When I talk to business leaders around the world about what politics means for business, it is (surprisingly) rarely about Brexit. Nearly three years on from the referendum, Brexit is the new normal. The near and long-term future might be uncertain, but the parameters of worst and best case scenarios are set and most businesses are content with their plans to respond to any fall-out.
Increasing populism, nationalism, and political leaders challenging the status quo present a much more challenging risk to global business. This includes actual and technological borders rising in some parts of the world and diverging international architecture, standards and norms.
That said, Brexit is a microcosm of some of the challenges that these wider themes pose to businesses – both sides of the English Channel. Equally important, it showcases how political volatility and an uncertain future can trigger companies to step-change strategy and gain ground over the competition. It’s the uncertainty that creates significant risk and less so the eventual structure that may be implemented.
So how do you prepare for a future of ‘known-unknowns’ and ‘unknown-unknowns’ and still thrive? With the clock ticking and political developments no clearer, the time for a ‘wait and see’ strategy on Brexit is (read: has been) over. Stress-testing your business to identify and address vulnerabilities is more important than ever – and that includes being clear about how much risk your company is ready to take. Here are five core questions you should ask to provide a degree of comfort that you are Brexit-proofed across the board:
1. Are your customs and supply chains resilient to Brexit? Considering not only Brexit but trade tensions globally, your logistics and tariff exposure might look different from one day to the next, so having a mitigation plan is vital. How would a (shock-induced) two-fold increase in transport time and / or cost affect your business?
2. Are your suppliers ready for March 2019? A strong relationship with your suppliers is vital to ensure that they have adequately assessed their exposure to Brexit and for you to understand how their planning might affect your operations and relations - whilst also allowing you to carefully consider back-up options.
3. Will Brexit break your contracts? Questions hover over the ability of UK and EU firms to interpret and enforce millions of contracts after March 2019, from SLAs and insurance policies to product licenses and data transfers. This goes beyond just understanding your contractual obligations to assessing third party risk: can your counterparty meet its contractual obligations – or will it want to? Can you meet your side of the bargain, or do you want to renegotiate? And most importantly, is your legal team up for the challenge?
4. Are your finances ready for Brexit? Be aware of the possible strain in your cash position and access to finance. Contingency plans for changes in your inventory, delayed payments, revenue shocks and FX volatility are a ‘must-have’ rather than an option.
5. Do you have a Brexit ready workforce? Brexit and proposed changes to immigration policy are forcing companies, predominantly in the UK but also in the EU, to think again about how they secure talent, and operate with less or no free movement. Securing talent involves more than retaining them – providing practical and even emotional support will be key for companies in face of changes related to (im)migration. Rule number one of change management is to make it known, so it is important you are up to date and ready to guide your employees while also thinking about potential extra costs and other challenges in finding local talent.
In all instances, these questions force businesses to consider trust. In times of change it is crucial to strengthen relationships with customers, suppliers, employees, and the government and public at large. This isn’t just to retain confidence but more importantly to drive growth.
So, how are you preparing for Brexit during continued uncertainty? We have been working with business across industries to tackle this question. Find out how we can help you get Brexit-ready.