Here are 5 questions to help you prepare…
No-Deal Brexit, could it really happen?
A no-deal Brexit is becoming more and more likely as the clock ticks down and the government’s efforts to get parliament to accept the leaving agreement plan continues to stall.
For many businesses, since Article 50 was implemented back in 2017 the question has been how do we prepare to leave? Big businesses with money and corporate responsibilities commenced their preparations and planning by considering the worst-case scenario, a no-deal Brexit.
For smaller businesses with fewer resources and with less cash available it’s been harder to prepare. This is as been compounded by the failure of the government to agree on the terms for leaving that Parliament and the European Union can accept.
As the 29th March 2019 draws ever closer, and with the government showing no signs of extending article 50 or gaining an agreement to leave, a no-deal Brexit looks more and more likely.
Where does that leave the small business owner? Somewhat frighteningly, as of December 2018, 86% hadn’t started planning or preparing for a no-deal Brexit. To help, I have put together 5 questions that will enable businesses of any size to kick-start their preparations for a no-deal Brexit by using business continuity planning.
Having a Business Continuity Plan and what it means?
Many years ago, I was introduced to my first business continuity plan. It was a beast of a document with over 100 pages of how the business would continue to trade in the event of a natural disaster or a significant incident.
Having worked in sales or business development roles up to that point, it was something that I hadn’t had to worry about. A storm blowing the roof of the offices, or fire damaging the warehouse just weren’t my concerns.
The power of a business continuity plan is that it allowed for several scenarios that could affect business operations and provided answers as to how to deal with them. It was produced with the benefit of time and considered thought to create a plan as to how to manage & overcome those scenarios.
It was produced with the benefit of time and considered thought.
A no-deal Brexit and business continuity
Which leads us onto the pending date of the 29th March 2019 and the UK’s exit from the European Union. There are many arguments about the why’s and wherefores, but something that isn’t widely appreciated is that it is written in law that we will leave the EU on the 29th March 2019.
With that in mind, it seems to highly logical to use a no-deal Brexit as the worst-case scenario in the application of writing a business continuity plan. Now, obviously I can’t write that for you, but what I can give you are the following questions that will help build the framework for a business continuity plan in the event of a no-deal Brexit.
5 questions for business owners ahead of a No-deal Brexit.
a. What products/ services are you currently either buying or selling to countries within the European Union?
b. Do any of the products require compliance certification before they can be sold?
c. Have you any contracts between your business in the UK and businesses based in member nations of the European Union?
d. Do you employ EU nationals?
e. What impact on your cash flow will it have to prepare for a no-deal Brexit outcome?
Let’s break down each question into more detail to help your business prepare for a no-deal Brexit.
1. What products/ services are you currently either buying or selling to countries within the European Union?
This is a critical first step to understand, because if you are buying or selling products or services to members of the European Union then there are several immediate issues to consider.
a. Customs declarations may need to be completed on both UK and EU sides, potentially in advance of shipment. Becoming familiar with digital customs system would be essentially very helpful.
b. It is also interesting to note that regardless of no deal or not, customs clearance may still be required.
c. Rules regarding proof of origin are likely to be required on goods that are shipped to the EU, as they for some countries outside the EU.
Supply chain mapping
A great place to start with this is to undertake supply chain mapping. The process enables you to identify all the products & services you currently source and to know where they have come from. From here you can understand what product category they might fall into which can then help assess the possible tariffs that may apply.
2. Do any of the products require compliance certification before they can be sold?
At the current time British standards and regulations are aligned and at the time of Brexit, an agreement would allow this alignment to continue. A no-deal Brexit may break this and render some of our standards non-compliant to EU rules. If this was the case UK products would need to meet and adopt EU rules and certification before being sold in those countries.
This does vary across different product sectors so it is worth checking out the relevant government guidance on this.
3. Have you any contracts between your business in the UK and businesses based in member nations of the European Union?
In the event of a no-deal Brexit, it is likely that most contracts between companies based in the UK and the European Union may become void. This is due to the changes in VAT and how it is processed should a no-deal Brexit occur. Terms of service should reflect the change from European to International as we will no longer be part of the EU.
4. Do you employ EU nationals?
Any EU nationals are likely to need to apply for settled status. As a business, you will need to plan for any cut-off dates and any new employees you take on. Your business is likely to need robust systems to record and track the nationality status of employees as well as ensuring immigration compliance.
5. What impact on your cash flow will it have to prepare for a no-deal Brexit outcome?
If a no-deal Brexit occurs you may well need to hold more stock, invest in separate stocks for UK/EU products to satisfy compliance requirements and invest in additional warehousing to meet the needs of your customers. How will you fund this increase in inventory? There are also other implications for the payments of VAT, tariffs and duties that should be considered.
Isn’t it too late to start this process?
It’s never too late to commence planning for a no-deal Brexit. As article 50 continues to countdown, the country and the European Union have no idea as to what will happen after the 29th March 2019. But as a business, we have responsibilities to prepare for the ‘what if’s’ that occur in life and work.
As I mentioned at the start, and it’s something you will find as your business grows, having a business continuity plan is a required document and not just to meet the demands of your insurance provider. It’s also to enable the business to be sustainable. Whilst a no-deal Brexit isn’t a natural disaster (although some may argue otherwise) it has the potential to be one if a no-deal Brexit is a path we end up taking.
What steps has your business taken to prepare for a no-deal Brexit?