In the past year, businesses have faced the impact of COVID-19 and the UK’s exit from the EU.
New laws and regulations from both events will change the way your business operates. Now is the time to act: review, plan, and futureproof your business in 10 easy steps.
EU Transition continues to cause uncertainty in the political and economic landscapes that SMEs are trading in. Alongside this, the Government are seeking Free Trade Agreements with a number of trading countries and regions around the world.
It is important that businesses remain alert to the guidance that is available – specifically the gov.uk/transition website, but also information available from, for example, trade associations and professional bodies.
One advantage an SME has is that it can be nimble and respond to change, sometimes more successfully than larger organisations. But good information and responsive planning is key at this stage.
Ensure there is someone responsible for monitoring EU transition at a senior level in your organisation, with access to professional advice and good sources of information.
Review your business plans to include potential changes to business travel, in line with COVID-19 and Brexit, supply chain impacts, changes in demand from EU and domestic markets. Where appropriate look to new global opportunities and markets.
Communication is key
Communicate with your customers, employees and suppliers.
They are also making changes post-Brexit, and will need to understand how your business is affected too.
This should be the time to open a dialogue and show that you are changing. By showing you are looking to remain competitive and are trying to mitigate risks, you may increase confidence with your customers, employees and suppliers.
Be open with your customers, suppliers and employees about company changes post-Brexit, including new ways of working and any changes affecting them.
Develop a Brexit communication plan for each and engage them now to minimise the impact.
Check the latest guidance within our Toolkit.
Impacts on your people
The Points Based Immigration system sets out the visa requirements for all migrant workers coming to the UK which may impact upon your talent pool and future recruitment options.
For lower-skilled workers you may need to consider impacts on your resourcing capability given the new system is not proposing a route for lower-skilled workers or a temporary visa.
You may have non-UK EU employees already in your business who, if staying the UK, need to register via the UK Settlement Scheme.
If you plan to continue recruiting talent from overseas ensure;
1) you understand the points-based system,
2) you can support applicants through the process and
3) you have registered and paid the fee to become an approved sponsor.
Keep your employees fully up to date and consider how your business is attracting the right talent in the post-EU labour market.
Assess the risks in your supply chain
We have experienced through the impact of Coronavirus that the resilience of a robust supply chain is integral to the performance of many businesses.
Whether your business is large or small you and your customers need to have the confidence that supplies will be delivered at the right time, be of the right quality and at the right price.
Importers need to complete customs declarations, pay import VAT and relevant duties. There are also changes in the way that goods move in and out of Northern Ireland.
By understanding the routes your goods and components take to come into the UK, you should be able to assess any possible risks to your supply chain and start to consider contingency suppliers, review of stock levels and plan for additional administrative, time and financial impacts as the new border controls come into force.
Consider an end-to-end review of your supply chains and where there are price or supply risks, consider alternative plans.
Complete a detailed review of stock levels to ensure that you have sufficient levels to fulfil upcoming orders.
Develop plans to find alternative sources of supply to reduce the risk. Make sure that you assess any new suppliers to ensure that they meet all required standards.
Ensure you consider increased costs, slower delivery times and increased administrative implications from the changes to borders and customs, particularly where you are reliant on EU supply and reflect these in your pricing if necessary and acceptable to your customers.
Read our Supply Chain blog.
Review your contracts
Leaving the EU means that UK business contracts may no longer be subject to common EU law and imposing contractual conditions to non-UK EU businesses may change.
In addition, as the UK transitions from the EU legal system, contracts that have been negotiated prior to EU exit may need reviewing. For example, terms and references related to EU regulation, the UK being a member state of the EU or resolution within EU legal frameworks may not be relevant.
Now is the time to review contracts with suppliers, customers and partners.
Review the contracts you have in place, look to renegotiate any potential negative impacts and engage with your legal advisor to discuss any adjustments that may need to be made for future contracts.
For importers and exporters of goods, you should consider using and updating Incoterms to mitigate your risks wherever possible.
