Whatever the post-Brexit deal is that we strike with the EU, the trade terms are unlikely to be as favourable as the ones we currently have, writes Kapil Davda, director, Haines Watts.
To remain profitable UK businesses reliant on exports to the EU, or those which have an EU labour force, will need strategies to cope with any changes – including the worst-case scenario of a ‘no deal’ or ‘cliff edge’.
It may involve starting afresh, going further afield and pursuing deals in emerging markets, which have a greater growth potential and higher returns. This might mean competing with businesses which will have ‘home advantages’ of local knowledge and a lower labour cost base; you might have to invest in more advanced technology, and there could be barriers to entry such as government red tape.
Investment in a local presence through using branches or agents, or identifying synergies with local partners and forming joint ventures, would be one way to overcome some entry obstacles.
UK businesses will certainly have to capitalise on their strengths of providing innovative products, niche and pioneering technologies, long-established/respected brands and strong business management skills. ‘Adding value’ to goods manufactured in emerging markets and selling them as higher-end ‘premium’ items would be one way to differentiate your offering.
Identify early on, potential sources of finance to fund the investment, from existing or new lenders, investors and shareholders. Use smarter foreign exchange risk management, including hedging, to minimise foreign exchange risk exposure.
Staffing is another concern – implement ways to attract staff, inspire loyalty and retain your existing labour force to reduce turnover. These don’t always have to be financial rewards; they could be providing a better work environment, personal development and flexible working policies.
Lastly, act NOW, talk to your professional advisers and other business leaders, look online for ideas and information – and devise your Brexit action plan.