With Britain’s vote to separate from the European Union, UK companies need to work hard to limit their exposure and mitigate risks. In this article, we will discuss ways small business owners can Brexit-proof their company.
- Money Transfers
Ever since the Brexit vote, there have been unavoidable currency fluctuations and complications. Sending your money overseas is a huge problem for SMEs in the UK. Since many of these businesses make payments overseas, a weakening pound means that any and all imported raw materials will become more expensive. This will affect profit margins and the affordability of products.
To avoid this, SMEs should seek out a currency broker instead of a bank. This will allow business owners to realize significant savings on money transfers with an option to receive fixed rates for a specified period of time. With this, businesses can know what their costs will be for that specified period of time, which can be up to 2 years. Hopefully giving them some room to breathe and adjust.
- Review employee contracts
A majority of the UK’s employment laws are derived from the European Union. For current employees, the current contract will be fine and remain the same since it is a legally binding document. But if you plan to hire new employees, the business should consider creating a revised contract and putting it in place to account for the new laws that have been set. UK owners who employ non-British workers should also take steps to make sure the people who currently work for their company are legally allowed to do so. (You should have been doing this anyway of course)
3. Communicate with your Clients
If you have a business that relies on repeat customers for business, you should discuss Brexit obstacles with them so they are up to date and understanding of any complications that may arise.
If Small business owners speak with their clients and explore ways to keep trade and business running smoothly, risks can be effectively mitigated. A big issue arises with exchange rates, which can fluctuate heavily. Consider setting up a forward contract, which will ‘fix’ your exchange rate for up to one year.
- Explore International trading options
International trade can be a complex subject for small business owners, especially after Brexit. Businesses that rely on the European market should consider exploring alternative solutions outside of Europe. Not to mention, having a diversified client portfolio will come in hand on more occasions that one.
More businesses should be seeking to expand their portfolio if they want to survive in this market. Because of Brexit, trading is becoming increasingly difficult. It makes it that much worse when you must rely on one client or supplier.
Navigating through the complications of Brexit can be a difficult and overwhelming task for small business owners, but it doesn’t have to be. Use these useful tips to mitigate your exposure to Brexit and keep your business up and running, profitably.
WrightCFO Ltd is an award winning consultancy of outsourced part-time Finance Directors for SMEs. Contact me to find out how we can help your business.
07817 784 603