At the time of writing, Brexit is shrouded in uncertainty. Parliament appears to be split, the Prime Minister’s authority is being called into question and the number of protesters lining London’s streets seem to be increasing in number.
We really are living in very uncertain times. And, if you’re a business owner, that leaves you with a number of rather unclear potential outcomes to try and plan for.
There’s no need to metaphorically run for the hills or over-plan for Brexit – but there are some things you can do now to prepare for pretty much any outcome.
Consider your exposure
Whatever happens after Brexit, trade deals and tariffs for exports and imports from the EU are likely to be volatile. If they worsen, that could affect your margins.
Whether or not you will be affected by such market turbulence very much comes down to your exposure, and there are three questions you can ask yourself to ascertain to what level that is:
- Where do your customers come from?
- Where do you hold your products?
- Where is the business’s money?
If any of the above currently sit within the EU (for instance, your stock might be purchased from an EU country and held there prior to shipping), your level of exposure is likely to be pretty high.
Answering those above questions will enable you to assess the risk you face. For instance, if you rely on foreign cash for purchasing goods or making sales, the exchange rate post-Brexit might impact your business.
The more you’re aware of your exposure to a post-Brexit world, the less likely you’ll be surprised by anything that might happen.
Be ready for fluctuations in cash flow
Now is a great time to look at your cash flow forecasts. If things are tight now, it’s a good idea to get them Brexit-ready, because any market turbulence experienced once the UK leaves the EU might put a greater strain on your finances.
Consider how you might be able to reduce the cost of production or streamline your internal processes so you can ensure invoices are paid quickly and any costs are properly accounted for.
If your cash flow is looking healthy, now might be a good time to invest a little more wholeheartedly in marketing in order to significantly increase your customer base. After all, the more customers you have come Brexit time, the more income you’ll have. Combined that scenario with a tighter focus on processes and reduced production costs, and you’ll be running a profitable, cash-positive ship!
Review your pricing
When was the last time you held a proper review of your pricing strategy?
Brexit – in whatever form it takes – will probably put a fair amount of pressure on both your margins and pricing. If people become increasingly nervous about spending their money, that means you’ll have to work harder to get them to part with it.
This might mean biting the bullet and lowering your prices (that should be easier if you work harder on your cash flow – see above), or working out how you can raise your value proposition. Why should people spend their hard earned money on your product or service when they’re concerned about the finances of the country?
The positive side of this is that you’ll probably get to know your customers far better, because any pricing strategy adjustment will benefit from increased interaction with them in order to find out how you can provide the most value in an uncertain economy.
Brexit is serving us nothing but uncertainty at the moment, but whilst the government goes about its work, the best we can all do as businesses is to prepare sensibly and without panic. Our tips above will help you do just that.