Brexit Strategy: Turning Plans into Action
Long before the new Prime Minister confirmed “Brexit means Brexit”, small business leaders have been busy guiding their firms through market volatility, seeking out opportunities and reassuring staff. Many have already begun to plan for a future outside the EU, whether or not it’s what they would have chosen. But how can leaders ensure their plans get off to the right start?
A business leader’s ability to continuously adapt to new competition, legislation and fluctuating markets is often critical to survival and growth. Yet it’s hard to recall a time more likely to put these skills to the test than the conditions beginning to emerge for UK small businesses. It’s lucky Britain’s entrepreneurs are well-practiced in both stoicism and agility.
In addition to preparing for the proverbial unexpected, there are some particular challenges that many will need to overcome in the next couple of months:
Protect people and skills
Regardless of what happens further in the future, very few small businesses are likely to need to make unexpected staff cutbacks in the first months following the referendum. As for employees from other European countries, Downing Street has promised there will be “no immediate change” in the status of EU nationals living in the UK. Nevertheless, anxiety can lead to knee-jerk decisions. There’s a lot to be said for avoiding departures with positivity and openness – being a calming influence while others are panicking.
Guiding a business through whatever transitions are needed to suit their own particular opportunities in the new climate is likely to mean retaining and in some cases hiring new skills, so it would be wonderful to see ambitious firms taking this positive and pragmatic approach to hiring decisions in the medium term.
Many of the business owners I work with are greatly driven by protecting their people and their people’s livelihoods, so much focus be on winning enough new work to make up for any losses and retain or grow incomes. For those that rely on EU trade, or work from large firms that may be considering leaving the UK, starting the process of breaking into new markets at home or abroad will be a major focus.
Though (at the time of writing) the pound has recovered somewhat from its initial post-referendum freefall, economists are predicting continued currency fluctuations. Link that with a downgraded credit rating, slowed GDP, and rumours of impending inflation – and the threat of another recession seems possible, although far from guaranteed.
While the economic outlook is anything but certain, preparing for months rather than weeks of market volatility and unstable conditions looks sensible. After the financial crisis that began in 2008, many business owners operating in 2016 will now have the personal experience of working through a recession – with all the hard won lessons that it brought. Preparation, confidence and adaptability are now hardwired into many entrepreneurs and more and more I’m hearing leaders respond to Brexit as an opportunity to focus on key strengths and investigate new ways of using them.
The Chancellor will almost certainly announce measures to protect the UK’s financial health in the Autumn Statement and these measures may well include cuts in public spending or tax increases. If this happens, it may be in stark contrast to the incredibly pro-enterprise Budget Mr Osborne announced in March so watch out for any cuts to newly won gains.
One factor that has the potential to scupper plans is how competitors respond. If your customer’s behaviour is likely to alter in the post-referendum world you may not be the only business leader to have noticed. This is a vital point when following through with plans to diversify into a mix of rainy day and sunny day business models, or when considering breaking into a different market altogether.
For example b2b firms that can service many different markets may be considering refocusing on an industry known to be well-insulated against current economic conditions, but competitors will know this too. These opportunities may become increasing competitive so winning could be a matter of speed as well as great offerings and smart marketing.
Executing a transition like this may require a crash course in a new skill set, or strategic hiring to broaden the skills of your team. This represents a leadership challenge in terms of winning around your workforce to a different way of doing things, but also, potentially, a financial one. Though this hardly looks like the ideal climate for seeking funding, there are ambitious investors out there no doubt looking to capitalise on the opportunities brought about by change.
To find out how KPMG Small Business Accounting could help free up your time so you can concentrate on business success, request a callback for a quote today.
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