Sarah Ludford, business growth advisor, GC Business Growth Hub
I presented at a Brexit advice session recently for the advisors at the GC Business Growth Hub. One of the key pieces of advice we were discussing for our businesses, as they face the uncertainty that Brexit may bring is to ‘plan to be flexible’.
One of the advisors at the session, quite rightly, asked: ”but how do we ask a business to plan to be flexible, when they don’t know what to plan for?”
So that made me think. How can you plan for something when you don’t know that that something might be?
I must say, it made me stop and think for a moment. We are asking our businesses to plan for a set of eventualities that the UK has never been through. No country has ever left the EU before, and all the economic and scenario models, from the best minds, are drawing the same conclusions – we just don’t totally know how leaving the EU will affect businesses in the UK.
There has been the proposed Withdrawal Agreement passed by the EU27 last week, but it has been received a chilly reception from UK politicians. If the Institute of Government has got its analysis right, then the chances of the agreement getting through Parliament is pretty unlikely. And with the recent release of the long-term economic forecasts report (November 2018) from the UK government, it is increasingly difficult to see how our politicians can back the withdrawal deal.
So where does that leave our SMEs? With the trading stability that the UK has enjoyed over the last four or five years, businesses have been able to plan around conditions that have been reliable, pretty stable and predictable. But Brexit is bringing a whole lot of unknowns with it.
But then, I realised that small businesses plan for the unknown every day!
It is unusual that a small business has access to the kind of market information and competitor information that the large FTSE 100 can retrieve at the touch of a button. SMEs tend to be what the strategists call ‘learning organisations’.
This is when an organisation doesn’t weigh heavy with steep hierarchies and set bureaucracy. Their structures are built for change rather than stability. A ‘learning organisation’ regenerates its offers and services as it draws from a variety of knowledge, skills and experience. This way, its planning strategies emerge naturally and the business secures success through sharing knowledge and evolving.
Now, that’s all very well, but how do you turn a strategic theory into something workable for a small or medium sized business? Brexit is dynamic and complex.
We start by looking backwards. Look at times when the marketplace was unsure, conservative, and reluctant to take risks. The most obvious time to consider would be the end of 2008, when trading as we knew it, changed overnight. A recession hit the UK and global markets like a freight train. And the companies that survived or thrived? They adapted overnight. They had a great set of key performance indicators in their business that tracked what was truly important to the company’s future. And when they saw a negative turn in those indicators, they reacted. The used scenario planning tools, met with their advisors, took professional advice and they did all of this quickly.
What’s a key advantage that a small business has? It is light on its feet and can change quickly.
This is what forms the basis of the plan for Brexit. Where can I adapt and how swiftly can I react? That is going to be the key to a SME’s success. As big business pulls on the wheel to turn its tanker of change. It’s a huge undertaking to get a large organisation to move its business plan. But as they do, your SME can be there to service their changing needs. Your SME can innovate, offer rapid alternatives and thrive in a changing environment.
So when your business advisor says plan to flexible – it means plan what you can change quickly. Know what you need to change when the unexpected happens. And know how you’re going to change it.
Leaving the EU means that there is change afoot. The question is, are you going to be a business that is going to try its hardest to keep an even keel and keep things as much the same as you can… or are you going to flex?
Read our Ten 'no regret' actions your business should consider now