SMEs – Keep Calm and Carry on Through Brexit?
The British economic and political landscape has changed in the light of the Brexit vote and while politicians negotiate the exit from the EU the landscape will continue to change. Despite the fact that the FTSE 100 has regained all of its losses since the referendum result was announced and the FTSE 250 is also performing relatively well, there is still much uncertainty regarding what the future will hold. It is unlikely, in the short term at least, that big business is going to suffer any crushing blows, but what about small and medium sized companies (SMEs)? In the short term should SMEs keep calm and carry on through Brexit?
The short answer to the question is almost certainly yes, the alternative options are not particularly attractive. Shortly after the referendum vote was announced Rich Preece, Europe VP and managing director of Intuit QuickBooks, said “After today’s vote, there will be a transitional period while the UK negotiates an exit agreement” Preece continued “it will be business as usual for now, but SMEs will have to monitor how the landscape is changing.” Preece’s comments were published in the Business Reporter. Monitoring the changing economic environment is only half of the story for SMEs, what comes hand in hand with that is the need for SMEs to adjust their position accordingly. Business continuity means finding solutions to the difficulties thrown up by problems such as Brexit should they arise. Business continuity has a well-established formula, it starts with analysis and is followed by design, implementation and then validation.
Common design solutions include cutting overheads and rationalising staffing and while these can be effective solutions they are rather negative. Diversification is a more positive solution and can have a dramatic impact if implemented wisely. Diversification itself can take many forms, but one option, investment, is often overlooked. Businesses with surplus capital may want to think about how that money can be made to work harder. With the right guidance and advice from investment companies, surplus capital can grow very quickly while remaining accessible should it be needed. Investments with IG allow you to trade contracts for difference (CFDs) in markets such as indices, shares or Forex (foreign currency) and may provide businesses with an alternative revenue stream that will help them stay buoyant without the need to downsize or cut costs.
Some changes in the economic environment have already started to have an impact on SMEs. A drop in sterling means that foreign buyers will get more value for money when buying British goods and this could be seen as a positive, however it also means that British companies will effectively pay more for when purchasing supplies from the EU. Another factor to be considered is that of interest rates, having already been cut by the Bank of England some business owners are already making plans for the possibility of negative interest rates. With such changes and uncertainty afoot, it is important for SMEs to act now. Constructing a business continuity plan that will effectively help them take proactive measures to ensure their continued success is vital. Not doing so may mean that they suddenly find that they are unable to act quickly enough to stop their feet being taken from under them by a metaphoric landslide.