What Every Business Owner Needs To Know About Brexit
Like it or not, it's going to happen ...
POSTED BY JONATHAN VOWLES ON 10/10/2017 @ 8:00AM
Being a business owner can sometimes be hard, but you don't have to make it harder by ignoring the signs that are showing up in the news headlines every day ...
Whether we like it or not, Brexit is going to happen. Will your business be ready?
copyright: egal / 123rf stock photo (licensee)
Right now, in October 2017, the UK has a marketplace that is filled with both challenges and opportunities. The challenge is to position your business to win ... the opportunity is to position your business to win as well!
"Importantly, don't be sidetracked by all the arguments over what sort of Brexit we getting, or if we can avert it or not!"
Today's headlines are full of arguments over the politicians handling (or mishandling) of negotiations. But that is a trivial issue compared to what Brexit is already doing to the UK and what it might do next year.
The information in the headlines recently can be summarised as:
Interest rates are going up at some time in the next three months
Productivity has fallen to its lowest rate for years
Inflation is rising
There is pressure from unions and workers to increase wages
Post-Brexit fears over residency status means that the numbers of EU workers in the UK have fallen
What does this mean, and what do you need to know to make sure you are a winner and not a loser from Brexit?
Wages costs are a problem to be faced!
The fact that we have fewer EU workers coming to the UK means that jobs are being unfilled. Which in turn will mean that businesses have to offer higher wages to attract people. Can your business survive a 5% or 10% increase in wages?
Wage pressure and the UK's track record of small annual wage increases, means that wages are being pushed up. Great for the individual worker maybe, but bad for the businesses that are going to have to increase wages or lose staff.
Remember the costs of auto-enrolment is set to increase each year over the next two years.
Inflation is rising, which means that all of your suppliers are going to be looking to increase their costs.
Interest rates are going up, meaning the costs of borrowing will increase. For the average loan, a ½% increase in base rate actually means a 12½% increase in your borrowing costs!
The latest productivity statistics show that the UK has stagnated, but that other countries have improved their productivity. How competitive will our exports be, and what can you do to improve your business' productivity. If you don't export then this is still important! What can you simplify or automate in your business to make it leaner and meaner?
... all of which will inevitably mean that every business will need to look again at its budgets and forecasts.
Probably, you will need to increase prices now, to get increased profits flowing in the future, from which to pay these higher wages and other costs.
You should also look at technology; what software is out there that will help your business to be more efficient? Finally, every business needs to be on top of its cashflow and forecasting it forward.
The key to being a Brexit winner is to do the things you should be doing anyway, looking at budgets, costs, costings and profitability. Forecasting efficiently and planning for the future.
"Would you like to know more?"
If you need help doing any of this, do give me a call on 01234 752 566 or click here to ping me an email and let's see how I can help you.
Until next time ...
If you're looking for a new accountant to help grow your business, do visit www.jvca.co.uk and discover how Jonathan Vowles Chartered Accountants can help you!
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.