Three months on from voting to leave the EU, In-Cumbria's Business Doctor takes a look at how businesses in the UK are reacting and what you can do.

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We are now three months on from the UK referendum to leave the EU. So what’s happened since then and have you taken the time and stopped to assess how these events are likely to affect your business next year and beyond?

We have had a change of Prime Minister and with the main opposition being leaderless there has been no push to BREXIT. Recent news is that we will not execute Article 50 until at least February 2017 and even if this is sanctioned early next year it isn’t clear under what terms we will leave the EU single market. It will most likely take us at least 2 years to negotiate terms to leave if not much longer. There are however many questions still unanswered and this in itself is causing uncertainty affecting your business now and in the future.

Customer confidence; with these events in the background it’s no wonder the CBI reported recently that business confidence is at its lowest level for 4 years, with only 12% of businesses having expectations that their sales, orders and profits will increase over the next 6 months. Down from 38% reported in January 2016. However consumer confidence is reported up 1.4% in August compared to July. So can consumer spending help us find our way out of our problems today and in the near future?

Review your customer mix; are your customers predominately businesses or retail? What trends are you seeing in your business sales figures, split by product or service and spend time comparing to last year and the year before and predict 2017. Which clients in which sectors are doing better than others? Ask your clients how they foresee next year’s trading or requirements for your products and or services. E.g. the tourism industry it having a mini boom, as it’s cheaper for people to come to UK for holidays plus there has been a 5% increase in the UK population taking staycations.

Cost of sales; the pound still trades much weaker against the dollar, down 16% and down 18% against the Euro over the last 12 months. If you import goods to resell, services or import raw material to manufacture, your costs will have increased greatly, affecting your margins, your competitiveness and likely sales too. However if you export goods this may offset these costs or you may even have seen a benefit. It’s worth doing financial cash flows with varying exchange rates.

Resources & Capabilities , Unemployment rates are at 4.9% nationally and much lower across Cumbria, whilst good news, many businesses are struggling to replace or recruit additional staff. The average wage has increased by 1.9% annually and likely to increase further due to these pressures. Many businesses also rely on workers who have settled in the UK from overseas so it will be interesting how the freedom of workers and immigration rules are negotiated as we leave the EU. Therefore in the meantime can you redistribute tasks, redesign job roles and reallocate appropriate activities or even restructure departments to increase capacity or enhance productivity with existing or even less employees?

Access to finance and borrowing; bank base rates are at the lowest on record at 0.25% so it is a good time to borrow, but are you finding obtaining funding for your business any easier? If you need finance, ensure you have a strong business plan when applying for a loan. Many businesses utilise grant schemes which are mainly EU match funded, so it will be interesting to hear how the government plans to replace these - news due in the autumn statement.

Future opportunities; It is good news that some large capital investment projects are going ahead. Whilst Hinkley Point maybe contentious with regards to the terms and process, it is a good omen for NuGen’s plans at Moorhouse. BAE systems contract was confirmed in July to build the Successor class Submarine. Therefore you may want to spend time assessing if your business is likely to benefit from these and any other opportunities. How can you best align yourself to the future opportunities in the supply chain? You could minimise the risks which may be caused by the market drivers in other industry sectors, that might be caused by BREXIT.

The greatest danger in times of turbulence is not the turbulence itself, it is to act with yesterday’s logic – Peter Drucker (1974).

If you are looking to consolidate and then grow your business even in turbulent times, Business Doctors Cumbria offer a free business health check where we can help you to set a clear vision and understand the steps you need to take to secure your business plans and fulfil your aspirations.

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