When running a business you can often ignore the signs of insolvency, taking out short term loans, propping up the...
No Deal Brexit – Plan for the Worst, Hope For The Best
The economy has only nominally recovered from the banking crisis over a decade ago and is suffering from almost perpetual indecision thanks to two years of uncertainty following the EU referendum. There is now a logic to the idea that businesses should, if they haven’t done so already, avoid potential insolvency by basing their business plans on the ‘worst case scenario’ of a no deal Brexit, so that they’re prepared should this end up happening.
For example, do you buy or sell in Europe? If so, what are the extra bills you could face in tariffs and taxation? What are the extra potential costs for transport if delivery staff are stuck in queues? What effect will delays at customs have on your production schedules? Would these increased costs allow you to remain competitive?
Thoroughly researching all the implications of a no deal Brexit as they apply to you is likely to help you mitigate the effects.
Directors, Descartes and a No Deal Brexit
What can a French philosopher teach us about a no deal Brexit? Rene Descartes’ famous conclusion “I think therefore I am” came after a lengthy analysis of what he could and could not be certain of. Directors wondering what to do about the prospect of a no deal Brexit might consider following his example and rather than concentrating on what is uncertain, instead, focus on what they can be certain of and let that be a guide.
No matter what the eventual outcome, Directors are responsible for the decisions they make on behalf of their company. They must act responsibly, make decisions in good faith and act in the best interests of the company. Should their company become insolvent, Directors must then change their focus and instead act in the best interests of their creditors. This may or may not save the business, but it will prevent the Directors finding themselves personally liable for the business debts following a liquidation.
Whatever happens with Brexit, it’s pretty much certain that there’ll be some financial pain before any recovery can take place. Look to your business plan and your cashflow in particular, make sure that, as much as is possible, you bolster your liquid assets to make sure that your business can survive a drop in revenue.
You don’t know what’s going to happen in Parliament, but you do know your business, your customer and client base, your suppliers, your staff, and your other stakeholders. Even if a no deal Brexit isn’t likely to directly affect your business, there is the distinct possibility that it will indirectly effect the behaviour and spending decisions of those you usually deal with. Consider what you know about those who interact with your business and how Brexit might affect them. This could give you clues as to how they’ll act and how you should plan to respond.
Whatever your feelings, be they leave or remain or neither, the purpose of a business is to make a profit. This means you should put your own views aside and regard the situation pragmatically and dispassionately. You may spot an opportunity. For example, when considering those you interact with, also consider those you compete with. Could you turn a worst case scenario on its head by managing the impact of a no deal Brexit better than your competitors? After all, you already know who they are, what they do well and probably a lot of other things about them. If you can use that knowledge to give your business a competitive advantage and deal with a no deal Brexit better than they do, then it’s a strategy worth considering.
A No Deal Brexit – Just another Business Obstacle?
If you strip away all the furore, the protests and mounting anger surrounding Brexit, when it comes down to your business, it’s just another obstacle to be overcome. A big obstacle for sure, but a challenge, which like many of the others you’ve already encountered, may have a solution if you face it and work out a way to deal with it.
At Lines Henry, we deal in solutions and always strive to find the best outcome for businesses and individuals facing financial difficulty. It isn’t always possible to get the outcome you want, but in our experience, there is always a way to make the outcome better and we pride ourselves on finding that way.
We offer a free consultation and with our decades of experience helping businesses like yours through all kinds of fiscal troubles, you can turn to Lines Henry to help you navigate the uncharted waters of a no deal Brexit. Contact us and we can discuss various options with you.
Speak to us, we can help.