Brexit and you!

Many small and medium companies are trying to decide if and how Brexit is going to change their business – and what the impact of those changes will be.

For UK companies, I think the biggest risks accrue to companies who have a good part of their supply chain in euros versus sterling (currency effect); who import fresh or short-dated items (issues with delays to import); whose workforce contains 10% of more EU nationals (currently residing in the UK but a crash out will probably not give them the same right to remain); and who export more than 10% of their product or services to the UK (export issues) or who supply an industry in the UK but whose supply chain itself is largerly outside of the UK, such as the automotive industry. If a transition period is agreed until December 2020, these risks are simply moved from 30 March 2019 to 1 January 2021.

If you have a company in the UK which has very little product coming in from Europe for your use, you don’t export more than 1-5% of  your goods into the EU, you have few if any EU personnel working in your company, the majority of your business isn’t supplying larger corporations with a big EU supply-chain risk, and especially – don’t bring in food or short-dated items from the EU –  then I expect you will have little or no impact from Brexit other than reflecting any wider economic impact in the UK.

If you are a small supplier to an industry with higher risk in Brexit due to longer supply chains into the EU (aerospace, automotive), then you need to try to diversify your client base as much as possible to mitigate.  Equally, if your client base is financial or insurance based.

If you have an EU-based business, and your supply chain is heavily UK-based, your customers/clients are heavily UK-based or you export short-dated or fresh product to the UK, you will definitely be effected.  Your best bet right now is to look to diversify into more EU countries as quickly as possible to avoid any shock from either the UK crashing out on 30 March 2019 or after the transition period ends.  In the event of „no deal“, you really do need to be working on that diversification of customers or suppliers as quickly as possible.

Global or macro impacts:  A banking crisis will have a ripple down effect, as would any shock to the overall economy by bigger companies having issues and going into insolvency leaving their small supplier ecosystem unpaid.