water has passed under the bridge but businesses are generally none the wiser about what the reality of Brexit means.
Since the shock referendum result, announced on June 24, David Cameron resigned and was replaced by Theresa May, who told the nation that “Brexit means Brexit”, and the new prime minister plans to trigger Article 50 by the end of March 2017.
Although the pound was severely weakened by the result of the vote, and there was widespread fear of an imminent recession, the UK economy has defied predictions and held strong, illustrating the strength, innovation and grit of British business.
We now know a little more about the proposed timeline for Brexit, and experts are predicting between 14 and 18 months for negotiations. However, we still know very little about the actual strategy the government plans to reveal come February.
So, considering the buzzword of 2016 – uncertainty – looks set to pass over into the new year, small business owners should take a few steps to prepare for Brexit.
Expect the unexpected
While the UK economy has proven to be robust and resilient this year in the face of global political upheaval in Europe and the US, business leaders will need to keep their seat belts firmly buckled as 2017 promises to be yet another bumpy ride.
We’ve already seen during the Autumn Statement that Brexit is starting to cost us. The chancellor revealed that Britain will borrow an extra £122bn for Brexit.
The government is due to reveal Brexit plans in February, and negotiation talks are likely to begin in earnest next summer.
Ministers and industry leaders have put pressure on government for a transitional deal to be put in place 12 months before the official Brexit happens, to help soften the blow to the economy and help business owners make necessary changes.
It’s vital that small business owners have good short-term and long-term plans in place to deal with economic uncertainty.
This may mean analysing your company’s vulnerability to changes in the market, reducing order sizes, reviewing the currencies you deal in and seeing if forward contracts, spot trades and limit orders could be beneficial, should exchange rates fluctuate.
Looking at the bigger picture, you can consider access to skills and how changes to immigration law may affect your firm, whilst thinking about location, and where might be best for your business to be based in future.
Make 2017 the year of exporting
While the weaker pound has made holidays abroad more expensive, the drop in the value of the currency has been great for British business owners who sell goods and services overseas.
According to a recent FedEx Express report on UK exports, only a quarter of small companies are currently “internationally active” but many claim gaining access to new markets will be paramount to success in 2017.
Although the pound is predicted to regain some of its strength in the coming year, and regardless of what trade deals come out in the wash, this is still a prime opportunity for firms to look at boosting and revitalising themselves by selling world-class expertise, services and products outside of the UK.
Firms which expose themselves to the pressures of foreign markets tend to become more competitive, in turn forcing them to become more innovative, so the benefits of exporting can be seen in more than just boosting profits.
Small business leaders should look at ways to increase productivity by looking at better management practices, investing in education and apprenticeship schemes to ensure skills shortages are dealt with and work with local authorities to improve transport links which will offer greater access to labour.
Business owners who offer employees performance-related bonuses and flexible benefits tend to be more productive, so look at ways you can retain talent.
Outside of London, small business owners suffer from a lack of graduates to fill roles. They should look at working with a local university, or education providers who may have set up innovation centres or business hubs, to help with research and innovation.
Vicky Brackett is CEO of business legal services at Irwin Mitchell.
Exporting stagnant despite wide government promotion
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