SMEs: What can be done to prepare for Brexit?
by Oreste Maspes Aug 12 2018
Coming from another culture I have always found intriguing how betting agencies in the UK can offer distinct cues also on diverse political, economic and social factors.
As the odds of no Brexit deal before the exit schedule at the end of March 2019 is given below evens, SME’s can either let them to be distracted by the media noise and confusion surrounding the matter or start preparing.
One thing to consider is that, possibly, the weak Pound will be a feature of the economic landscape for several months to come.
Put simply, whatever your view of Brexit, there are two areas worth immediate attention and planning to cushion the possible impact of a weak Pound: operational excellence and export.
Chance is that, if your business is highly dependent from imports - not least because 55% of goods imported to the UK in the 12 months to 31 May were from the EU.1- you may have to improve effectiveness and efficiency of your business to compensate for higher costs or more limited availability of raw materials, manpower and specialized skills.
On the other end, as 49% of goods exported from the UK go to the EU, it is clear that there is an aappetite for British goods abroad and export might be just the chance you need to broaden your customer base.
Possibly you may have to consider a combination of the two factors making your business less chaotic and efficient and simultaneously increasing your export.
Whilst SME operational excellence opportunities will be the subject of my next post, trade is getting more attention by the government and the private sector and that is why Export is the focus of this one.
Get ready now !
Although the uncertainty, I am very confident that the EU will remain a vital market for UK exporters somehow, as the existing business and cultural bonds with the EU are too strong to be ignored. The probability is that there may be a once in a lifetime chance for new UK exporters and many SMEs.
The very idea of first time exporting can be however very daunting for an SME: which are the right markets? How will I manage the incremental costs of reaching them? How will I cope with regulations around tariffs and tax? Have I got enough working capital and a strong enough management team? Do I understand currency exchange fluctuations and the cost of tariffs, shipping and insurance?
Moving into new export markets requires preparation and a sound and fully-resourced business plan before you begin. Before making the move into any new market, is key that you do your own research, possibly reaching expert advice
It is important to determine which markets suit your particular products and service, reviewing your unique selling propositions and the capability to cope with export volumes. The creation or review of the distribution model is a must, scrutinising areas such as direct sales, subsidiary or licensing through a distributor. In my extensive experience in international business, facilitated by the passion for foreign languages I also discovered that the elaboration of clear distributors selection criteria matching the company values and priorities is crucial. Finally investigating logistics, tax implications, payments and financing can also be vital.
A final recommendation, if you are an SME first time exporter do not underestimate the value of jumping on a plane to research and observe your market in person; Conversations with potential clients and partner to check business and cultural fit can be real light bulb moments of truth !