Your Handy Brexit Business Checklist
Already the referendum is disappearing in the “rear view mirror” but to many, the long term economic consequences still remain very unclear. As Business Advisors, TAG Accountants Group are keen to further explore some of the opportunities and indeed risks that may face our clients going forward.
The initial reaction of the markets was probably to be anticipated with a predictable fall in the Stock Market and weakening of Sterling with an equally predictable rebound when the dust had settled. Sterling remains well below pre-referendum levels but then if you’re an exporter that’s probably welcome news!
Evidence is starting to support the fact that the Brexit vote, having created a short term shock to the UK economy leading to some Bank of England intervention including a cut in interest rates, has not been the apocalypse that some predicted.
Markets were initially nervous because of uncertainty over the future. Indeed, many TAG Accountants Group clients certainly found the run up to the vote difficult as their customers deferred decisions. Obviously, this state of affairs cannot continue indefinitely and it appears that many business owners are now beginning to realise this.
Although the EU continues to take a hard-line publicly, it is highly likely that in private the key players recognise they will need to be more pragmatic given that the UK is too important a trading partner. Given there is still very likely to be a significant period of upheaval until such time as full impact of Brexit is felt, what then are the key issues that business owners should consider in order to minimise any potential downside to their businesses?
The Business Advice Checklist
With that in mind, the team at TAG Accountants Group have put together a 10 point Business Advice checklist covering the main issues, to include:
Funding and liquidity
- Consider the impact of fluctuations in base rates (likely to be downward pressure in the short term) as there may be opportunities to refinance at more favourable rates.
- For importers and exporters, volatility of Sterling is likely to remain an issue so consider using forward contracts and hedging to create cash flow certainty and protect margins.
- If your business is reliant on EU grants/projects for funding then this will need to be assessed and UK Government lobbied to replace these with alternatives post-Brexit
- If your business employs EU nationals or have UK employees working in the EU then you will need to see how the UK Government and EU members are moving in terms of freedom of movement.
- Future employees may need to be sourced primarily from the UK population.
- For businesses with key customers overseas, it will be important to follow how trade negotiations progress and react accordingly if tariffs are to be imposed or amended. New trade deals could potentially open up new markets for your products.
- Sterling volatility could impact on sales and margins – again consider forward exchange contracts.
- If you have key suppliers overseas then it will be important to follow how trade negotiations progress and react accordingly if tariffs are to be imposed or amended.
- Sterling volatility could impact on purchases and margins – so consider forward exchange contracts here too.
- Consider reviewing your key competitors to consider if they are going to be more at risk than your business – this could be chance to take some market share from them.
For many SME’s based in the UK, the medium to long term effect of Brexit on the economy is likely to result in something of a “rollercoaster ride”, in that there will be times to proceed with caution and other times where opportunities will arise that need to be acted upon. Consequently, it will be important to remain vigilant and to approach the future with a positive mind-set so as to be able to focus on any opportunities that will be created by it as well as any potential downsides.
Our business advisors keep you up to date
Here at TAG Accountants Group, we will be in regular communication with our clients to help ensure that they avoid the pitfalls and recognise any opportunities. If you would like to talk things through and explore how Brexit might affect your business, just give our Managing Director Shaun Philpott a call on 01902 783172 in order to arrange an informal chat over a cup of coffee!
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