As the countdown continues to run down on the Brexit clock businesses across Wales and the UK are facing a lot of uncertainty in their futures. To help combat this Business News Wales asked our panel of experts for their advice.
Lead Partner | Grant Thornton
Currently the shape of the UK’s relationship with Europe beyond March 2019 is unknown and the impact will be different for every organisation. Whilst the business environment will not change much in the next two years, organisations should take the opportunity to clarify strategy, redesign business models and embrace new opportunities. For any dynamic growing business, it is vital to utilise this two-year period to prepare. We are emphasising to our clients how important it is to ensure that they are able to react quickly to upcoming changes, minimise any potential risks and seize the opportunities that are presented.
The future of the UK will be shaped by the choices that are made in negotiations, including where we land on the continuum between ‘hard’ and ‘soft’ Brexit and how we shape our new model of economic co-operation with the EU.
There are three key actions we advise business leaders take, mapped out against key dates between now and 2019.
1/ Measure your exposure For instance, this means assessing the touch-points your business has with the EU through things like your people, supply chain and the regulatory influences and conducting scenario planning around them to determine the likely impact leaving the EU might have.
2/ Brexit-proof your business Once you have determined where and how your business is likely to be impacted the most, you can develop a transition plan to prepare, protect and eventually reap the benefits of Brexit.
3/ Capitalise on opportunities To achieve growth during and after the UK’s departure from the EU, now is the ideal time to identify and capitalise on the opportunities it could present. This means redesigning business models, optimising processes and controls, exploring new international markets and trade deals, and capitalising on new domestic opportunities.
Our CEO Room is proving the ideal tool for forward thinking business owners and company boards already thinking about the challenges and opportunities presented by Brexit and creates an opportunity for such organisations to explore in detail possible implications and potential opportunities across the key themes of trade, people and talent, finance and operations.
Whatever the eventual outcome, during these uncertain times clear leadership is vital to business success. The more resilient organisations will be those which focus on creating robust and effective engagement plans with employees to maintain their focus on the business fundamentals and ensure leadership teams have a clear vision and purpose aligned to the key strategic goals of the company.
Chief Executive | Taff Housing
Brexit came as a shock to many of us, and having now had a little time to digest it, there are some things we know that we must prepare for. Whilst uncertainty remains around the status of EU nationals in the UK workforce, the housebuilding sector, especially via social housing, has already begun a ‘grow your own’ approach by encouraging apprenticeships on our contracts. For us this is not just important for labour supply, but also for the opportunities it brings for our tenants to get work experience and a pathway to well-paid employment.
Working with vulnerable people, we quickly saw the effects of the Brexit debates in our communities. Hate crimes rose in Cardiff, though thankfully not as severely as in many other UK cities. As part of our new five-year plan ‘Building Foundations for Better Futures’, we have committed to helping individuals and communities become more resilient. We do this though community events, and through tenancy enforcement, with a zero tolerance on hate crime. Many of our specialist services work directly with BME communities, to support them and help with integration. Cardiff and the Vale locals have on the whole been very positive in helping our Syrian Refugee families, for example.
Uncertainty is always about risk, and how to manage it. We have benefited from European funding in recent years, and post 2020, this will disappear. So, our approach is to look at alternative means of income generation to fund the projects we care about. In particular, we are looking at commercial opportunities to use the talents of our staff.
As all our business is Wales based, we do not have to worry about exchange rates directly affecting us. But we are not immune from markets or austerity measures, so we always keep in close contact with our lenders to ensure we can insulate ourselves from any nasty surprises in the future. Our advice is to plan for how risks might manifest themselves – rather than to second guess specifics around Brexit. So, interest rate increases, shortage of labour, procurement restrictions and opportunities are where we will be focussing over the next couple of years.
Senior Associate, Business Legal Services Team | Slater and Gordon
Economists appear to be advising that Brexit is likely to result in a downturn in the economy. Businesses should factor this into their business plans for the next five years. Are their current overheads sustainable in an economic downturn and how vulnerable is their business to slower economic conditions? Is there anything that can be done to mitigate against this possibility?
If freedom of movement is to be stopped how will this affect businesses’ ability to recruit? Will any of their existing employees be unable to continue working in the UK? Now would be a good time to speak to immigration experts to ascertain whether there are any steps which can be taken now, which might enable key employees to remain working in the UK, even if there is a hard Brexit. In addition is there anything that they can do which would make the jobs they offer more attractive to UK nationals?
