With Brexit fast approaching, CEO of Enterprise Ireland, Julie Sinnamon outlines why the time for planning has given way to the need for action
The good news is that many businesses have already taken action. Visits to Enterprise Ireland’s Prepare for Brexit website have increased tenfold in the last three months. The numbers attending our Brexit Advisory Clinics has trebled and in 2018 alone, Enterprise Ireland made over €74m available to Brexit exposed companies.
For those that haven’t yet acted, there are a number of steps you need to take immediately.
First is financial management. It is vital that all businesses assess their exposure to sterling, not least because whatever decision emerges in the weeks ahead could give rise to exchange rate volatility.
Those most at risk are those whose margins are thinnest. As we saw in the immediate aftermath of the Brexit vote, an exchange rate swing in the wrong direction can have a negative impact, so take advice and develop a currency risk management strategy to protect yourself.
Stress test your cash flow projections. We are seeing client companies being required by their UK customers to increase their UK stockholdings, particularly for shorter shelf life products.
This puts pressure on cash flow so put adequate working capital solutions in place.
The SBCI’s Euro 300 million Brexit Loan Scheme, available through the pillar banks, can be used by qualifying businesses to fund working capital requirements.
Enterprise Ireland supports
Get to grips with customs. Enterprise Ireland’s Customs Insights is a free, 45-minute online course that includes key actions to prepare for customs, as well as the options from Revenue that are available to make the customs process more efficient.
Enterprise Ireland has a suite of wider solutions too, including our Market Discovery Fund, designed to support research into new markets.
Our Agile Innovation Fund is a fast track tool to help you redesign products or packaging for international markets while our new Operational Excellence Offer builds on our highly-successful Lean transformation programme.
Assess your supply chain. Know clearly what you sell into the UK, what you source from the UK and what goods come to you via the UK. Understand the supply flow of goods.
In some cases, where goods come to Ireland from Europe via the UK – and therefore go from Euro to Sterling and back again – we are seeing clients source materials direct from Europe. In doing so, they remove the cost of the middle man plus two sets of exchange rates, becoming more competitive as a result.
Our client companies are increasingly being asked about their Brexit contingency plan by their UK customers. If you haven’t got one, get one.
Equally, if you haven’t already done so, talk to your UK suppliers about what they are doing in relation to Brexit. Some of our client companies are switching from UK to Eurozone suppliers. Others are bringing more of their supply chain back to Ireland. Whatever it takes, build resilience into your supply base.
Engage with your UK customers and suppliers. Have those conversations. Understand the implications and plan accordingly.
In the short term the most pressing issues relate to funding, currency, customs, supply and logistics. It’s vital that these concerns are addressed quickly, so that businesses can get on with their longer term strategies for post-Brexit success.
Since the Brexit vote, Enterprise Ireland has been delivering the same message in this respect – that Irish businesses should hope for the best but prepare for the worst.
In addition to the immediate actions needed for Brexit on the pressing issues, our advice is also to concentrate on innovation, competitiveness and diversification. Improving each of these is something no business will regret, regardless of Brexit.
That our client companies have heeded this advice was clearly demonstrated in February when more than 350 of them attended our major Eurozone Summit, which took place at Dublin’s Convention Centre.
They were there to hear from, and talk to, Irish businesses and senior European leaders about how best to take advantage of trade opportunities in the Eurozone.
These events and our resources play a vital role in increasing your knowledge base and capacity to prepare for Brexit. Start with the Brexit SME Scorecard which in a matter of minutes will help you identify your vulnerabilities, enabling you to prioritise the issues facing you in the short term and start dealing with them one by one.
Evidence of exporting strengths
The good news is that at Enterprise Ireland we see first-hand how strong the exporting base is. When we first developed our Irish Advantage export promotion campaign, for example, which is designed to promote Irish suppliers to international buyers, we talked to existing buyers all around the world about why they were buying from Ireland and Irish companies in the first place.
The recurring response was that it was because of Irish business’s innovation, client focus and commitment to delivering results. We are bringing the Irish Advantage to business partners across the globe and despite the challenges we need to ensure that we don’t let Brexit interrupt the key strengths we are recognised for internationally.
Happily too, I can categorically state that Enterprise Ireland has never dealt with as strong a client company portfolio as it currently has. Irish companies are achieving international global sales at record levels.
The quality of innovation we are bringing around the world during the 207 trade missions and events we have planned for 2019 is simply outstanding.
Rest assured Enterprise Ireland is innovating too; opening new overseas offices, introducing new supports and increasing staff numbers to support Irish businesses expand internationally.
Significantly one of the new offices we are opening is in Manchester. This is because the UK, which is currently worth Euro 7.6 billion, is and will remain the number one market for Irish goods.
But with no currency volatility, total regulatory alignment, zero customs headaches and a market of 340 million people, it’s little wonder that diversifying into the Eurozone is now a priority for many of our client companies.
Our role is to facilitate them.
Our PrepareForBrexit.ie website, which was cited by the European Commission as an exemplar of advanced Brexit contingency planning by a Member State, has provided insight and guidance to thousands of companies.
More than 4000 SMEs have completed our Brexit Scorecard, while our Irishadvantage.com campaign, which showcases Ireland’s supply capability to a global audience, is live in 17 markets, actively promoting Irish companies across 14 sectors to international buyers.
Over 1400 companies are live on the website in a campaign that has already reached an international business audience of over one million people – and counting.
In the long term innovation is of course what will determine success and is something Irish businesses have a strong track record in. We just have to make sure we can deal with the implications of any potential Brexit induced customs, logistics, currency and funding challenges.
That is why the time for planning has given way to the need for action.
The supports you need are available and I would urge all companies to have a No Regrets approach to Brexit .While we don’t know what the outcome of the negotiations will be, if you become more competitive, more innovative and more diversified, irrespective of where the Brexit negotiations end up, your business will be in a stronger position for the years ahead.
This article was originally published in the Sunday Business Post.