Guest blog post by Chris Torney, ABN AMRO.
It may still be unclear exactly what the impact of Britain’s departure from the EU will be, but there are still countless opportunities to grow your business.
The British economy has proved to be more resilient than many people expected in the wake of last summer’s referendum decision to leave the European Union. The latest gross domestic product (GDP) figures from the Office for National Statistics showed growth of 0.6% in the final three months of 2016, a fraction ahead of forecasts.
For many of the country’s businesses, the next few years will offer some uncertainty as the government negotiates the details of Brexit with the remaining EU members. But few companies can afford to sit back and take a wait-and-see approach simply because the future of the UK’s trading relationship with Europe and the rest of the world is unclear. Regardless of what is happening politically or economically in Britain, there are still numerous opportunities for growth.
- Target new export markets
Despite the Brexit vote, nothing has yet changed when it comes to our freedom to trade with the rest of the world. Indeed, the fall in the value of sterling since the referendum – a reaction to the expectation of ongoing low interest rates in the UK – means that British goods are now likely to be more competitively priced in overseas markets.
While a weaker pound means that some firms have seen the cost of raw materials and other inputs from abroad rise, it also presents a great opportunity to export. Since the referendum, the government has put a much stronger focus on helping businesses trade abroad, primarily through the new Department of International Trade.
There is considerable support available to help companies research new markets, meet potential customers and develop the most suitable export strategy. Look at the Great.gov.uk website [https://www.great.gov.uk/uk/] or contact organisations such as the Institute of Export [http://www.export.org.uk/] or the British Chambers of Commerce [http://www.britishchambers.org.uk/].
- Market to overseas visitors
You don’t have to sell your products or services in other countries to take advantage of the fall in sterling. UK-based businesses such as those in the hospitality and leisure sectors can look to advertise themselves to visitors from overseas, many of whom are currently finding that their local currency goes significantly further in Britain.
There are a number of marketing strategies that companies in the tourism industry can employ to attract foreign holidaymakers. These range from ensuring that your establishments are prominent and positively reviewed on services like TripAdvisor to teaming up with other businesses to market a particular area or region collaboratively.
- Develop new products
One of the most traditional ways to expand an existing business is by creating and marketing a new product. The process involved is very similar to setting up a company in the first place: you will need to research your market to see what potential gaps there are, have a look at what your potential rivals are doing, and work out how much it will cost to develop and sell compared with the revenues you expect to bring in.
Think also about how any changes in the UK’s international trading relationships could affect the cost of making your product: for example, today’s weaker sterling means that inputs sourced from abroad are more expensive. And if you are buying from EU members, bear in mind that the terms of trade could deteriorate following a final Brexit deal.
- Make an acquisition
As an alternative to developing new markets, you could consider buying an existing business that complements your own operations, thereby providing a more direct route to growth.
The two main challenges here are identifying the right takeover target and funding the purchase itself. You might decide to acquire a business that is similar to your own but which operates in a different market geographically; alternatively you might opt to buy a supplier in order to gain greater control of your supply chain and introduce new efficiencies.
In many cases, some form of credit will be required to finance the purchase. Many businesses consider asset-based lending to fund acquisitions: this can mean that the assets – such as property or machinery – owned by the company which is being bought can also be used as collateral for the loan, potentially making more capital available.
- Take time to think strategically
One of the keys to growing a business involves taking time to step back from day-to-day operations to consider what potential opportunities the company has to expand.
It is a common complaint among business owners and senior management that they are simply too busy to engage in this kind of strategic analysis on a regular or systematic basis, despite its importance. In some cases, it can be of particular benefit to seek an outsider’s view of the challenges facing your company, whether this is from an investor such as a business angel or venture capitalist, or a finance provider which is willing to work in close partnership with its customers.Blogactiv Team