CPD  

How to run a Brexit-proof business

  • Explore the market post-Brexit
  • Find out how Peer to Peer can help investors
  • Using Peer to Peer within a portfolio
CPD
Approx.30min
How to run a Brexit-proof business

Many business leaders, owners and entrepreneurs are frustrated with the way things are going post-Brexit vote.

We’ve become victims of circumstances that are out of our control and they are affecting both normal day-to-day business dealings and our ability to plan for the longer term.

Most of the adverse effects of Brexit, at least in the short term, are clearly a result of the negativity and uncertainty streaming from experts, analysts, the Bank of England and of course the government.

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Granted, the Bank of England has now pointed out where the uncertainty is likely to lead and that the UK political situation is currently less turbulent, but the true effects of Brexit are yet to appear and be properly addressed. Longer term, the market will reflect a true value.

For the time being, businesses are being challenged to continue as usual and to just “overcome the uncertainty”.

However, this is easier said than done considering that we are already experiencing slower decision-making, projects being placed on hold, and general growth stagnation across a wide range of business sectors.

Behind the scenes in the financial service industry, both traditional and alternative finance institutions are undergoing real-time stress tests.

You will no doubt hear about those that fail the test in one form or another, but the task in hand for British businesses is to identify and evaluate potential “BrexitProof” products and services on both their sales and supply sides.

This means selling products and services (not just financial) that can still be attractive and also ensuring their suppliers will keep on supplying.

Brexit-proof: The investor situation

It is important for UK businesses to understand the repercussions of Brexit on the typical business investor, most of whom are being challenged in the interpretation of conflicting and confusing messages that we have been bombarded with since the Brexit referendum.

We know that some businesses are already finding their flow of money stifled or delayed, and this is understandably causing considerable angst and serious issues. In lending this is currently localised to certain lenders who had nervous funders and have seen funding lines removed or reduced since the vote.

The good news is that there is little doubt that the major UK banks are robust enough to survive Brexit. This is because simulated Bank of England stress tests have demonstrated that they can withstand even the worst-case scenario recession beyond that which could result from Brexit.

However, this could affect British businesses because banks will be likely to lower savings rates and adjust their probability of defaults (PDs) during the Brexit transition.

This means savers could lose out and banks will slow lending to riskier sectors due to their capital requirements rising as a result of rising PDs.