How can UK SMEs prepare for life after Brexit? - Just Food coverage

When it comes to Brexit, almost everything is uncertain and unclear. As entrepreneurs and leaders of small and medium-sized enterprises (SMEs), it can be tricky to anticipate and take proactive action to future-proof your business when the post-Brexit business environment remains so unpredictable, John Stapleton writes.

The UK business community, and the SME sector in particular needs information on which to make decisions and confidence to deliver against them. Small businesses need to understand what they can do and need to do now to mitigate Brexit risks and take advantage of opportunities that will surface. Despite the lack of clarity, failing to prepare for a post-Brexit world is tantamount to preparing for failure.

In any big instance of change (and it doesn't get much bigger than Brexit, the UK's departure from the European Union next March), it is important to understand the risks and opportunities that will likely emerge. However, for SMEs, the distractions from doing this are numerous.

It is easy to put Brexit to the back of our priority list. After all: 

- "Brexit is seemingly out of our hands anyway"
- "SMEs don't have any influence and if anyone, the politicians and big lobbyists will shape Brexit"
- "I need to just concentrate on managing my business"
- "We have enough problems on our plate - consumer confidence, GDPR, internal challenges like recruitment and building company culture, the list goes on…"

While the post-Brexit landscape still remains unclear, it is important entrepreneurs and business leaders remember that no business is too small to be challenged by the upcoming risks and opportunities. In order for FMCG start-ups to prepare for a post-Brexit world effectively, there are five key areas they should evaluate as jumping-off points:

Currency 

Business leaders should look to embrace the (already and potential further future) devaluation of the pound and see it as a powerful commercial opportunity. A weaker pound has, across the board, already facilitated demand overseas and increased supplier margin. There is an appetite for Brand Britain abroad, so 'heritage-focused' marketing and branding makes for great commercial opportunity. Significant benefits exist in implementing hedging tactics against current contracts to mitigate the risks of supplying orders at a loss.

Innovation

Devaluation has, on the flip side, increased the price of imports, which makes the purchasing of British-grown or originated goods more appealing to customers at home. Growing FMCG brands may look to "product substitution" - designed to develop home versions of imported products sold to UK consumers with UK-designed and manufactured products. Why can't British consumers buy Brie made in south Wales rather than in France - once the "protected designation of origin" rules don't apply post-Brexit?

This approach can be further positioned through a concerted emphasis on innovation and new product development, as well as a focus on re-positioning or re-targeting consumers at home with local products. "Brand Britain" is already a recognised trend in the UK marketplace that can be capitalised upon to achieve further prominence, including the desire for consumers to support their local, vibrant economies, the growing preference for organic and artisan products and the emphasis by many challenger brands on authenticity, provenance and craft.

Staff & Skills

Many UK businesses employ significant numbers of EU-origin staff - especially in the food and beverage industry - and this group (unless they have already become UK citizens) needs reassurance and support regarding their future presence and status in the UK. Businesses can avail of an audit process or an 'Action Kit' (different industries have developed approaches best designed for their needs) to provide their relevant staff with the advice and direction they need to understand the various options available to them and help with following procedures to secure their future in the UK and within the businesses to which they belong.

Such 'Action Kits' serve to answer questions such as, 'Who is affected by Brexit and in what way?' 'How can their current and future status be secured? ' 'How can I, as a business, provide reassurance and security for them and their families?' One can also outline the relevant regulations and demystify bureaucracy and provide tactical information ranging from legal support to technical information on government regulations.

Tariffs & Customs 

It's important that all business leaders are, at the very least, anticipating the introduction of new or increased trade tariffs. Business needs to lobby government in a coherent way through relevant organisations (e.g. the Food & Drink Federation, which acts as a mouth-piece for food and soft-drink manufacturers operating in the UK) for greater clarity on trade and customs arrangements. Together, business and government must work together to ensure we all avoid disadvantage and disruption.

In instances of increased self-sufficiency, growing FMCG brands might look to develop further options within their supply chains by increasing export opportunities outside of the EU. This will not materialise overnight but small businesses need to lobby government to develop trade channels with non-EU countries which will mitigate potential loss of export trade with the EU.

Location

For those wishing to grow their trade opportunities within the EU, it might be worth considering developing an EU manufacturing base. This approach can lead to the avoidance of UK tariffs for buying and importing ingredients and similarly avoiding EU tariffs when selling and exporting finished goods. This should be designed to sustain a growth strategy, and not detract from UK-based activities. When launched successfully, an EU manufacturing base may increase job security and stability for your total business - especially in the long-term. Obvious options to consider are Ireland, given the benefits of the same language, business culture and very similar tax structures and legal systems, or eastern Europe, where a low unit cost and a great proximity to certain raw material sources and ultimate consumer markets may be deciding factors.

When it comes to Brexit, almost everything is uncertain and unclear. However, as entrepreneurs and business leaders, this is precisely the environment in which we thrive. Being prepared - whether for Brexit or for the next market change - presents an opportunity to develop a competitive advantage over your industry competitor who doesn't.

John Stapleton is a serial entrepreneur behind food brands New Covent Garden Soup Co. and Little Dish. He is also an angel investor, industry advisor and speaker on a range of topics including entrepreneurship, leadership and #GetBrexitReady