Adam Jackson of Grant Thornton lays down his suggestions for actions businesses should be taking to plan for Brexit.
With less than seven months to go before the UK leaves the European Union, we still do not know what shape Brexit will take.
We are all looking for clarity but this may still be some time in coming. The UK and EU governments are aiming for an agreement of heads of terms by mid-October. This now seems increasingly unlikely and could be as late as December or beyond.
There is also increasing talk of ‘No Deal’ as a likely outcome. This scenario would have the biggest impact and provide businesses with least time to prepare. There would be no transition period and the UK would start trading on World Trade Organisation terms straight away. Initial chaos would be inevitable.
Even if a deal is agreed, the detail will still need to be negotiated during a ‘transition period’ so we won’t have absolute clarity until 2020. And it is possible the UK Government won’t be able to finalise anything until there is a clearer political mandate through an election or a second referendum.
The uncertainty and complexity of Brexit can make it difficult for businesses to plan ahead. But plan they must to narrow uncertainty and prepare for the future, whatever that holds.
So where to start? Here are my top five suggestions for actions organisations should be taking right now to plan for Brexit:
1. Do something! Grant Thornton’s research shows less than a third of British businesses have begun planning for Brexit. You cannot afford to leave this to chance.
2. Measure your exposure. Identify risks and how Brexit could impact your organisation.
3. Plan for a number of different scenarios. This should include ‘No Deal’ as the most disruptive outcome. Look at what is common across all scenarios and identify those decisions which apply to all so you can confidently make these ‘no regrets’ decisons now.
4. Develop a contingency plan. Consider how to protect your business. What would trigger activation and what would you need to do and when?
5. Identify opportunities. How can you use Brexit to grow your business or improve efficiency?
Brexit is complicated. It will impact every aspect of the economy so you will also need to consider your wider business ecosystem. How will your customers, suppliers, markets and people be affected as well as business operations, regulations, taxes and future growth?
Brexit is not just about regulation and the legal agreements between the EU and UK; it is also about how people and markets may behave, how the economy is affected, and what further political change Brexit may prompt, which could lead to more change to the business environment.
Organisations would be well advised to keep track of these wider external dynamics. But beware. There is a lot of noise and hot air out there. Don’t get distracted by what politicians have to say. Focus on what you do in your own business.
My advice is to plan for the worst and hope for the best. And while we’re on a positive, we shouldn’t forget there are a number of opportunities businesses could seize on from Brexit:
1. Identify opportunities for efficiency. Review your operations. How could you become leaner, more agile, productive and resource-efficient?
2. Changing customer demands. What do your customers want and need now as a result of Brexit? What new services or products can you offer to meet these?
3. Widen your markets. Now is the time to look beyond Europe and consider exports to growing global markets such as China, India, USA, and UAE, taking advantage of a weak pound.
4. Identity your competitive edge. Which aspects of your business model give you an advantage over your competitors?
5. People. What is it about your offer that enables you to continue to attract highly skilled talent? How can you develop home-grown skills?
6. Deals. What opportunities are there to acquire undervalued assets or to form strategic alliances to strengthen and grow your business?
The Brexit clock may be ticking but it’s not too late to prepare. Doing so now will help ensure businesses are in the most robust position come March 2019 to embrace the opportunities and deal with the challenges, whatever the outcome.
Visit the Grant Thornton website here.
