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Top tips for businesses following the UK’s vote to ‘Brexit’

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The UK’s decision to leave the European Union took pollsters, markets and voters by surprise. Regardless of how you voted, it’s clear from the developments since the referendum that we are entering an extended period of economic uncertainty. No one knows what the plan will be and what sort of relationship with the European Union will eventually be adopted.

The majority of businesses have understandable questions and concerns in light of this event. With the spectre of the last recession still affecting the UK economy, the last thing business owners want is more uncertainty. But while the future may not be clear, there are ways to protect yourself against the unknown.

Don’t panic

There have already been multiple stories in the news of businesses losing orders and investment, while disgruntled ‘Remain’ supporters accuse ‘Brexiters’ of having caused a recession. Before you start shutting up shop or planning to relocate your business, it’s worth stepping back and taking stock of a few basic facts.

The key thing to remember is that for the next two years - at least - we are still a full member of the European Union. That means that a lot of the forecast negative effects of a ‘Brexit’, such as weaker trading positions, won’t materialise for around two years – with some camps even claiming that they won’t ever appear. It’s true that negotiations could be completed sooner, but with it looking like Article 50 of the Lisbon Treaty won’t be invoked until either September or October 2016, you have plenty of time to plan and put measures in place to protect your business.

Reassure your customers

Just as you might have been unnerved by the ‘Brexit’ vote, your customers may have unanswered questions. Get in touch and reassure them that business will continue as usual for the moment and that you will make every effort to accommodate any changes with minimal disruptions. Stress the fact that you are committed to doing business with them and want to strengthen your relationship.

Communication is always key for business; more so now than ever. Put a system in place to keep customers informed, such as an email newsletter. It may be that you have to change your contracts and agreements further down the line; but giving your customers plenty of warning will help improve retention.

Diversify your client base

While keeping hold of your current clients is important, it is also worth broadening your horizons - especially if the majority of your current business comes from EU countries. Explore other markets in order to try and build up enough of a presence overseas to protect your business should the UK’s eventual exit from the EU put you under strain.

If your business relies heavily on the European Union, now is a good time to ask yourself why. It may be that, with the prospect of higher tariffs on the horizon, the perks that made EU trading more attractive than other markets no longer exist. Your business may be just as profitable, or even more so, if you turn your attention overseas.

Consider options to protect against currency risk

We’ve already seen a significant drop in Pound Sterling as a result of the vote for a ‘Brexit’, with global shares and commodities also suffering. The prospect of a Pound weakened for the long-term could cause major headaches for UK businesses, but there are ways to protect against it.

‘Forward contracts’, for instance, help you hedge against volatile currency movements and better control your cash flow.

For example, imagine you needed to pay Euro-denominated export costs next month. You fear that the Pound will fall further, making it even more expensive for you to meet those costs. Using a ‘forward contract’, you can fix the current exchange rate in advance, so that you know exactly how much your exports will cost you. Even if the Pound should fall dramatically, you will be able to buy your Euros at the rate you secured.

There are also ‘stop loss’ and ‘limit’ orders, which allow you to set lower and upper exchange rate thresholds respectively. This way you can hold out for a better exchange rate without risking losing money by putting off your trade for too long. Once your threshold rate is hit, the trade is automatically conducted.

Reassess your hiring policy

A lot of the benefits your employees enjoy may have come from EU legislation. This means that, in two years’ time, employment law is likely to change. While you can’t change the contracts of existing employees without their consent, any new hires will need a different contract that takes into account the fact things are likely to change.

Make sure new employees understand that the terms of their employment could well change within the next couple of years. Ensure their contract reflects this as well, so that you are able to make the required alterations without acting against the law.

Learning to deal with adversity is an important business skill
There are bound to be a lot of scare stories in the newspapers over the coming months. You’ll hear about businesses collapsing and others who have seen a dramatic drop-off in trade volumes. There will be large companies who relocate away from the UK and others that lay off large numbers of staff. But it’s important to remember that it’s in the media’s interests to report the big disruptions.

Learning to deal with periods of uncertainty is a key business skill. Making a profit or growing a business when the economy is strong is easy; doing it in times of uncertainty and in the face of economic headwinds will help you shape your business into something resilient and robust.

You still have time to prepare for changes. Things may seem bleak at the moment, but you can put measures in place to ensure your business keeps operating, and the situation may have more upbeat economic consequences than economists have forecast.