Future Proofing Your Business In The Run Up To Brexit (Part 1)
Earlier this week, I went to a breakfast seminar about how to future proofing your business, jointly hosted by accountants Hartley Fowler and solicitors Dean Wilson at their offices in Brighton. As I listened to the panel of speakers, I was reminded of one of my favourite business planning tools – the PESTLE analysis.
In case you’re not familiar with the term, PESTLE is a handy acronym which stands for Political, Economic, Social Technological, Legal and Environmental. A PESTLE analysis will help you to evaluate how each of these six macro-economic factors are likely to affect the performance and activities of your business, for good and for bad. You can then use this information to prepare and plan accordingly. A PESTLE analysis is often used in collaboration with other analytical business tools like a SWOT analysis and Porter’s Five Forces.
One of our most important jobs as business owners is to regularly evaluate which factors are most likely to affect our businesses – for better or worse. Then to come up with a plan to ensure our business thrives, whatever the prevailing wind. To ignore these factors is what the former CEO and author, Margaret Heffernan, calls wilful blindness i.e. knowingly failing to see and act on issues and problems that are in plain sight.
As a business consultant working with a new client, one of the first things we do is a PESTLE analysis to help us to better understand the current and future environment. I then use my CEO’s lens and experience to help my clients to understand what this means for their business and to put together a strategy that will take advantage of their strengths, minimise their weaknesses, capitalise on any opportunities and mitigate the threats and risks.
Without a doubt the most important political factor affecting businesses in the UK is Brexit. The problem is that we don’t know what kind of Brexit we’re heading towards, nor if, as I very much hope, Brexit will happen at all. I had a go at reading the runes in my previous article, Reading The Brexit Tea Leaves. But the fact is, future proofing your business amid this level of uncertainty is no easy task as there’s so much to consider.
The impact of Brexit on the economy is another factor we should consider seriously here in the UK. Earlier this month, the governor of the Bank of England, Mark Carney, warned there’s been a “sea change” in the world’s financial markets, driven by pessimism about the economic outlook. While a study by the Resolution Foundation think tank, Failing to Plan = Planning to Fail, made an alarming assessment of the nation’s economic health. The report states that uncertainty around Brexit coupled with the global economic slowdown have led to the highest risk of recession since 2007.
During times of recession, the cost of essential items such as food, fuel and utilities rises meaning that consumers (customers) have less disposable income to spend. These same consumers are often either heavily in debt or have little to no savings. As a result, they try to hold on to what money they do have, rather than spend it on non-essential items. Retail and manufacturing businesses are among the first affected, with downsizing the workforce a common solution. Next hit are their supply chains and the business communities where these companies are based.
If you’ve read this far, you may be feeling dispirited. After all, this doesn’t sound like much of a climate in which to be starting, growing and scaling a business! But please don’t be downhearted. I’m a great believer in being brutally honest about the reality of a situation while simultaneously remaining optimistic that if you plan and prepare, you can keep pace and maintain steady growth during challenging times.
Completing a PESTLE analysis will help you to understand the climate in which you’re operating your business. It’ll only take you an hour or so to list out which macro-economic factors you expect will affect your business. Armed with this information, the next step is to start making plans and preparations. Read Future Proofing Your Business In The Run Up To Brexit (Part 2) for next steps.
Meanwhile, if you’d like my help with your business strategy, drop me an email and we can arrange a time to discuss your needs and how best I can help you.
OVER TO YOU
Have you used a PESTLE Analysis before? Which factors do you expect to most affect your business? I’d love to hear from you in the comments below.
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