19 Aug 2019
Preparing for what comes after 31 October
As the clock continues to tick towards an uncertain outcome there is also a looming deadline of changing business relationships – notably those dependent on ongoing cross-border contracts with Europe as well as with those organisations that receive EU funding. Whilst we would all hope that any relationships that need to be renegotiated, for whatever reason, can be done smoothly CEDR also knows that in real life problems in contract negotiations can and do occur and progress can get deadlocked. It may be all too easy for some of these stumbling blocks to escalate into claims and litigation.
Planning for the unknown, whilst very difficult, is also essential – so think about your own or your client’s negotiation goals, what your strategy should be and how to – as well as who will – negotiate. Also anticipate that if your renegotiations do run into troubled waters there are many different ways that you can get help from assisted negotiation techniques, such as mediation or neutral chairing, by accessing those with the right skills from organisations like CEDR. Whilst it is absolutely fine to ‘go it alone’ while negotiations are working well, when things do get stuck, spending a day with a neutral or even investing in a couple of jointly assisted meetings can be the difference between success or failure.
Outside of negotiation issues below are examples of how some companies have prepared for the future:
How small businesses are getting ready for Brexit
By Anna Tobin, editor of www.readyforbrexit.co.uk
Ready for Brexit was set up in acknowledgement of the fact that Brexit, in whatever form it takes, is happening and that businesses will need support to help them minimise the negatives and exploit the positives that it might bring. Those organisations with three-figure head counts have the means to create dedicated Brexit departments or to contract a team of Brexit consultants to help them to create a solid plan for Brexit. As to be expected, it is the smaller companies with less manpower and resources that need to be steered through the Brexit process. What we are seeing is that many forward-thinking SMEs are following the lead of the big corporations and are setting up bases in the EU.
Setting up an EU base
Smaller companies who rely on trade with the EU, in particular exporters, are setting up warehouses within the EU and, in some cases, even opening up European companies. By doing this they can have their products made or put together within an EU country or have the goods that they typically import into the UK from say Taiwan and then export out to the EU, delivered directly and frictionlessly to the EU.
These moves into Europe ensure that they avoid the expected additional tariffs and non-tariff barriers and customs duties that Brexit, in particular a No Deal Brexit, could bring. These companies feel that the UK Government isn’t doing enough to support them and that this is a sink or swim Brexit survival tactic for them.
Taig Karanjia, for example, is in the process of setting up a Dutch subsidiary for his gifting company Rex London. He said: “I don’t think that there is anything that they [the Government] can do because they are bound by their own interests and by much larger businesses. They are much more interested in the huge businesses, like the services and the automobile industries, than giftware companies. We are one of the many small businesses that fall outside the huge amount of pressure that the larger organisations put on the Government. They don’t have the time to deal with or be interested in small businesses.”
The reluctant wait and see-era
Even as we edge closer to Brexit, there are still many UK businesses who are taking the ‘let’s see what happens’ approach. It’s not that they don’t understand that they must change their business strategies to accommodate Brexit, it’s just that they still don’t know what form Brexit will take, and so they in turn don’t know what direction to take.
Matt Deighton, managing director of furniture company Timeless Chesterfields said: “The biggest concern that we have as a business is the uncertainty surrounding Brexit. When we are speaking to customers they are asking us what is going to happen, how will they get the furniture and will there be any customs delays? It’s the uncertainty that then leads to that anxiety that potentially will put some customers off. There is not a great deal that we can do in terms of contingency plans, because we don’t know what to plan for. In the meantime, we are reevaluating everything that we do and are looking to make sure that we are as efficient as possible to streamline processes.”
The positive early adopters
All the SMEs we speak to have been impacted in some way by Brexit or expect to be. There are some businesses who feel that they have benefited from Brexit, however. These businesses tend to not be involved in foreign trade and don’t have to rely too heavily on foreign labour.
Nick Thompson, managing director of software solutions company DCSL Software had a massive recruitment problem straight after the referendum. His employment pool was made up of a lot of EU citizens and the applications from the EU stopped coming in. He changed his strategy increased salaries and benefits and is now employing more British citizens. The fall in the exchange rate has also benefited him, because it makes his services more attractive to foreign customers.
Thompson said: "I voted to remain. I was very disappointed by the result. I couldn’t believe it. It seemed to go against everything that we were doing in the business, but now I look back on it and think, well right now we have a great company. Brexit has helped us to accelerate our growth, which wasn’t what we’d expected. We have around 70 staff now and we have great plans to expand the business over the next couple of years to much much bigger than that. Business is better than it’s ever been. The demand is greater than it’s ever been. There is the natural possibility that we’ve just become a better company, but I think Brexit forced us to become better.”
Whatever approach they take to Brexit, Ready for Brexit aims to help companies to understand how best to deal with its personal impact through news, analysis, interviews, checklists, supply chain audits and a comprehensive directory covering all Brexit-related issues.