EU Exit on the horizon: the future of small businesses in Britain
Following informal talks ending on 15th October 2020, the Prime Minister instructed British businesses large and small to prepare for leaving the EU without a deal. The key participants in the Brexit negotiations were left at an impasse, with Boris Johnson claiming that the EU had “abandoned the idea of a free trade deal”.
Chief EU negotiator Michel Barnier, and his UK counterpart, David Frost are fast running out of time, with Michael Gove describing the door being ‘still ajar’ based on an unlikely change of position from the EU. Lord Frost explained that there was ‘no basis’ on which to continue to negotiate and finalise a deal for Britain to leave the EU on 31st December 2020.
Previously, the Government had published its new internal market bill, a 100-page white paper, in July 2020. The bill is constructed to ensure that trade between England, Wales, Scotland and Northern Ireland continues ‘seamlessly’ after the UK leaves the EU.
And yet with COVID-19 putting the resilience of British businesses to the test, those sectors that the pandemic has affected most severely face a prolonged period of hardship. Job losses continue apace, and the prospect of a global recession looms large.
So how can businesses prepare for a second ‘unprecedented’ challenge in 12 months? The Business Finance Guide consulted a leadership expert and a military stress and resilience coach on the methods businesses can employ to prepare for what might be tough times ahead.
Lucy Barkas – podcast host and author of the best-selling leadership book, LeaderX
Linda Torbet – Lieutenant Commander, Royal Navy – stress and resilience expert
What can businesses learn from COVID-19 to help deal with the EU exit?
Over the course of the pandemic, I’ve seen the full spectrum of leadership behaviours, good and bad. Fear and change are very disruptive to businesses. Simply not knowing what to expect or what to do next is paralysing.
In 2020 we’ve progressed to an age of accelerated change. From the ‘Me Too movement’ to ‘Black Lives Matter’ to the coronavirus, we’ve seen quite incredible changes unfold at speed. The successful leader will acknowledge the changing circumstances and involve their people. It’s not about simply asking people to give more, it’s about drawing a team together to find a solution.
In times of stress, it’s typical for individuals (like businesses) to accept the challenging circumstances, become overwhelmed, become trapped and feel isolated.
First, it’s important for a business to find its reason to fight. Second, and absolutely as importantly, with the time that a business has, it’s vital to consider a variety of options, plan for a range of scenarios, and consider how it will respond to a challenge.
The role of a financial expert as we approach a potential no deal Brexit will be very much a part of ‘finding a solution’ to the sudden challenges ahead.
Many small businesses may previously have rejected the idea of borrowing, or never before considered debt finance or equity finance as an option. Now really is the time to investigate every eventuality. Talking to a financial expert doesn’t give a business an obligation to take the advice, to take any debt, or to give up any equity. It simply means that they are informed, and prepared for any sudden change in circumstances. It’s vital to build resilience and scenario plan in business, just as it is important to build that same resilience in people by planning for various outcomes.
How can businesses best prepare for the challenges of the EU Exit?
I think the first thing that all of us need to acknowledge is that there is no ‘EU exit manual’. Nobody in Britain, in business or otherwise, has done this before. Everyone will essentially be going through the same thing and, more importantly, shouldn’t expect to sort everything out all at once.
Change doesn’t necessarily always have to be bad – it’s just change. What a business can do is to prepare, practice, and then rely on that practice in times of stress. This requires a contribution from everyone. If you’re on a ship that’s sinking, then no idea is a bad idea in terms of keeping it afloat. It will be necessary for a business to quickly understand a situational requirement. It will then be a question of having the clarity and level of contribution to meet that new requirement.
It’s so important for leaders to have a really honest appraisal of where their business is now, and then on an ongoing basis throughout the EU exit process. Leaders must drive the understanding of the business, its mission and its market to their people.
There’s a greater level of communication required in terms of change. Within a business these are often called soft skills, yet they are the hardest to master. It’s a sign of true leadership when a leader accepts that they don’t have all of the answers and asks for help. Seeking that support throughout the EU exit will really help keep businesses alive and maybe even allow them to advance.
Rising to the challenge
Nobody has a set of instructions for the EU exit. Change will undoubtedly come for businesses next year, and in times such as these, being financially secure can make the difference between a business surviving and not. Fundamentals like cashflow are paramount, and no business will be able to solve every challenge relating to the EU exit in one go, those that have a robust financial strategy in place will be more likely to thrive.
In 2020, companies have prepared for the changing circumstances brought about by COVID-19 by applying for finance solutions like BBLS, using the facility as a backstop even if the need to draw down on it was not immediate. This is really prudent financial practice.
Both Linda and Lucy talked about the paralysing nature of fear and people somehow accepting hardship as the status quo. It is so often the case that businesses have the same reluctance in terms of discussing their finances, as if a financial discussion would in some way cause discomfort or expose a lack of skills.
A great example of business leadership is to have those conversations with an expert about finance, whether it’s about the cash position of the business, the benefit of a government-backed loan, or the deferral of VAT. In the tough times that lay ahead, finding a solution to a potential financial challenge, as our experts described, is more important than the risk of the discomfort of seeking one. It’s vital that businesses talk to their accountant, or – if they don’t have one – access a programme like the Business Advice Service (BAS), and find one locally.