As it is the politicians who are trying to negotiate a way through these unchartered waters, we must accept that Brexit and politics are intrinsically linked. However, the impact and concerns over the outcome of negotiations are already directly impacting your business and the economy.
It is therefore vital that businesses face up to the challenges and get ready now to take advantage of the opportunities that develop.
Having been directly involved in international trade for over 20 years, Jim Fanshawe who is the founder of Your Export Department, is helping companies create, manage, develop and adapt their strategies in relation to Brexit. Here he raises some of the key steps companies can take to plan for Brexit despite the current uncertainty.
“To recollect: In the immediate aftermath of the Leave vote there was huge disruption. More than £120bn was wiped off the value of Britain’s biggest companies, the pound plunged to a 31-year low against the dollar and the UK was stripped of its AAA credit rating.
Business continues though, and as the UK and the EU embark on the trade negotiations there are both short-term and long-term issues to address. Despite the uncertainty, with a little investigation and help you can plan to respond to the consequences and maximise the opportunities.
So, let’s look at what you can control.
- Understand your connections to the EU: Your commercial links to the EU may go well beyond exporting. You should consider the impact on your supply chain, your employees and your future recruitment strategy. You should also think about how it might impact your relationships with parent or sister companies or subsidiaries that could all be connecting you to the EU. A Brexit Impact Analysis project is the best way to do this.
- Focus on relationships: Now is a critical time to be having even closer dialogue with your customers, partners, supply chain and employees. The stronger your relationships are currently, the better chance you have of smoothing out any contractual issues caused by Brexit further down the line. Consider the message you want to portray to each stakeholder group and the mechanism you will use to communicate it.
- Understand where you fit in the supply chain: Continued currency volatility means that changes such as import costs are likely to be passed along to firms which only sell into the UK market.
- Carry out scenario planning: Although the UK government insists it will be leaving the Customs Union and the single market, a lot could happen between now and the end of negotiations. At the moment, there is an increase in the number of companies wanting to carry out impact analysis given various scenarios related to Brexit outcome. Once we have carried out your Brexit Impact Analysis we can cross reference the results with various potential Brexit outcome scenarios enabling you to plan accordingly.
- Review the taxation implications on your business: As the UK will no longer be bound by the EU’s VAT directives, the Government will have far more flexibility to set its own rate of sales tax along with which goods are covered at each level. You should speak to your tax specialist or accountant about this, so they can keep you up to date with the likely impact. But, do consider what the admin burden will be on your business given that you will no longer have access to the EU’s co-ordinated VAT collection system? Similarly, if import duties get imposed, does your business have the administrative capability to manage the increase in work this will inflict?
- What regulatory framework do you currently work under and will this change? There has been much discussion in 2018 about how closely the UK’s product standards and regulatory procedures will mirror the EUs. As this affects different sectors to varying degrees, British businesses will need to keep up to date with the situation in their specific industry. Therefore, it’s best to stay in regular touch with your Trade Association to keep well informed. Although the UK is likely to remain very closely aligned to EU product standards and regulations, the eventual outcome could have a huge impact on your supply chain and your export market selection and heavily regulated sectors such as pharmaceuticals, life sciences, chemicals and financial services should pay particular attention. Don’t forget though that if you want to sell into the EU, your products will have to meet their standards / certification so divergence could mean that you have to run an additional conformance programme.
- How do you trade? The EU (and therefore the UK currently) has beneficial trade arrangements with over 50 countries. Find out which ones you are currently benefiting from in your international trade activities, then investigate the impact on your business if the UK was to trade with those countries under WTO rules. Look out for exciting opportunities that will arise as the UK generates trade deals with other countries outside of the EU. Do you see potential opportunities in your sector in the Commonwealth countries for example? Work out what an attractive export market looks like to you and then go and proactively seek opportunities there. You need to be doing this now though, as it takes a long time to enter new export markets. Organisations such as Your Export Department, Suffolk Chamber and the Department for International Trade can all help with this to varying degrees. Finally, understand the implications on your import and export documentation commitments. The Suffolk Chamber offer a very good export documentation service. Private companies such as Your Export Department and Wallis Shipping Services offer valuable training in this field.
- Review your commercial contracts: Re-read all existing contracts and look out for sections covering pricing (in relation to currency volatility), territorial scope (referencing the EU), dispute resolution (where will cases be heard in particular regarding enforcement?).
- Understand the immigration implications: Looking at your existing employees, what support can you offer them to ensure they are able to stay legally working for your company? Do you have British nationals stationed in the EU? If so, carefully monitor the final Brexit agreement around their status. Also, in the future, where are you going to get employees from that you would normally easily get from the EU? What are the short-term and long-term implications of this on your operation? There are solutions to these questions but it may require some lateral thinking.
Finally, it is prudent to carry out a Brexit Preparation Project, so you fully understand the implications on your business. Getting an external party to work with you on this will give you a valuable and objective outsider view of the company.
Above all, be positive! If you are a confident British business with a great product or service and you’re prepared to put the legwork in, there are excellent global opportunities for you which will still be there post-Brexit. Don’t be afraid to ask for help to get your business Brexit-ready as soon as possible so you’re in the best position to maximise the opportunities when they arise.”
Jim Fanshawe is Director and Founder of Your Export Department and IoD Suffolk Ambassador for Brexit M: 07853 107499 W: yourexportdepartment.com Twitter: @JimFanshawe