Managing Director | Wolfestone
Britain’s impending exit from Europe has created a lot of uncertainty for businesses. For companies like Wolfestone operating in European markets, the fluctuating pound and unknown status of EU nationals makes planning difficult. While a weakened currency makes UK goods more appealing to Europe, importing services has become more expensive.
Being aware of the EU’s influence on one’s business is beneficial when planning for Brexit. From customer bases and supply chains to regulations imposed, business directors need to stay open-minded. With a contingency plan that is diverse and accounts for any eventuality, businesses can position themselves to take advantage of Brexit regardless of outcomes.
The potential to strike trade agreements with countries outside the EU could be beneficial. Markets like the US, China and Australia have already shown interest in securing a deal. However, until negotiations with the EU advance further, it’s difficult for businesses to understand fully what impact Brexit will have.
Director | Grapevine Event Management
When doing business there is always an air of uncertainty in what you do as there are just some things you cannot control. Brexit is one of those things.
Planning for the future is important, but when you don’t know what the future might hold it can be hard. There is no way you can plan for every eventual outcome so you have to make sure that your business and your employees are strong enough to deal with change when it comes.
During this time of negotiations, we need to remind ourselves of what we do so well and focus on communicating all that makes the UK event industry the envy of the world.
With the focus very much on the UK right now, Brexit is an opportunity to strengthen our relationships with national and international partners, showcase the great and the good of the UK events industry and drive home the message the Britain is very much open for business.
Head of Business Corporate Banking | Barclays
It will take 2 years following the date of our triggering article 50 to leave the EU. Brexit has already led to volatility in financial markets and there will be a period of economic and business uncertainty as the details of our exit from the EU are worked out.
In the interim businesses will need to undertake a strategic review to minimise their risks and maximise the opportunities that Brexit presents.
- Owners / Directors should identify the issues that need addressing now and those that can wait
- For example:- which of your costs are likely to be impacted? How much of your trade is with Europe, impact of currency fluctuations, investment plans, order book certainty, free movement of labour, what % of your workforce originates from the EU?
- Consider the impact of Brexit on your funding plan – assess future capital investment and consider the risks if you are faced with economic hardship, review cash flow forecasts – does this present any challenges that you need to review or discuss with funders?
- Identify any opportunities – Invoices in sterling will be cheaper to settle by foreign currency holders – will this increase demand for your product or service and does your business have the capacity for increased demand?
- The U.K has strengths in many industries such as financial services, creative industries and tourism as well as high value manufacturing. Are there changes you can make to benefit from these areas?
- Communicate to key stakeholders the outputs of the above – all key people need to be aware of the impact and may also have ideas to help the business benefit from the review.
- As decisions are made it will be important to revisit strategic plans and adjust necessary decisions in light of the new information. It will be necessary to ensure that you have the right talent and levels of resource within the business and this may involve new ways of recruiting
- What are the opportunities with regard to trading outside of the EU
- Continue to work on the opportunities you have highlighted to maximise the potential and review resourcing requirements and changes
Above all consult with your key stakeholders and continue to communicate
Director | Smart Anchor Ventures
If you’re a business owner, company manager or entrepreneur, you’d be forgiven if the events surrounding Brexit, since it was formally announced, have left you feeling rather uncertain about what the future holds. Well one certainty is you’re not alone!
We’ve spent significant time looking at what Brexit means for our business, our portfolio companies and the fellow investors we work with. We been trying to determine what we should do as we enter the uncharted waters…
The following are some key points which we are acting upon and which are worth your consideration:
- Focus on what you can control, don’t panic and keep doing what you are good at – Good businesses and great business leaders adapt and become stronger in times of uncertainly.
- Continue investing – Don’t stop putting energy, time and resource into developing your product/service’s uniqueness and value. Ensuring you communicate this to key stakeholders, both within your business and externally.
- Don’t believe everything you hear – For the most part, the hyped rhetoric being put out by the many factions in the Brexit debate is unhelpful so try not to get bogged down in the different narratives being banded around. Most are second guessing at best!
