Brexit will continue to be a major topic of political discussion for consumers and businesses alike – understandably causing stress and tension for the country in general.
The UK officially left the EU on 31st January and is now in a transition period until 31st December 2020.
While the negotiations on trade agreements and other matters are ongoing, the overall impact it will have on businesses is yet to be determined. Planning ahead and being a smart startup owner will help reduce the inevitable stress that will come in 2021.
On that note, here are five questions to ask yourself in order to make sure you can survive and thrive once the Brexit negotiations finish.
How dependent is your business on the foreign exchange market?
Brexit has caused the GBP to fluctuate in extreme ways ever since the referendum. Case in point, an in-depth report on the GBP’s ups and downs by FXCM notes that the value of the GBP fell by 10% against the USD, but hit a 50% recovery in the following months. This volatility can have some serious repercussions if your business deals with importing or exporting goods, as any moves with the exchange rate could affect your bottom line, along with financial documents in different currencies being subject to sharp revisions. That said, use hedging strategies or forward contracts to trim your risk and create a complex yet secure payment solution to avoid further forex risks.
How well can you work with foreign freelancers?
Given that no one knows how Brexit will affect foreign talent acquisition in the UK, you might have to consider working with freelancers in the meantime. As a growing business, it has its pros and cons, but you can definitely use this to your advantage in the midst of Brexit — after all, the gig economy is meant to help you save costs. The key cons are the lack of predictability when it comes to quality and no supervision, so make sure that once you find a freelancer you like, you retain them for long-term contracts, along with developing a solid form of communication.
Does your startup depend on businesses from EU countries?
Similar to the first question, how your startup will be affected largely depends on the type of company structure you have. If you rely on imported goods from different EU countries, you might want to start looking at local options instead because of the changes to customs, tariffs, and VAT. The changes will take effect on 1st January next year, which applies to exported and imported goods to and from the EU. Even if you yourself don’t buy or sell directly from the EU, Startup Donut suggests that it’s worth looking at how your customers or suppliers could be affected, as they might rely on businesses outside of the UK as well. The only problem is that Brexit affects every aspect of business, and finding UK alternatives can be a challenge as they may have been booked a long time ago.
Does your startup depend on disruptive tech innovations?
If your startup relies largely on tech innovations to remain ahead of competitors, understanding how quickly you can access any new tech is crucial. Suffice to say, the UK will have to come up with the appropriate agreements when it comes to future technology made in the EU. Not to mention, the UK will be outside of the EU’s proposed “Digital Single Market”, which aims to harmonise EU tech markets. This could have a number of implications for your startup because if the UK decides on stricter measures, it could impact investment decisions for tech companies and telecom operators, which could limit your access to new tech.
Can Dublin and London remain startup hubs post-Brexit?
While the Brexit uncertainty has led many businesses to consider relocating away from the UK, saying that London won’t be a startup hub may be a bit farfetched. ITPro details that the UK tech sector continues to attract investment, and is projected to reach £8 billion by the end of 2019. Not to mention, Dublin has seen the creation of more than 1,600 new businesses in 2019 alone, proving that this specific startup hub is far from struggling amid Brexit uncertainties. That said, you can still expect to hear about and perhaps even connect with startups from both London and Dublin without the fear of Brexit breaking the momentum.
If you have any questions, please do not hesitate to get in touch with our team at Key Business Consultants, who will be happy to assist you. After all, being prepared for the repercussions brought about Brexit is something all smart startup owners will be doing.
About this writer: Johan Buckler is a freelance financial writer with a background in financial services. He is also a consultant for small businesses and enjoys practical and timely financial advice for entrepreneurs and startups.