If you are feeling a little bit unsure of how things are going to change due to the forthcoming Brexit event then don’t worry, you’re not alone.
Although it is now recovering well, business confidence took a fair knock following the vote and it’s true to say that the future landscape is anything but clear.
So what can businesses do to help themselves in the coming months?
The natural thing to do in times of uncertainty is to try and create some order however that might not be the best bet.
Did you know that modern fighter jets are built to be unstable in flight? They use powerful computers to make thousands of adjustments every second to keep them level. The theory being that when they do want to make a turn they are much more nimble and thus evasive.
The same goes for businesses. If you embrace uncertainty and keep your systems and thinking flexible and nimble then you’ll be much quicker to adapt to changing circumstances and adjust your business operations to match the prevalent conditions.
Of course this kind of flexibility requires a keen sense of what is happening in the market place and this leads to our next tip.
Businesses need to perfect their environmental scanning so that they can spot trends and have advanced warning of changing conditions.
Developing your internal reporting is vital as it will help you spot trends within your current customer base. Allied to this it is important that external signs aren’t ignored. Understanding what is happening to the wider economy adds depth to the company’s strategic awareness allowing the business to react quicker to changing times.
One of the first effects of Brexit, occurring even before article 50 was triggered was the large shift in currency rates.
Within a matter of weeks the pound sterling dropped by a good 20% and this is indicative perhaps of a wider volatility that will become a feature of the British economy.
There are two sides to the coin of this currency devaluation of course. For importers it means that everything instantly becomes more expensive, for exporters the reverse is true.
Businesses are well advised to take a tactical decision as to whether they keep their home currency prices stable or move with the wider market volatility. What’s important is not the decision itself but the process of actually making a decision. Just going with the flow is a recipe for disaster as it leaves the company at the whim of the markets.
Firms are also going to need to understand what the effect of large currency fluctuations will be. Although it may seem to exporters that their goods will become cheaper to the wider world the fact is that Britain is not an isolated economy. Generally speaking the majority of exports will include some components that have been sourced abroad meaning that they become more expensive.
Businesses should look at their supply chain, understand where the price pressure is going to come and then look to either absorb the increase or perhaps source locally.
One of the key reasons for the out vote was the effect it may have on immigration. Again the situation is unclear as to whether there will be free movement of people and what the status of current visitors to our shores will be.
Businesses need to think about how a shortage of labour from abroad would affect their operations and if need be put in measures to train local labour to fill the void. For a good example of how the world may look in the future it’s worth viewing the effect that our immigration system has had on Indian restaurants recently.
A further benefit of Brexit will be access to new and emerging markets that may have been affected by EU levies and tariffs in the past.
Companies that are thinking ahead may like to assess what markets would be most suitable for them and their goods and make preparations to enter as soon as is practicable.
The likelihood is that businesses that start planning on the day of Brexit will be two years behind their more forward looking competitors who may already have local distribution deals set up or may have bought local companies to gain entry early.
If you are thinking of expanding abroad then it’s worth making your preparations early.
In the home markets, if as looks possible there are reciprocal trade tariffs on EU goods then it means that imports will become less competitive.
Businesses that have faced stiff competition from imports will find that their home grown goods suddenly become relatively cheap in comparison.
However it’s important that producers don’t rest on their laurels. Exporters who find it more difficult to ship good abroad may decide to concentrate on the home markets and so competition could increase. It is a good idea that firms think carefully about how they will react to increased competition in this instance.
Brexit has been portrayed as both a disaster and the best thing since sliced bread however the reality is that it will clearly be a bit of both.
It may prove to be a boon for some businesses and a death knell for others. Whatever happens it is clear that companies that have taken a strategic approach to the issue, have made plans and contingencies and have though carefully about their new place in the world will do better and are much more likely to make the best of the new opportunities that Brexit will bring.