Brexit planning for business – where to start
After 17 months of talks, we still don’t have a firm picture of what Brexit will look like, making it difficult for businesses to know how best to prepare. A few months ago it seemed that there was broad consensus that some sort of transitional deal was almost certain, giving access to the European Single Market for perhaps as long as 2 years post Brexit. More recently the government rhetoric has made the prospect of exiting in 2018 without any replacement trade deal seem more possible.
Whilst there is a big difference between trading within the Single Market and outside of it (essentially on World Trade Organisation rules), there are still steps you can take now to manage risk to your business and help identify opportunities. One of the most important things to do is to assess the risk and plan for the most likely Brexit scenarios:
- undertake a thorough review (due diligence) of all aspects of your business in order to identify those areas which may be affected by Brexit;
- try to anticipate broadly what might happen in the different potential scenarios for Brexit (particularly whether the UK remains within or outside of the customs union);
- based on the likely scenarios, decide what measures you could take now to mitigate the current or likely future affects, what you can do once the route for Brexit is agreed and what you can do once Brexit actually happens.
Break it down into short, medium and long term risks and opportunities if that helps.
The action plan itself may not be very detailed at this stage, but it is important to get the review underway and then you can keep the plan updated as the political situation moves on.
Your plan will of course be individually tailored to your business, but here are some general headings and thoughts which may help.
This is one of the main areas of concern for businesses, and one where many are already feeling effects in terms of concern amongst those EU nationals already employed, and increased recruitment challenges. Areas to look at might be:
The effect on your workforce of an end of free movement – both into and out of the UK:
- the total number of EU workers in your business, divided into skilled, unskilled and semi-skilled
- the number of your key staff working in the UK who are from the EU and their immigration status
Steps you could take now and going forward to mitigate this effect include considering:
- the potential options for recruiting UK nationals to fill gaps (training and recruitment strategies)
- the mechanics of hiring from outside of the UK (both EU and non-EU); and
- technological alternatives for some roles
Depending on what your business buys and sells you may be more or less affected by issues such as changes in the regulatory framework, tariffs and border controls as well as exchange rate fluctuations. Consider:
- your imports – what you currently source from the EU, what could be the affect of changes to tariffs and border controls and how could these be lessened (are there steps you can take now to find suppliers based outside of the EU?)
- what you export. If tariffs are imposed how will you deal with the cost impact? Can you look now for new markets outside of the EU?
What intellectual property does your business own or use? Do you need to take steps to ensure its ongoing protection going forward? For example if you have registered EU Trademarks consider re-registering these as in the UK as well. Look at how you can protect your patents.
Is this flexible enough to allow your business to flourish post Brexit? Do your contracts allow you to terminate or at least renegotiate if trading conditions become much tougher for you? Will they continue to be relevant post Brexit or do you need to take steps now to amend key contracts to include “Brexit clauses”. What about the regulatory environment – do you rely on an acceptance by EU countries into which you trade of common rules and standards? Will you need to apply for any new permits?
Finance and Funding
How could your finances be affected by a split from the EU – looking at the situation where we remain with the common market or outside it? Does your business rely on any EU grants or funding? If so are there options to reduce the need for this or to source from elsewhere?
Look at all aspects of your internal systems and assess how they might be affected by a change in rules: for example on accounting for VAT, processing personal data.
Trade Associations and Government Support
Make enquiries about what support is out there for your industry via trade associations and government bodies. Make sure you are getting up to date information and keep up with (or ahead of) your competitors on this.
Once you start to break down the process it should become clearer if there are areas where you should and can take action now to make your business model more resilient and put it in a position to take advantage of any new trade deals that may become available. Appointing a single person within your organisation to look at the issue in the round may help and communicating with staff, suppliers and customers will be key, particularly if you are planning any major changes
This article first appeared in Real Business on 24 November 2017.