Paul’s perspective – Exit post Brexit – Six points to consider

July 1, 2016

The Brexit result came as a real bombshell to friends, family and colleagues with whom I have been deliberating the future of Britain over the past month or so, with many Brexiteers now regretting voting for the side that they never thought would actually win!  Brexit will, if it happens in the form we expect it to, change the status quo in so many ways.  The economy, the political ecosystem, regional divides, immigration, defence and, concerningly to me, the way in which the British are now seen by our European friends and business partners.

The result was, as it had been forecast, incredibly tight and, post vote, resentment has been building from the losing side (of which I form part). One never knows whether a 2016 General Election will, possibly, in some crazy twist, reverse the outcome. For what it is worth, my views became increasingly ‘Remain’ in the run up to the vote.  I had toyed with voting Brexit some months back, but I changed my mind, gradually, when I was sat down quietly with a cold towel on my head and when I recognised the complete absence of detail contained within any of the economic or business proposals mooted by the Brexiteers.  My resolve to Remain was strengthened by a number of other matters including an observation of over 70 years of uninterrupted European peace and considered reflection on the numerous benefits that being part of the EU currently brings – and would likely to have continued to bring – to future generations.

What comes next for ‘Great’ Britain is anyone’s guess.  New leaders for our two main parties (and for UKIP as of today), a softer FTSE-250 (more important to me than the FTSE 100 for assessing the health of our domestic market), a weakening pound, Scottish independence ‘round two’, 27 freshly negotiated trade agreements, changing immigration rules and a new defence regime to ensure that Putin remains tethered to his Westernmost border.  Frankly, there is much to consider.

Many clients have asked me to assess what Brexit means for their business or their impending exit and I thought that it would be helpful to share some thoughts and tips for small business owners to assist them in managing the inevitable volatility in the next few months before the ramifications of this self-harm exercise become clear:

  1. Establish a Brexit Committee

Here at Bluebox, a Brexit Committee has already been established.  We did so a day after the result.  We have met on a number of occasions and have reviewed our business and the actions that we may need to take to respond to a changing environment.   I suspect that overseas buyers will not be jumping headlong into the UK market in the coming weeks or months until things quieten down, but that presents a great time for reflection.

  1. Growth Opportunities

Explore your own growth opportunities, in detail, in the current period of uncertainty and, specifically, in a post-Brexit world.  Take time away from working ‘in’ your business and starting thinking bigger picture.  Working ‘on’ rather than ‘in’ your business.  An exercise in free thinking.  Changes create opportunities for sure and there will be opportunities that your competitors will exploit so be a first mover and enjoy the benefits.  It is often the case that new initiatives implemented in a changed environment become value-creating in their own right. Being ‘forced’ into the change exercise is no bad thing.

  1. Swift action, nothing knee-jerk

Take decisive action, but nothing knee-jerk. Your team will want to see quick action and it can be a demonstration of strong leadership.  You will be looking into the same crystal ball as your peers, but with a deeper insight into the workings of your own business. Consider your opportunity map and growth plans ahead; it may be wise to place some markers in the sand or at least develop some KPIs that can be used as benchmarks to measure future performance.

  1. Formal International Trade Review

Undertake a formal ‘International’ trade review internally.  Are you aware of the widespread implications of what has happened (or looks likely to happen)?Bluebox has created (and now use as of last Friday) a specific toolkit to consider your reliance on, and interaction with, the International market.  Magnified currency movements and volatility, overseas customer and supplier relationships, international members of your management team and other staff and International growth opportunities.  It is a great time to consider the way in which your business operates specifically within the ‘International’ ecosystem.

  1. Cost management

I have heard from numerous ex-clients the importance of cost control in challenging or uncertain times.  Clearly it is a matter of one’s appetite for risk, but Brexit (including this period in the run up to the invocation of Article 50) could be a catalyst for a comprehensive cost review across your business.  Carrying an overweight cost base in challenging times presents more risk, whilst cutting cost too aggressively may prune the opportunities that are driving value.  Balance is important here, but take some time to reflect.

  1. Review ‘Exit’ timing.

Review the timing for your exit and consider whether you can, or should, wait until the uncertainty passes.  My experience would suggest that few deals will be actually ‘completed’ in the summer period, but that leaves a perfect opportunity for methodical planning.  Use the time wisely and plan for that Exit.  It is precisely what Bluebox specialises in, using our bespoke methodology ‘Blue Diamond’.

In summary, this referendum result will inevitably present certain businesses with certain challenges.  The pride I took in seeing democracy at work in the UK has been overshadowed by the result itself.  However, as a Nation, Britain is Great. We are innovative and world-leaders.  Yes there will be uncertainty in the months and possibly years to come, but this is exactly the environment where winners will be created and business owners will prove their mettle.  Use Brexit not only as a catalyst to review your business with a critical eye, but also to capitalise on the exciting opportunities that lie ahead.

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