As we approach the end of the first quarter in the run-up to Brexit D-day, we are now beginning to see what practical steps SME businesses are taking in preparation:
- Businesses with a significant production source or market presence within the rest of the EU are strengthening their presence there. Creating a subsidiary based in Southern Ireland keeps your options open and seems to be the preferred solution.
- Perhaps the biggest fear from Brexit is that it will create a confidence shockwave, that will depress UK economic activity generally. As always with a downturn, businesses should consider how they could trim excess costs from their overheads and which discretionary spends can now be turned off.
- Business borrowing and commercial leases are often backed up by personal guarantees and security given over assets owned outside of the business. Where your relative strength has improved, consideration should be given to negotiating the removal of this exposed security.
- The Government positive spin on Brexit is that it will enable us to sell into non EU export markets with lower tariffs. If such tariffs have been a barrier to you selling in the past, prepare to reconsider.
- Since the day before the Brexit referendum, Sterling has devalued 13%. This author is not clever enough to predict or gain from future rate movements. But sensible pricing arrangements and purchase of forward currency contracts can hedge against the downside risk.
Blog entry by: Ian Piper