Brexit and Your Business Plan
Brexit brings us uncertainty.
I’m sitting at my Swedish made desk, writing this blogpost on my US designed iMac which was assembled in China, drinking my very British cup of Yorkshire Tea made from teabags bought in a German owned discount supermarket. I’m also minded that in the garage is a German made hatchback and a Japanese sports car. For lunch its bread and cheese (French brie) followed by a Spanish orange and a West Indian banana. In or out of the EU each one of us, individuals and businesses are locked into a complex world of international trade.
So what does Brexit mean for your business?
There’s a Brexit media frenzy going on. Its really not helpful to us, and is telling us very little. Ignore the media, they thrive on uncertainty and will focus on whatever makes a good story. Most of what they talk about will never happen, and even less of it directly impacts your business, so why expose yourself to all that stress and worry about things you can’t control.
We know there’s a long road ahead of us until there is any certainty over the British future potentially outside the EU. So what does that uncertainty mean to your business plan?
There will be some immediate Brexit effects:
- Market volatility impacting exchange rates, fuel prices and other RM not denominated in £.
- Complex relationships between interest rates price levels and inflation, there are arguments for rates going up and for them staying low.
If you are heavily exposed to any of these its worth knowing what happens in your business when there is a significant movement. At the moment predicting what might happen will be difficult, but be ready with your plan B just in case it’s not quite what you expected.
Capital markets hate uncertainty, and thats exactly what Brexit gives us in the short term – Expect these markets to take a holiday across the summer. As a result, it might be more difficult to get funding for projects and new ventures. This might impact you in two ways:
- If you are looking for funding for your own projects, there might be some delay in getting a decision. Don’t push too hard to get that decision, being impatient might mean the answer that comes back isn’t the one you want. Also, make sure you have a solid story to tell about your exposure to the uncertainties the financiers are worrying about. Be ready to tell them how you are mitigating against them.
- Look at your sales pipeline. Are you reliant on your customers starting new projects? If so are you exposed to any delay they might have in securing investment?
Of course if your business is in a great position right now it might be the right time to get yourself some extra security in case there are rockier times ahead. How about renewing the overdraft facility you never use?
In the short term do some analysis and get yourself a good understanding of your own position:
If you need to raise funding then the investment case will be much stronger if you’ve thought some of the uncertainty through. The key thing is there will be risk, there’s always risk, but the most important thing is how you prepare for it and mitigate against it. But think opportunities too, whats the up side?
A key element of any business plan you prepare for investors will be demonstrating you understand the risks and you have the mitigation strategies in place.
To understand what your business is exposed to start looking at customers and suppliers
- Think about your customers, and your customer’s customers. They will have the biggest impact on your business. What might change for them?
- Your suppliers, how will they be affected?
What might impact these people, or indeed impact you directly:
- Exposure to exchange rates
- Prices of things denominated in other currencies – fuel, raw materials, etc.
- Will they have any new business problems you might have a solution for
A great tool for doing your analysis is a SWOT analysis. This enables you to take both an internal and external look at your business. You can systematically explore your strengths and weaknesses, and more importantly for Brexit the opportunities and threats.
Yes, think strengths and opportunities – this isn’t simply a risk management exercise!
For each item you put in your SWOT think about its impact on your business. Rank them high, medium or low. Remember you want to focus on the things that are going to have the biggest impact on you. Also think likelihood, again rank everything high, medium or low. If the likelihood is low, there’s probably no point in worrying unduly right now about something that might never happen.
Now that you have this analysis, what can you do about it? What needs to go into your plan for the next 90 or 100 days? If there’s an opportunity nothing beats massive action to make the most of it.
But remember Brexit isn’t the only economic driver. Many things impact your market, and your suppliers and customers. It’s not just about exchange rates, fuel prices, and so on. Don’t over think it!
We talked about Brexit on The Next 100 Days Podcast. Graham and I gave business owners 10 tips for a post Brexit vote world. Take a listen
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