Small Business? Three Things To Consider After BrexitNow that the surprise of the Leave vote has died down, and we are dealing with the aftermath of the public choice to leave the European Union, many business owners have started wondering about the impact of Brexit on their business. It won't affect all businesses; but I do feel that there are three key areas that every business owner needs to think about if applicable:
1. Keep calm and carry on!
This might seem like an exercise in stating the obvious, but we can only control what we can control. The markets had pretty much priced in the risk of Brexit, and had there not been speculation of a Remain vote, the "crash" would have been unspectacular.
What the markets haven't yet priced in is the future unknowns. Will Jeremy Corbyn resign? Will a left-field candidate become PM? Will there be a snap General Election? Will there be a push for a second referendum; or even a winning party with a manifesto pledge to remain in Europe?
The answer is we don't know, and with the exception of our singular votes in the instances where we can have a say, we also cannot control the outcome. Rather than worrying about the potential impact, it's time to roll up the sleeves and get on with business at usual - the external circumstances will shape themselves in their own time.
Whilst it has been claimed that this isn't a Lehman Brothers moment, the economy is in a fragile condition. The potential changes listed above could all have an impact on the financial markets. An area that could be hit; which will affect most businesses, is the funding market.
We've all been here before. In 2008, it felt like all we could hear was "computer says no". Despite the apparent unwillingness for banks to lend as they had done before, few business owners joined the dots to realise that in order to stay in business in difficult times, the banks still needed to lend money.
The difference was that they were only lending money on safer bets.
If you are likely to need funding over the next couple of years, it would make sense to start preparing sooner rather than later. It's unlikely that what passed an underwriter six months ago would sail through at quite the same pace. Make sure that you make life (and the decision) easy for them, with well thought through plans, detailed projections, and sensitivity analysis on your projections. Demonstrate that you understand the markets appetite to risk, but also that your business can withstand a potential downturn in the economy. Make it a safe bet, and you'll find that this isn't as much of an issue as you might perceive.
3. International Trade
Now we have the tricky one. Whilst those of us who understand what's going on know that nothing has actually changed yet, and won't change for some time; the recent referendum has proven that even some apparently educated individuals don't actually know what's going on!
We have clearly had more information about Brexit than any other nation in the world. For many, Brexit might be something that they overheard on the news, and perhaps saw on Friday 24th June in their newspaper. The reality is that most international trading partners - at our level (we're talking business to business, not geopolitics here) - might not understand the full process and ramifications of our exit from the EU. Some EU business partners might mistakenly assume that we have already left the EU, and that dealing with a UK business is more hassle than it is worth.
Make sure that you communicate with them, and make it clear that until further notice, it is business as usual. If one of our fellow UK residents believed that they couldn't visit Disneyland Paris because of a physical border stopping them from travelling, it is possible that our international colleagues might not be fully au fait with the legislative process of Article 50.
Something worth considering in these communications is that many Europeans see themselves as Europeans, in addition to natives of their home country. In my experience, this can be similar to how an individual living in the state of Texas would also see themselves as an American living in the US. This might differ from your own political views on Europe (hey - we were pretty much split 50/50) - and therefore, it is worth bearing in mind the potential sensitivities surrounding Brexit in your conversations with them. From my conversations with my own European friends and colleagues, Brexit is regrettable for them, much in the same way that Scottish Independence could be for many south of the border.
This list of three items is in no way conclusive. In fact, it would be remiss of me not to include some other considerations in any article like this, such as:
- the potential impact on EU citizens employed by UK companies
- the questions that staff might ask about EU-driven employment legislation
- handling office politics (of the geo-political kind!)
- the potential impact of Brexit on EU competition law
- the potential impact of Brexit on VAT (a tax derived from an EU directive)
What you will notice about most of the above is that they can be answered by existing good practice, tact and common sense; or can't be definitively answered as they are still an unknown! And whilst there are unknowns, all we can do is the best that we can with the circumstances we find ourselves in.
In short - there's a few things to consider - but none are insurmountable. Focus on business as usual, and you'll be well prepared for any storm yet to come!