Forecasting the Impact of Brexit on Your Business
Posted on 27th July 2017 in Business
Written by Freya Hughes
Brexit. It’s a word that sends shivers down the spines of many a Brit, and for good reason. There’s so little certainty in the UK economy at the moment, that many of us are plunging our heads into the sand to avoid having to debate it or deal with it. Having divided a nation, the triggering of Article 50 has indeed happened. So how will business owners avoid becoming collateral damage to a snap decision by a fairly uninformed population?
Back in March, the Independent reported on the Economic Outlook the OECD projects. It saw a growth of 1.6% this year for the UK, up from the 1.2% it forecast in November. While this is good news, it portrays the massive sense of uncertainty that has plagued the UK since the referendum result in June 2016. “UK growth is expected to ease further as rising inflation weighs on real incomes and consumption, and business investment weakens amidst uncertainty about the United Kingdom’s future trading relations with its partners,” the OECD said in its latest report. It goes to show, huge upheavals can be just around the corner – and the results you may not want are more than possible.
While we sit here with baited breath to see what happens to our economy next, we’re going to show you how implementing a financial forecast into your business can protect you, to an extent, against downturns and changes in the world.
We witnessed the pound plummet against the dollar just after the vote, and it got everyone worried. While we were lucky to see a rise once again after that, it goes to show the market is unstable and we need to fasten our seatbelts for this particular ride. Businesses are being, and will continue to be, affected by the Brexit result. As the BBC reported in late March, “The pound may have weakened but investor confidence as measured by UK share prices is holding up well – UK stockmarkets have risen since last summer.”
So it’s not all bad. What business owners need, however, is some stability. This seems a long way off yet though. So let’s make use of what we have: a reliable, real-time piece of software which will project your figures instantly. Forecasting is the way to keep your head above water in these tumultuous times. Injecting your figures into a forecast will show you where your figures will peak and trough throughout the year, so you can make decisions moving forward in the right direction with confidence.
Not even our parliament has a clue as to the effects of this bill. A year on from the vote, and most of us here in the UK are still on tenterhooks, trying to predict what will happen next. Rumours and predictions are overtaking actual news, and the only common factor in those is uncertainty. It’s stressful enough running a business, and with Brexit hanging over our heads, it’s more important than ever to protect your company. With uncertainty, any number of scenarios may play out, each of which will probably carry risk. Now risk is made up of downside risk but also upside risk. We’ve seen the impact on our favourite sweet treats, but what else is to come?
Changes to your team
It’s essential to not only keep an eye on news sources but to react to the information you’re absorbing. What will this mean for business? What is the worst case? Will it impact staff? The UK and the US have always mirrored one another’s movements, and immigration is a hot topic right now. Can you afford to lose staff if EU rights are revoked? Having your staff performance as a KPI in your forecast will allow you to see how each team member is doing compared to their professional peers. Remove one, or a few, and how does your forecast look now? The chances are, your revenue will have dropped substantially. This is seriously dangerous territory for your business. Can you afford to not plan for losing staff?
Business and Industry make the case for Brexit’s negative impact on employees: “Real terms growth in wages may be reduced by lack of confidence and a rise in inflation associated with Brexit which is likely to have negative consequences for engagement and motivation.” We’ve learnt the importance of employee engagement, so don’t underestimate it.
Making your business agile
A key part of making your business last the test of time is agility. If you’re not willing to adapt to change, you’ll be out of business before long. The ever-changing economy is something to watch closely here, so limber up your business to be able to change with it. This is the only way to keep going in such unpredictable times.
Flexibility, balance and adaptability are the three core qualities you must adapt. “Business agility refers to distinct qualities that allow organisations to respond rapidly to changes in the internal and external environment without losing momentum or vision,” writes HRZone. Your business is your livelihood, so ensure it can adapt, and make sure you’re ready to guide it through this time.
Don’t drive your business without airbags
The Guardian reports: “Budget watchdog warns country is in worse shape to withstand recession than on the eve of 2007 financial crash.” We’re not trying to scare you here, rather highlighting the importance of protecting yourself. If you were in business in 2007, you’ll remember the fear that came with this uncertainty. Fortunately, ten years on, technology has developed to help with these frightening situations. Think of scenario planning like having airbags in your car. They’ll save you in a collision, just as trying out different scenarios will allow you to steer your business away from a crash.
Use the scenario planning function to see ‘what-if’. You need to be prepared for the changes that might incur over the following years. FUTRLI’s what-if scenario planning function allows you to see and prepare for the following:
- A best and worst case scenario
- Seasonal or environmental fluctuations
- Create quick mini action plans to mitigate short-term risk
- Get your team involved – set them a challenge to think outside of the box
- When do you want to take on more staff and what’s the impact on sales and expenditure?
- Moving to or taking on new premises
- Expanding your offices
- When you want to start trading overseas
- Take on a new untested product line – what’s the market?
As you can see from these, you’re able to run your business’ outcomes through FUTRLI for many different reasons. This will set you up in the best way possible for the tumultuous time ahead.