Ready for departure
In this article Bivek Sharma, Head of KPMG Small Business Accounting, considers how businesses can prepare for the Brexit deadline of 29 March, 2019.
With a hand-signed letter to the President of the European Commission, Theresa May kick-started the Brexit pendulum and formally set the clock ticking down to our departure from the EU.
For the many small businesses that are heavily connected to Europe – whether through supply chains, talent sourcing or funding – the thought of knowing little more about our impending departure than the final deadline may be more than a little unnerving. But this isn’t to say that there aren’t advantageous side effects for businesses. The triggering of Article 50 can be used as an opportunity to take stock, streamline and prepare for what comes next.
The first step is to assess your business’s vulnerability to Brexit. This could be in the form of exposure to foreign currencies or fluctuations in the economy, in which case diversifying the business could be a beneficial route to pursue.
Take, for instance, a dairy farmer in Northern Ireland who sells the majority of his or her stock to the Republic. The farmer could think about taking on more agriculture work, or establishing more trading partners within the UK to prepare for the split with the EU. By not keeping all their eggs in one basket (or should that be all their milk in one churn?), the dairy farmer can safeguard themselves against the adverse effects of Brexit.
Taking a similar approach to supply chains can also help operations run smoothly, especially if a crucial supplier encounters difficulties when the UK departs.
No regrets, no problem
A key part of the approach to the next two years is ensuring you make ‘no regrets’ decisions. This means making rational, prudent choices for the future, and avoiding either being too impulsive or subscribing to the ‘ostrich approach’. Making ‘no regrets’ decisions certainly doesn’t mean immediately uprooting the business and moving to the Costa del Sol, but instead making a range of positive, impactful decisions staggered over the Brexit negotiation period.
A plumbing business, for instance, might rely on sourcing skilled labour from the EU. In this case, the business owner might want to think about establishing an apprenticeship programme so that, by the time the Brexit bell tolls in two years’ time, they already have the skilled people they need. Taking action now can help the business owner reap the rewards later down the line.
Once you’ve considered some of those decisions, you need the finances to make them happen. New ventures aimed at diversifying a business offering and the establishment of strategic programmes, such as apprenticeships, require sound financial planning. Substantially changing the business proposition can be a drain on funds, and real-time access to financial records is essential in order to maintain a healthy cash flow.
The messages emerging from both London and Brussels over the next two years are likely to be dispiriting, to say the least. To secure the best deal, both sides of the Channel must give the appearance that they’re able – and willing – to walk away from the negotiations.
Yet with plans and financial power in place, a small business should be able to see through the political rhetoric and weather the impending storm. Small businesses are the backbone of the UK economy and, in true British style, they’ve always had the knack of keeping calm and carrying on. Some big decisions will be made in Westminster – and will generate even bigger headlines – but so long as entrepreneurs have made smart moves early, then this shouldn’t prevent them from achieving their ambitions.