So here we UK businesses are, with a problem. A big problem. How do we plan for a probable new trading environment, an unknown number of months away, and possibly very soon? When there is at the same time a bigger perceived chance of Brexit going into the long grass, for years, or never happening.
Contributing to an air of general uncertainty are an absence of business confidence, a continuing lack of visibility about future access to suppliers and markets, and regulatory unknowns, particularly regarding duty, VAT and other taxation.
Cross-border services are bound to increase in cost and reduce in efficiency. Whilst the Kent car park scenario is hopefully not going to transpire, the passage of goods to and from the continent is likely to be slower than we have come to expect. For just-in-time goods, that is a major headache.
More complex port procedures may mean carrying more inventory – a cash flow planning issue for many businesses; survivable in the short term and with low borrowing rates, but an enforced gearing which many SME owners will feel uncomfortable with.
This is a new and highly uncomfortable situation for UK businesses. So, assuming Brexit does indeed happen…
What can be done?
We’ve weathered crises in the past – oil and banking spring to mind – and somehow things retrench and we carry on. This will happen again. But my business contacts – suppliers, customers – all ask the same question: we can’t just wait and see, hoping for the best – what can or should we do now?
Here comes the good news.
Market understanding and good management practice can ensure best possible readiness in the face of these uncertainties. Reciprocal entities in EU may have mirror image issues and will value a joint approach to a solution.
And despite a sense of great uncertainty, it seems to me unthinkable that 40 years of sensible regulation will disappear overnight; both the UK and EU recognise the need for an orderly and controlled exit, in the context of a well-established historic regulatory framework. Governments will look as a priority to ensure economic and business stability in the remaining negotiations, and post-Brexit. And while there will in time need to be a high volume of new regulations, these are in practice unlikely to be rushed in.
I believe that UK businesses can realistically do the following now:
1. Focus on certainties – what we know about local and international markets and services.
2. Seek EU partners to assist with product and service delivery, on a reciprocal basis. UK businesses providing a stable and transparent service to EU businesses in the post-Brexit world have a huge opportunity.
3. Plan credibly for non-EU markets. Potential clients from these are likely to be thinking pro-actively about the opportunity for UK-sourced products and services, especially if sterling is weaker for a period. And there may be regulatory advantages or incentives post-Brexit to encourage these bi-lateral opportunities.
4. Make a judgement about out what point do we start spending hard cash on implementing new solutions.
5. Budget according to risk; avoiding excessive caution, but making appropriate provision for setting up new alliances and accessing new territories and markets.
What are the likely outcomes?
My view is that there will be as many winners as losers in the new trading environment post-Brexit. The winners will have:
Identified new opportunities or ones where the risk/reward ratio has changed for the better
Been prepared to make strategic investments, or to set aside cash to be ready to do so
Understood their customers’ requirement s in the post Brexit world
Reappraised their product/service offering for existing and potential new markets
In some cases just have been lucky.
In other words the normal rules of business will still apply – businesses which know their customers, are prepared to seek new ones, and to find better ways of doing things in new circumstances, will be the winners.