Following an historic vote by MPs
last week to take control of parliamentary business and block a no-deal Brexit,
many commentators have reported that the latest economic health check suggests the
UK economy is shrinking and falling into recession with Brexit uncertainty
driving down the UK economy. Markit’s All Sector Output Index indicates that
the private sector shrank last month, due to heavy falls in construction and
manufacturing and new business growth in service sector companies slowed
abruptly. Many have reported that new exports have stalled as more and more
overseas clients delay spending decisions until there is more political certainty.
The ongoing uncertainty has knocked business confidence too, which fell to its
lowest level since the 2016 EU referendum.
So how do business owners protect
their business during this difficult period? Is it possible to Brexit proof
your business?
We are told that over 40% of UK businesses have begun no preparation for Brexit. However, there are some practical ways to protect your business: –
- Assess the likely impact on your business
This is the
first step. Most businesses will have already felt the negative impact of
Brexit uncertainty as people spend less and delay decision making. This means
that every business will have to work harder to generate profit.
History has
taught us that those businesses with cash reserves can adapt to survive periods
of uncertainty and recession.
Get in touch
with new companies and explore potential new relationships. Can you sell
overseas? If you sell in Europe perhaps you could sell further afield e.g.
China, Canada or USA. The more new customers you have, the more resilient your
business will become. It is also important not to write off your existing EU
relationships. Although it may be more challenging to export, it won’t be
impossible.
Those
companies selling services or digital products have an advantage as they do not
need to consider the physical movement of goods between countries and ports. However,
if you are involved in manufacturing and production consider whether you can
sell your design or licence any of your intellectual property rights to another
overseas company. Have you considered entering into a joint venture with
another company?
Minimise staffing
costs by implementing a work from home rule. Staff love the trust and
flexibility and you can recruit from anywhere in the world. Staff are more
productive and you pay for less office space. Make sure that you get the right
legal advice before contracting with workers abroad as different rules apply in
different jurisdictions.
If you trade
with the EU check the government guidelines and do what you can to apply these
to your business. These guidelines deal with movement of goods, product
compliance, contracts, people and financial planning.
Technical barriers
can be an even bigger barrier to trade than tariffs (e.g. rules affecting
packaging or labelling). Although UK standards and regulations will be aligned
with the EU at the point of exit, it is possible, if there is no deal, that the
UK certification may cease to be recognised in the EU. You should check the relevant government
guidance.
Check your
existing contracts to see if they might need to be renegotiated or terminated
as a result of Brexit. Are any contracts due for renewal? Consider whether you
should you start negotiating heads of terms now.
Existing UK employees who are EU nationals will need to apply for settled status.
If the UK
leaves the EU without a deal, organisations that process/transfer the personal
data of EU citizens from the EU to the UK may need to take action to continue
the free flow of data from the EU to the UK and protection of EU data subjects.
Again check the relevant government guide to understand the actions that need
to be taken in preparation.
Always remember to seek expert legal and accountancy advice from the outset when introducing any changes to your business e.g. negotiating contracts, joint venture agreements, contracting staff overseas, agent agreements or GDPR.
