What can we expect short term and what preparations should we make if you own or run a business?
Emotions are running high as the reality of the referendum result has kicked in for both leave and remain camps. A blame culture of “I told you so!” with sentiment flames being fanned by the media circus and social media is exacerbating reactions. Suddenly everyone is a Facebook politician! And all this is even before we press the BREXIT button.
Apart from Brexit the current political unrest alone will cause business confidence to further slow and potentially we will have negative GDP growth for the remainder of 2016 resulting in a technical recession. Any growth or decline in 2017 will very much depend on the outcome of a possible 2016 autumn election and ensuring the UK has strong political leadership through implementation of BREXIT. In the UK we need a clear vison establishing pride and togetherness through having a collective purpose before we act on article 50 to leave the EU.
The following 7 steps will help you and your business prepare for the uncertainty that is ahead:
1. Take some time to discuss the current economic state. Currency exchange rates, world stock markets and commodity prices will be volatile. If you haven’t already, ensure you take some time over the next week to fully understand how this effects your customers, their customer’s and also your own business costs and the likely effect on sales and your personal situation.
2. Take an external view: Purchase of big ticket items, cars, trucks, houses, infrastructure and capital equipment expenditure, larger technology investment, along with business merger and acquisitions will likely be delayed. Recruitment plans within larger organisations will be postponed, imported products, oil based products and raw material prices will go up. If concerned or you envisage a reasonable risk, please seek professional advice and don’t do anything radical unless you are professionally advised to. I would also advise that you get more than one professional opinion.
3. Take time to sit down with your key employees and managers. Share any potential implications that may affect your business. Draw up 3 potential scenarios based on low, medium and high risks outcomes and create action plans and review at least fortnightly. Agree critical trigger points and implement appropriate actions when necessary.
4. Don’t just focus on the negatives as there will be positives too. Not every business sector will be negatively affected. If the pound continues to have a low value against the world’s main currencies for the next 6 months, this will encourage tourists to come to the UK as it’s cheaper. If you are linked to the tourism industry you may well benefit in the short term. Plus UK based citizens will find it at least 10% dearer to go abroad, so they will holiday in the UK and this will be a double boost to tourism particularly across Cumbria. If you export products or services this could well be an advantage to you too.
5. Don’t get embroiled in the emotional debates at play, stay neutral. Don’t post political views or vent off on social media. It looks unprofessional and could potentially damage you and your business more than the financial volatility in the marketplace. Ultimately your employees and customers are looking for someone with a level head to give them some clarity, guidance and reassurance!
6. Be positive and support your staff. Ensure you consistently communicate. Hold staff meetings, tool box talks, 1-2-1s, set up a Q&A forum, as employees will be concerned that their jobs are at risk and particularly if you have any EU or overseas workers, they will need reassured the most. By engaging your staff and focusing on improved employee productivity and efficiency, you can make a positive difference to your business performance even if sales are flat, slow or decline.
7. Ensure you or your sales staff stay close to your customers. Keep in close touch with those who have already ordered but not taken delivery. Reassure them and check if there are any risks to cancellations. You may have to incur increased costs, resulting in reduced margins or repricing conversations. These conversations are best to be started as soon as there is likely to be any impact. Again there may even be opportunities, evaluate and exploit those most suitable.
Finally we are and will be in unchartered waters so ensure you review and adapt any medium to longer term business plans based on your assumptions.“The greatest danger in times of turbulence is not the turbulence itself, it is to act with yesterday’s logic” – Peter Drucker (1974).