- Communicate – Open and clear communication is vital at all times but more so than ever when potential changes are ahead. Ensure all team members remain engaged, motivated and passionate. Whilst it’s hard to be certain of anything currently, it’s always reassuring to see that businesses are planning for both best and worst case scenarios.
- Seize the opportunity – I’m a firm believer that, in times of adversity, the truly determined rise to the top. Be brave and don’t let the uncertainty around Brexit lead to uncertainty within your business.
Good luck and avoid letting issues outside your sphere of influence curb your enthusiasm or ambitions!
Director | Greenaway Scott
Whilst the Brexit negotiations go on, it is ultimately business as usual for SME’s. For the most part, the confidence of business owners post Brexit seems to be on the increase, but there is still a lot of uncertainty as to what leaving the EU will actually mean. It is hoped that the next year of negotiations brings about a solid deal for UK businesses across the board, which not only takes into account trade but also provides a good outcome for the UK labour market.
Whether you were in or out, Brexit is now a reality and businesses need to embrace it by planning and using this transitional phase to their advantage. Try and consider how you can make your business work under all eventualities, consider diversifying into other markets, and ensure you manage the businesses finances for the long term to cover any unforeseen blip we may encounter in the economy.
Graham Leslie Morgan
Managing Director | Business Doctors
In simple terms a business as usual approach is without doubt the best approach for any business in any sector.
An independently facilitated Strategic Planning session should be undertaken by Business owners every 3 years so they have a clear direction and road map for their specific business ambitions and aspirations. Bret is one of many factors that can impact on the success of a business and capturing and assessing the likely areas that can impact on the journey of the business going forward is key.
In any strategic planning process there are a number of key areas to review and these would certainly include:
- Review of your current product and services and how they meet the needs of your customers. What are your competitors doing?
- Review of your market and areas that could change over the next 3 years.
- Assessment of what is happening in the Economy, Political and Social spheres.
- Digitalisation – technology can impact on businesses of all sizes across all sectors and understanding what opportunities or threats exist is paramount.
- Staff & People engagement – at times of change/uncertainty getting closer to the staff and understanding their thoughts and views is highly relevant. The vast majority of businesses do not have any form of staff engagement mechanism! An essential tool in 2017 to help capacity, retention, customer service, attendance and attraction of new employees.
- Marketing & Business Development plan fit for the next 3 years.
A business that has a 3 year Strategic Plan will have little to fear from Brexit or any other influence that could impact on their business given scenarios have been thought through and contingencies discussed or indeed put in place.
The Brexit Audit available from Business Doctors would certainly be a first step to preparing for the journey ahead.
Director | Hudman Solutions
I’d love to be able to sit here and write a “how to..” guide for navigating your business through the Brexit process, but as we all know, that is almost impossible.
So, what do we know? Well, we might be in the single market, we might not. We might have to pay import/export taxes, we might not. We might have to charge VAT on goods and services sold within the EU, we might not. We might have a decrease in corporation tax, we might not. We may have changes to legislation around intellectual property rights and data security, we might not.
As Managing Director of a company who specialise in business software you’d expect this to worry me, but it really doesn’t – Brexit is just another example of how businesses need to be flexible. My job is to ensure that SMEs have the software infrastructure in place that offers them the flexibility they need to navigate through uncertainty.
Flexibility in software terms means the creation of an architecture that is highly responsive to change and can be altered with the minimum amount of cost, cultural upheaval, and time. Businesses would be wise to consider how flexible they are currently, and how quickly they could react if there was a substantial change after Brexit.
I realise that this is a hugely overused phrase (and one that I have been to known to cringe at in the past) but the sentiment for the next two years has to be “Keep Calm and Carry On”. We need to continue innovating and pushing boundaries. We are still the world’s leading financial centre, we have the English language, some of the world’s top universities, a thriving technology sector, we’re on the doorstep of the world’s largest trading bloc, and we are the number one destination in Europe for foreign direct investment.
At Hudman, we see Brexit as a huge opportunity. We sell flexibility for a living by offering SMEs a cost-effective alternative to traditional ‘on-premise’ software systems. We also specialise in software for the manufacturing sector and we are already seeing the benefits of a lower pound and the increase in exports for our clients.
If you’d like to hear more, feel free to get in touch and find out how Hudman can help to steer your business through the next two years and beyond.