If one could sum up 2017 to date in a word, then that word is currently: uncertainty. One year on from the EU Referendum, a momentous decision that is sure to affect everybody – and yet the country is still none the wiser as to how.
While it may take many years before we know exactly what Brexit actually means on the ground, good or bad, businesses with exposure to the EU need to start creating different models for various potential futures. Unless businesses start to think about financial forecasting, including exchange-rate fluctuations, some companies will see their trading and cash positions deteriorate.
The message is simple: management information should be top-notch. Those with accurate and timely information will be able to identify risks, take immediate action and drive business performance.
How to avoid a business panic attack
The temptation at a time like this is to panic. Already, SMEs are showing less confidence in how things are going, as the latest Smith & Williamson Enterprise Index shows. Anxiety among British companies about relations with their European clients and counterparts, and potentially access to workforce, is rife. Uncertainty is becoming the norm.
Businesses can prevent panic by being prepared. As simple as this may sound, here are three tips to help you get ready:
Ensure your past data is correct – get your accounts in order. Despite many companies not needing an audit, accounts are critical to good information. A good accounts package, system and team are crucial.
Build a well-informed management structure to guarantee that the data you receive is accurate and that you can act on it. Businesses need the information to understand exactly where they are now, the potential impact of changes and a plan for how to manage or even benefit from it going forward. Good, basic and proactive management information can be presented as a risk dashboard for clear understanding.
Create robust financial models able to predict your future in various scenarios. From that information can come strong budgeting and forecasting, forward planning, the ability to react quickly, strong cash management and a relevant business plan. When the final exit details are known, there can be changes in the model and the company can then measure the impact and take actions, where possible, to mitigate or exploit the change.
Fail to prepare, prepare to fail
Businesses should not ignore the reality that their world will change – and, at the same time, should not panic. By being well prepared, far in advance, companies should be able to spot the changes that will affect them and deal with them accordingly.
The more prepared you are, the easier you will find it to be flexible and react to change when it happens. In times of uncertainty, one thing you want to be sure about is your own business. A good model takes time to develop so businesses need to be ready.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.