With the impact of Brexit combined with the Coronavirus (COVID-19) pandemic, it is vital that business plans are reviewed including financial forecasting and reviews. Businesses should consider cash flow impacts, changes to order books and sales forecasts.
Historically, currency fluctuates when there is political and economic uncertainty. When Sterling is lower in value against the Euro and Dollar, your exports may look more attractive to your overseas customers. But financial planning, when there are swings in currency values, can be difficult and making wrong estimates can be commercially damaging.
There are finance products and options that can limit your risks, such as currency spot rates and forward contracts. Having pre-agreed exchange rates may add extra cost to your financial plan but may help to reduce your risk.
Carry out a financial risk assessment and review your cash flow forecast.
Engage with your accountant, bank and currency specialists to look at products and processes to lower your exposure to currency exchange fluctuations.
Read our cash flow blog.
If you’re an existing exporter or international business the latest guidance relating to international trade and immigration are crucial. Check your plans reflect changes affecting sales, operations, payments and business travel within the EU and the rest of the world. Understand the implications for your global business partners and customers.
if you’re new to international markets, have you considered the opportunities international growth may present?
Update your business plans to reflect changes to importing and exporting.
Complete market research to identify new market opportunities and mitigate the risk of negative impact on your business from EU transition
Find out more about global growth through our dedicated International website.
Investigate existing government schemes
Businesses that have traded outside the EU are used to using government-backed schemes such as ‘Trusted Trader’. This is a scheme where logistics and freight forwarders have Authorised Economic Operator (AEO) status, allowing them priority at border controls, accelerated customs treatment and lower safety control compliance.
Other schemes include customs warehousing and inward processing. Now is the time to consider opting into or partnering onto these types of schemes, in order to make any revised customs process administration less of a burden to your business.
Look at current initiatives like the ‘Trusted Trader’ scheme and warehousing and how your business can benefit, when moving goods in and out of the EU and consider registration or using a partner that has AEO status.
Continue accelerating digital transformation and innovation plans
In response to the COVID-19 pandemic, businesses have quickly pivoted, utilising technology and automation, to meet changing customer demands and working environments.
This approach to innovation and digital transformation will be important as businesses respond to changes from EU transition.
Consideration of data processing and handling, GDPR, e-commerce, movement of people across the EU for work and potential changes to regulatory and compliance frameworks is needed.
Conduct workforce planning, consider your organisation design and understand where there are opportunities to accelerate digital transformation. Use automation and digital innovation to offset skills shortages and adapt business models to respond to Brexit changes.
For the movement of goods take time to scope what additional data may be needed and adapt your ERP (Enterprise Resource Planning) system around the process.
Online service providers operating across the European Economic Area should consider the implications of the eCommerce Directive which no longer applies to the UK.
Engage with your key business partners
As well as your supply chain, there may be other third parties who play a crucial role in your business. Banks, insurers and systems providers can all have a critical impact on your business, especially where they are also adjusting to their own challenges.
This is a key time to share information, share best practice and invest in developments together. Scenario planning and deployment of plans as a network can help share any burden. When trading in a disrupted market, consider joint ventures and cooperative approaches when there is a chance to be stronger together.
Speak to your advisors and suppliers about common goals and how to plan towards them together.
Thanks to our partner PwC for providing supporting information.
How can GC Business Growth Hub help?
GC Business Growth Hub provides fully funded support to businesses in Greater Manchester. We support businesses across a number of key growth sectors and offer a range of services that help businesses to secure investment, access new markets, develop products and improve skills. Hundreds of the businesses that we work with want a reliable source of facts, insights and practical advice surrounding the UK's exit from the EU that is highly relevant for the SME audience.
GC Business Growth Hub’s toolkit helps SMEs to:
- Keep up-to-date with the developments that matter to them
- Get guidance that is tailored specifically for SMEs in the region
- Get to the heart of what leaving the EU means for their business
- Understand how and where to access support provided at no cost to their business
Please be aware the information provided above is meant as a general guide only rather than advice or assurance. Read the disclaimer.