Since the UK voted to leave the European Union, there has been an air of uncertainty that has been looming over the country. From the uncertainty of accessing the single market, the impact on sterling and the defining influences on post Brexit within the global markets, what does this present for the future of the UK economy and businesses in general?
The outcome of the referendum has undoubtedly left UK businesses feeling skittish; with a recent study by Hitachi Capital Invoice Finance suggesting that over one quarter (27 percent) of UK businesses say they are in "survival mode" and aren't going to invest for the next 12 months. Furthermore, 57 percent of those surveyed said they had not sought external finance in the past year and 59 percent predicted that Brexit would impact their ability to get access to finance in the future.
With statistics like this, you can understand why business owners are reluctant to consider expanding into new markets or diversifying product lines, preferring to delay the decision making process, once the post-Brexit storm has calmed. For some businesses and startups, Brexit presents huge benefits for penetrating into new areas of potential growth.
In November, The Times published an article that stated five startups have made the move to Berlin as part of an aggressive campaign that has been wooing entrepreneurs with the promise of lower commercial and living costs and continued access to the single market. According to the article, there are an additional 39 companies considering relocating as more startups look to other markets to maintain growth. However, is this the answer for startups and entrepreneurs who are worried that Brexit could pose significant challenges for expansion?
Whether you are a business owner happy to wait for the uncertainty to diminish or decide to immediately set the wheels in motion for change, timing is crucial, and in a period of such economic doubt, the implementation of a new restructuring plan into your business can be a daunting and present risk.
So, in a post-Brexit era, what should businesses consider when looking at an international expansion?
A Need for Steady Cash Flow
Choosing to move your business into international territories can present an exciting, but costly prospect. In order to achieve a seamless transition, you'll need to ensure your check list includes making sure you have the finances in place; revenues, profit and a steady cash flow to mention just a few.
With UK businesses apprehensive about securing finance, this could present a significant challenge in funding your plan for growth. However, if you already have the finances secured, you may find you have fewer restrictions entering the global community.
In short, if you're not confident you can bank roll your expansion, without relying on external funding, the risk of accessing into new territories may become extremely difficult.
How is your industry performing post-Brexit?
Despite what some may assume, Brexit didn't impose restrictions or appear to be a barrier on all UK businesses across the board. Some will be hit harder than others and some may even find their industry remains relatively unchanged. However, if planning on adopting change, it's worth considering where your business falls on the spectrum and how your industry could suffer or thrive outside the EU.
Making the decision to apply changes to influence your business's potential income, when your sector is performing particularly well could undoubtedly give your company that extra edge above the competition. To maximise on the performance of your business' sector, you may wish to broaden your marketplace before it has reached its peak, sustaining a healthy profit margin. This will certainly enable you to leverage your company's momentum to perform well overseas.
Do you already have an international client base?
With the UK leaving the EU, one of the most pertinent questions relates to our access to the single market and the represented 500 million potential customers. Currently in debate, this will most likely affect a business's decision in developing overseas.
Many service-based businesses operating in the UK may already have international customers around Europe, USA or Asia. If this is the case and you're already trading globally, you might want to examine alternative arrangements in procuring a team in some of your most successful markets.
Providing the contingency plan to adapt change is key by applying changes to your global structure and incorporating the necessary means to reduce risk. Opening offices, instilling the right workforce in emerging markets are pivotal in securing success, whilst reducing and extracting presence in other markets are critical in protecting your business from vulnerability in the uncertainty of the present climate.