15 February, 2019
With the Brexit deadline imminently approaching, how can you prepare your business for Brexit? This is a challenge facing every SME based in the UK that either sells internationally, has an international supply chain or relies on international workforce. SME's employ over 15 million people and account for £1.8 trillion of annual turnover. It therefore seems surprising that 64% of UK SME's have not made specific plans to prepare their business for Brexit. Despite the uncertainty surrounding Brexit, it is fundamental for SMEs to start to prepare for the possible risks they may face.
How to prepare?
1. Be Proactive
It may be tempting to wait and see what happens at the end of Brexit negotiations however, planning is crucial. Businesses importing and exporting across the EU need to consider how the new regulations will affect this movement. This includes; changes to tariffs, border controls and a potential delay in importing goods, consequently limiting the supply of stock.
The uncertainty surrounding Brexit has left companies unaware of the cost implications involved in leaving the EU. For this reason, businesses should attempt to keep their overheads to a minimum and build reserves, to try to reduce the impact additional costs could have.
2. Review Your Supply Chain
Consider how your supply chain currently integrates with the common market and the EU. If a significant relationship between the two exists, review the impact of potential time delays to your work, for example; border check disruptions and cost consequences of the same.
3. Cutting Down on Costs and Alternative Funding
Businesses should consider cutting down management costs. Any possible adverse effects on the pound-dollar foreign exchange will have a direct impact on oil prices, consequently increasing fuel prices for both businesses and consumers.
Further, with the likelihood of EU funding ceasing being very high, it is likely that funding (and administrative requirements in relation to it) for certain sectors may change. Businesses should therefore begin considering alternative funding which is available to their business.
5. Review Your Workforce
SME's should carry out an audit on the immigration status of their employees to identify who may fall under any new immigration controls, and in turn, which of those employees would be entitled to apply for a settled status. Putting a plan in place will assist and aim to protect the employees, helping to maintain a robust and settled workforce, which continues to contribute towards the productivity and growth of your business.
You should also review the skillset of your staff and try to envisage how various Brexit decisions such as; a no deal, a comprehensive economic and trade agreement or remaining in some form of customs union, could have an impact on your workforce.
The Potential Benefits of Brexit
Despite the major concerns regarding leaving the European Union, Brexit will benefit UK businesses too. According to a 2015 analysis, the UK contributed £13 billion to the European Union budget. Therefore, the decision to leave the EU will save the UK government having to contribute every year. Further, leaving the European Union will give the UK the option to make business deals with countries around the world. The UK is currently exploring multibillion-pound free trade deals with China. Additionally, voting to leave the European Union will result in lesser regulations and obligations.
There is undoubtedly a great deal of uncertainty around what Brexit will mean and although it may seem impossible to plan for it, it is vital that businesses start to consider the effects and have contingency plans in place which are sufficiently flexible, dealing with a variety of potential outcomes.