Prepare for Brexit ... have a plan … any plan!

“Brexit means Brexit”, but now, several months after the referendum result do any of us know what that means for the UK?

Hard Brexit, soft Brexit, “golden opportunity” – a whole new lexicon of vagueness, the only certainty for businesses is that those failing to plan for the future now are much more likely to get a nasty shock when eventually the terms of exit are agreed.

At a minimum all corporate boards should be identifying a director to act as a leader for oversight of development of a corporate approach, and ideally should have started to develop an impact assessment which will then evolve as information becomes available. Red Jay Associates has experience of having worked on a wide range of strategic business development activity, and in our view, even a basic plan is far better than having none!

Outlined below, is our suggestion of the 5 basic areas that every board should be focused on to develop a strategic response to Brexit.

1. Manage your cash flows and sources of finance

Your business may be able to survive for some time without sales or profits, but not without cash! Have you got a firm view of the cash generating capacity of your business over the coming years? If it doesn’t already have long term financing or cash reserves in place is now the time to remediate that?

2. Evaluate expected impact on your current and alternative markets

This should include an assessment of the potential impact of Brexit on your prices, customers, cost base, suppliers and business profitability - this is particularly critical if you are planning to commit to make a significant investment. If you conclude that Brexit will have a devastating impact should you be changing market focus, relocating operations, entering into a joint venture with an overseas partner or innovating?

3. Upskill and engage your team

In an uncertain economic climate, it's vital that you can rely on the competence of your board and staff. Employee health and wellbeing can also affect business performance, especially as staff worry about the impact of the exit on their own future. Considering your team, addressing any weaknesses in the team now and maintaining an open dialogue may be critical to the future of your business.

4. Keep up to date with regulatory change

EU exit may result in tariff changes for importers and exporters, restrictions on migration, new employment law etc. and the UK government may replace some EU regulations with a UK equivalent; the commercial and compliance impact of any such changes should be a key focus.

5. Are you discharging your responsibilities as a director?

Are you complying with your legal duties as a company director? Economic uncertainty increases your personal risk exposure - are the board’s Corporate Governance disciplines robust, particularly when considering going concern risks relating to the financial outlook for the next 18 months to 2 years?

The list above is not definitive ……… what should your company's list look like?

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Red Jay Associates Limited is a specialist finance consultancy advising on corporate finance and business transformation, we would be very happy to discuss your business and develop a proposal for how we could support your needs. For more information please contact Ed Rogers on 07771 913528 or mailto: edmond.rogers@redjay.co.uk. Visit our website on www.redjay.co.uk

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