Brexit – some points for consideration
The U.K. has embarked on its most significant, bold journey in the last two decades – and now it is full steam ahead. The decision to leave the European Union will affect everyone, interactions with companies and government alike. It is therefore no surprise that businesses may be keeping their heads down with some reluctance to face the issues (and opportunities) that may lay ahead. A climate of uncertainty has been created, but there is also the potential for opportunity and growth.
What follows are some thoughts to be contemplated and for you to strategically consider for your business. These are by no means exhaustive as all businesses are different, but what all our clients possess (and the SME sector generally) is the ability to adapt and change. After all, we have just been through one of the worst recessions. Planning is key, the other option is planning to stagnate. You may not need to do much but as long as you’ve thought about the issues, then you’re more prepared than your competitor who has not.
The fundamental question is – what is it your company really wants? For example, one advantage of being in the EU is that there are integrated supply chains. These will no doubt be disrupted. Your business model may have to adapt.
To paraphrase Sir Richard Branson “your staff are your greatest asset”. Certain media coverage and political agendas may have unduly worried staff. Do you have staff who are EU Nationals or who are concerned about Brexit? Now is your opportunity to help to put minds at rest. We don’t know what’s going to happen regarding employment rights upon exit as most of our employment laws are enshrined within EU law but what we can do is try to reassure. Make it firm policy to inform staff that should certain individuals require visas or work permits then you will help them – maybe by offering them the services of the company’s legal advisers etc. Staff like reassurance and support and openly offering it is the best option.
What is your exposure to Brexit? How important is being in the EU to your business? If these are key issues then how are you going to protect your interests from changes/regulations such as tariffs or duties? If you are a larger business then maybe consider starting a lobby group to protect not only your interests but those of your competitors, customers and suppliers who will all be affected. If not then there are a whole raft of Trade Associations you could join – these essentially are unions for industry and look after the needs of their members by lobbying government. You are in a position of choice now. Are there good (or bad) EU rules that you would like to see kept (or abandoned), then now might be a good time to look to form or join a lobby group.
Where are your suppliers and customers based? Which customers are key and which suppliers do you spend the most with? When the UK finally departs the EU will suppliers and customers outside the EU become more attractive once levies and taxes are taken into consideration on the goods and services you provide? Maybe working on some simple ‘what if’ scenarios could help to quantify if changing suppliers or dropping certain customers is worthwhile? Barnes Roffe can certainly help you here with some financial modelling.
If you break down the concerns into digestible items it will help you make informed decisions – such as looking into using alternative suppliers inside the UK or in the Rest of the World.
There is likely to be a customs process in trading with the EU – will you need to hold more stock? (With the associated costs), will having a strategic base in the EU be an option?
Likewise service companies may be affected – will your regulatory environment change? If you are a lawyer, for example, do you want to consider registering with a professional body in a country that will remain in the EU or admit staff to that body? Ireland, for example, speak English and you will still be able to appear in front of EU courts. Other professionals may want to consider the same.
For manufacturing companies, do you want to consider your manufacturing processes or machinery. Has it been acquired from within the EU? Therefore parts and maintenance may be an issue. Can it be adapted to run on parts not sourced within the EU or to make multiple products should your business model change? This may be the case if your customers in the EU are a minor proportion of overall sales, so as mentioned above, could suffering the end of an income stream be for the greater good?
You may start seeing ‘Brexit clauses’ in contracts. So in the event of the law changing, what are you as an employer or employee going to do – will you still be able to handover, honour or complete on an existing contract? Will there be financial penalties or will execution of the contract be prohibitively expensive (in terms of time or cost)? Is it in your favour to capitalise on such clauses?
The above is by no means exhaustive but should help to offer some food for thought.
Why not have a word with your partner at Barnes Roffe to see how we may be able to advise?
Blog written by Adam WildboreTalk to Barnes Roffe today