What Brexit will mean for Irish companies
While a lot of uncertainty exists around exactly what Brexit will mean for the European trading landscape, Irish companies need to examine their business strategy now and decide where adjustment, if any, is needed. This is crucial if companies are to be in the strongest position possible in terms of managing the range of challenges expected as well as taking advantage of new opportunities.
One way or another, Irish businesses will have to deal with a new set of circumstances in the years ahead in relation to the UK. This means they need to take stock of their current position, consider the implications of Brexit and plan for every scenario in order to meet growth targets. An adjustment in business strategy could mean anything from deciding to take a different approach to the supply chain in the UK, to diversifying into new markets altogether or placing an increased emphasis on innovation to improve competitive advantage.
Over-dependency on the UK
This is an issue as there is a chance the UK economy could decline as a result of Brexit, which in turn means less demand for Irish companies’ goods and services. In addition, Brexit could mean less inclination to buy Irish products and services due to campaigns promoting British-made goods, such as the Red Tractor initiative for food and a possible drive towards a general ‘Buy British’ movement. From a strategic point of view, if you feel as a company that you are over-reliant on the UK you can act now by working on a plan to protect your existing business there while also exploring which other markets you could diversify into.
Uncertainty about sterling
The euro-sterling exchange rate has been one of the most obvious effects of Brexit so far. A lower sterling value directly impacts Irish exporters’ bottom line. You can pre-empt difficulties around the value of sterling by establishing what your break-even exchange rate is and considering financial instruments to provide a degree of certainty. Currency volatility may dictate the sourcing of inputs from new suppliers and/or importing through EU countries instead of the UK.
Brexit could mean increased and new competition from the UK and other international markets. To tackle this challenge, you can identify areas now where you can reduce costs and improve efficiencies. It is also important to gain a greater understanding of your current competition and develop differentiated offers.
For companies that source products from the UK, Brexit may present significant challenges. Potential delays at border crossings and costs associated with increased administration from customs and tariffs may have significant adverse effects on your business. Clearly understanding your supply chain from a Brexit perspective will help you understand which suppliers could have the greatest impact on your business. Once that is known, it becomes much easier to put contingency plans in place in the event of a hard Brexit.
People are often the key assets of a business. This is especially true for businesses that have a strong service element necessitating frequent employee travel. With Brexit meaning the potential change to the mobility and employment rights of staff, it is important as an employer to understand what steps can be taken now to provide advice to employees but also how this may impact a business’s ability to deliver to its customers.
When the UK leaves the EU it will be treated from a customs perspective as a Third Country. Customs declarations will be necessary for imports and exports and will add an increased administrative burden on the business. A customs capability will need to be built and the process managed accordingly to ensure the business meets its customs obligations. It is important to understand the impact that customs may have on your business by analysing the flows of imports and exports into your business. To support businesses dealing with customs for the first time, Enterprise Ireland’s has developed the Online Customs Insights course outlining the key customs concepts and processes for businesses exporting to, from or through the UK.