Conventional business school wisdom tells us that in time of major change it is not the strongest, fittest or fastest that survive - it is the most adaptable and the most innovative.
Dependent upon your beliefs, major climatic change ended the rule of the dinosaurs, and whilst Brexit doesn't compare with those events (at least for most people), change is certainly happening, and we will need to adapt and innovate.
So whilst undoubtedly the next few years will not be as calamitous as it was for the dinosaurs (hopefully!) what can we do as business men and women to ensure that we are innovative and adaptable enough to survive change? Here are 5 suggestions that might be of use.
Keep your European partners close
Europe currently accounts for 45% of UK exports and 52% of our imports. Just because we have agreed to leave the EU we should not turn our back on our largest single market and nearest neighbours.
Now is the time to strengthen ties with our European partners, and, in particular, forge strong bonds to help us negotiate and survive what might be changes to our political relationships in the future. If you already have European partners make sure that they are feeling valued and that they do not automatically look elsewhere for their goods and services.
Find new friends in Europe!
With exchange rates as they are, look to expand your current distribution in Europe. UK goods are still highly attractive across Europe and Scandinavia and whilst we still have free access, now is the time to broaden your scope to see if new opportunities are open to you. If you have not exported before, now is a good time to explore the options. There is a great deal of quality support and advice out there from UK Government for both first time and experienced exporters - take advantage of it!
Revisit your business model
It is likely that future changes in duty and legislation will mean future unplanned costs for importers and exporters. Check that your existing business model is adaptable to meet future cost changes in raw materials, duties and freight etc.
Whatever market you operate in, you will still need to ensure that your marketing, labelling, testing, approvals and packaging meets in-country requirements and this will probably come at a cost.
If you are concerned about calculating what future tariffs might mean to your cost base and sales price; essentially we can revert to the World Trade Organisation (WTO) as a default position.
That is to say that in the absence of a regional trade agreement, such as our current membership of the EU, then the tariff that applies to the ‘most-favoured nation’ (MFN) would apply.
You can look at the European Commission’s Market Access Database or the WTO’s Tariff Download Facility to see what a particular country’s MFN rate is for a product - but you would have to drill down into more detail about your own specific products and you will need at least the four digit tariff number to check.
Get acquainted with export documentation requirements and build a skills and knowledge base to address new markets
We are all being encouraged to explore new markets. In itself this is good advice, however, as I mention in points 1 and 2 don’t forget the easier to access local markets first!
In exploring new markets you will need to understand the implications and requirements of export documentation, duties and risk. Consider which new markets might be suitable for your goods and services and start to list all the issues you need to become familiar with how to operate in those markets.
Create some skills, knowledge and processes in your organisation to support export and invest in your staff to go on familiarisation and training courses around export issues.
Consider non-tariff barriers and the WTO
The interesting thing here is not the tariffs themselves, but non-tariff barriers.
For example, with food products, a company may have to provide additional documentation or undertake additional testing to operate in the EU or new markets.
In the services sector, a company may not be able to operate if their qualifications are not recognised. A firm of UK patent attorneys would find it difficult to carry on their business in the EU if their UK qualifications were not recognised.
There are dozens of examples of how non-tariff barriers can make it difficult for one company to trade in another country. Ensure that your business is adaptable to any revised legislative changes.
N.B. ensure that your intellectual assets, i.e. trademarks, designs, patents and copyright are all fit for purpose when considering new markets!
Allegedly, after the rule of dinosaurs, various species of small furry mammals started to emerge from the carnage. These - our ancient ancestors - have evolved over time into life as we know it today. So let's not mourn the loss of the dinosaurs but celebrate the arrival of the inheritors of change!
If you would like more information on import and export, how to strengthen your ties with existing markets or how to discover new partners in new markets please don’t hesitate to contact us at Business West.
Business West manages on behalf of UK and Europe a number of programmes providing information, coaching and trade opportunities for existing or potential exporters and companies wanting to establish international presence.
As I like to say to anyone who will listen, innovation is not about guys in lab coats with Bunsen burners - it is about identifying and implementing change in your business and your markets, it is about developing new processes, finding new markets and introducing new ways of conducting business in order to succeed.
Innovation means being disruptive, thinking differently, embracing change and commercially exploiting your ideas to drive wealth.
Let us know if we can help support you with your business challenges help you innovate in order to succeed.
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