Could help from an unlikely source get the UK’s businesses Brexit-ready?

Flags Brexit

As the nation takes stock of Britain’s EU referendum result, businesses are under growing pressure to understand, plan and evolve during this period of intense ambiguity. This challenge is amplified by the early signs of post-referendum economic stress as evidenced by recent business polls, Forex and a further reduction of interest rates. The long-term economic outcomes will depend upon negotiations with the rest of the EU, but in the meantime, the only certainty is uncertainty.

While the full effects of Brexit remain to be seen, UK management teams are faced with a growing list of questions, from the immediate risks to future opportunities in a post-Brexit world.  “The ability to equip a business and its stakeholders to adapt and respond in a rapidly changing environment lies at the heart of turnaround leadership,” Managing Director of De Novo Advisory, Jo Wright explains. “Even a financially healthy and stable business could benefit from the support of a turnaround and business transformation expert to prepare for Brexit, potentially using Brexit as a catalyst to transform business strategy in pursuit of growth,” she continues.

Management teams are under constant pressure to respond to growing leadership, technical, compliance and financial demands – a Brexit strategy will be high priority but in reality few businesses have surplus capacity and skills, alongside the day job.

A turnaround or business transformation expert would work alongside a management team to safeguard financial vigour, streamline operations, challenge business strategy and improve stakeholder management. Even those businesses that have steered themselves through challenging times in the past can benefit from specialised resource to help assess the impact, create a credible plan, and if appropriate, to weather any storm.

Importantly, there is no need for a knee-jerk reaction, nor will a ‘do nothing’ approach yield benefits. Management teams should use this time to consider the following:

Know your lending financial position – When are facilities due for renewal? Will existing covenants be challenging? What are lender expectations? Is the funding structure correct? Is there sufficient flexibility?

Cash remains king: Even if cash flow is generally stable, it could start to get tight, as orders could slow and payment terms are stretched.  How much cushion is there to weather any difficulties?  Is there sufficient headroom taking account of foreign exchange risk and interest volatility?

Structure the business to support future strategy: Is it the right shape for now / future?  Is there a plan in place to adopt optimal structure?

Supply chain & commercial issues:  Consider potential supply chain implications and other commercial issues, from direct costs such as import / export tariffs and exchange rate volatility,  through to the impact of EU workers and changes re EU grants.  Scenario  planning can never be too early.

Business plan and plan again: Is the plan agile? Can it be refreshed as the position becomes clearer? Consider short term (next 3 months), medium term (2 year Brexit negotiation period) and longer term (post exit).

Don’t underestimate the stakeholder matrix: Is there a clear and credible plan that will help secure confidence, particularly amongst incumbent lenders?  What will help support renegotiations?  What are the alternative funding options?  Has the full matrix been identified?

“Management teams must take stock and evaluate the opportunities arising from Brexit, whilst also being alert to the fact that volatility also brings with it risks.  The challenge is there are many unknowns, and such unpredictably will inevitably create spikes which management teams will need to skillfully manage.  I believe that by embracing Brexit and adopting a positive mind set, these challenges can be effectively tackled head on,” continues Jo.

Brexit could deliver a wealth of opportunities, but to benefit from them when they come, businesses must stay strong in the meantime and not be weakened by slow growth and the uncertainty that currently prevails.

De Novo Advisory has a wealth of expertise in supporting businesses through uncertain times, specifically in stakeholder management.  Competing demands can often appear overwhelming, but managing what can often be a complex stakeholder mix is absolutely crucial to success.  With our deep knowledge of the lending market and strong relationships with funders, we can also assess the adequacy of existing funding arrangements and potential challenges come renewal, as well as advise on alternative funding options.

Jo concludes, “By adopting the right business structure, optimal funding platform and a credible plan, businesses will be able to look to the future and leverage opportunities, and avoid getting bogged down in the Brexit unknowns. De Novo’s expertise in supporting businesses through periods of uncertainty can be invaluable, and can be the difference between a successful transformation and a rapid demise.”

@the_ift @LendingStdBrd Plenty of practical and constructive tips, highlighting the importance of engaging the rig…