Brexit Uncertainty: Preparing Your Business - Fleximize

Brexit Uncertainty: Preparing Your Business

With more uncertainty around Brexit dominating headlines, here's how to keep your business prepared in the face of the unexpected

By Gianluca Bisceglie

The Article 50 deadline is looming closer and the government is seemingly no closer to an agreeable Brexit deal. This, along with the fact that a no-deal is not ruled out, means that the future of British businesses seems more uncertain than ever. For many SMEs, the worries surrounding crashing out of the EU include everything from supply chain disruption and regulation changes to reduced access to external finance and funding.

Brexit, whether it happens or not, is an opportunity to assess your business and stress-test it for potential challenges so that you can mitigate risks should times get tough. We take a look at the potential changes and possible solutions to help keep your business prepared.

The first step

In an environment of uncertainty and unpredictable outcomes, you must be able to answer what-if questions and have a forward-thinking and proactive approach to change.

Consider what each of the following questions might mean for your business:

If you start by answering these questions, you'll be able to focus on actionable and practical assumptions. This will allow you to create contingency plans or prioritize resources to cover the possible risks involved with the impact of Brexit.

With this in mind, you can then move on to focus on the details around cash flow, funding, and your employees, as we outline below.

Cash flow concerns

Changes to the way VAT is paid are likely to result in higher upfront costs for imported goods from the European Union post-Brexit. This, combined with question marks over future changes to corporation tax, has resulted in many business owners being understandably concerned over rising costs eating into hard-earned profits.

The simplest way to prepare for this is to try and keep profits consistent in order to ensure you have enough liquid funds to cover any higher tax charges. Pay particular attention to this if your business relies on seasonal sales. Most importantly, stay close to your crucial suppliers and understand what their plans are.

It's also worth stress-testing your financial model, as Brexit will likely result in the cost of goods increasing. Adjust expenses and study your key input drivers within your spreadsheets (or any other forecasting tool you use) to determine which items have the greatest impact on your bottom line.

If you can, make sure any agreements and payments are documented and agreed into the future. If you work on longer payment terms than your suppliers grant you, there will be a gap in your cash flow that you will have to fill. Consider talking to your bank or finance company now to make sure that access to cash flow finance won’t be a problem when you most need it.

Finding funding

The European Investment Fund has provided huge amounts of finance to British businesses through banks, and with economic uncertainty in the air, the chances are that funding may become more difficult. Even so, this doesn’t mean it will be impossible. There are plenty of alternative finance lenders who are able to offer your SME flexible business loans to keep your business ticking over amidst the coming changes.

As a business owner, your job is to be aware of the factors that investors or finance companies use to assess your company - and react accordingly. When pitching, be sure to present your ideas with confidence, support them with clear financial projections that show the business model is solid also when assumptions change due to market uncertainties (prepare to show 'what-if' analysis).

Bridge the skills gap

There has been a lot of talk about a talent crisis and skills gap following our departure from the EU, so this may be a good time to consider upskilling and cross-skilling your existing staff. If you're experiencing a shortfall of European workers leaving, consider it an opportunity to cut costs through using contractors and remote workers.

Collaboration with remote teams is also easier than ever thanks to advances in software and products like Google docs for trackable document editing. A great task management system such as Trello can help to keep remote teams on track, while Skype and Google Hangouts are also great tools for conference calls and remote working.

Communication is of course key to the success of remote teams, so make sure staff are available online and stress the importance of keeping response times short. Use email, WhatsApp, or whatever suits your team. However you choose to communicate, it must be quick and equivalent to a walk across the office for a chat.

Assess opportunities and risks

Rather than focusing on the potential perils of Brexit, why not consider the potential opportunities it might bring to widen profit margins?

One way to assess potential opportunities is considering the impact of imports vs exports. Assess potential suppliers with offshoring options and how this could bring about new opportunities. It's also worth taking the time to understand new supplier benefits in regard to costs, quality and competitiveness.

Complete due diligence on each supplier and the possible outcome each could have on cash flow. The key is to remain numbers-driven and ensure your decision making projects the best possible scenarios for your business.

Brexit or not, no business ever goes exactly to plan, so the best entrepreneurs know how to pivot. Being able to pivot towards opportunity, instead of being grounded in your original idea, will keep you ahead of the game in any economic condition.

About the Author

Gianluca Bisceglie is the founder and CEO of Visyond, a cloud-based software platform that transforms the way people work with spreadsheets. It enables secure, selective and interactive data sharing, automating financials and performing analysis in minutes with just a few simple clicks.