KNOWLEDGE

Brexit won't change the fundamentals of business

Morton Fraser Chief Executive Chris Harte
Author
Chris Harte
Chief Executive and Partner
PUBLISHED:
14 January 2019
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Article

We all know the feeling when stress or anxiety in one walk of life spills over into another. Research has proven that when people are anxious about one issue, it lingers.

Worse still, anxiousness about one theme can cloud judgement in another. For example, if you’re worried about something at home you could take different decisions in business than might otherwise be the case.

If that sounds familiar to you personally, it is certainly familiar to Scottish businesses collectively. Ever since the independence referendum of 2014, the course of domestic politics has chipped away at business confidence. It hit rock bottom in the FSB’s latest business confidence index.

That concern for the future of our nation, both as a member of the UK and the EU, is perfectly valid. How many different decisions might have been taken, had Brexit or IndyRef not been part of the context?

The statistics suggest this lack of confidence has affected decision-making. Two in three small business owners across the UK do not expect to increase capital investment and one in five of those are actively decreasing investment in their firms.

The question is, should it impact day-to-day business decisions? Are there more pressing matters for businesses to tackle?

The irony of this situation is that Scottish companies trading overseas are actually weathering the storm. Scottish export of goods increased at a higher rate than any other part of the UK in the year to September.

If Scottish businesses can trade beyond their domestic borders so successfully, why the lack of confidence around Brexit? Yes, our future trading relationship with overseas markets matters hugely, but running a successful business is not beholden to those circumstances. Regulatory risk is just one of many risks.

The ICAEW points to marketplace competition and customer demand as two challenges currently preoccupying Scottish businesses to a similar extent to Brexit.

But those businesses who do not tackle those risks in the same way they are mitigating the impact of Brexit are contradicting themselves.

It is safe to argue to that changing customer habits and demands as well as the influx of technologically driven competitors are vital risks that require urgent attention. These are important changes throughout commercial life: the future of a business in Scotland looks very different now to how it appeared five years ago.

Businesses must tackle technological challenges, innovate continually and seek investment to fund those changes. Furthermore, a business must articulate its place in the world, its contribution to society, with greater clarity than had previously been the case.

These are the new fundamentals of modern business: leveraging the best technologies, adapting to change and contributing to society.

All these things help to build trust with customers – far more so, in fact, than showing how you will survive Brexit. Experience suggests that customer relationships are built on trust, so articulating how you are tackling some of these fundamentals is urgent.

Particularly in the context of Brexit, showing you are focused on your core business, on meeting the needs of customers, should be the number one priority.

However anxious you are about political change, don’t let that cloud your judgement – what matters to your customers should matter to you.

This article first appeared in The Scotsman.

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