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GUEST BLOG FROM BEST YEARS: BREXIT PLANNING
Brexit Planning – A Parable of 4 Quotes
“It does not do to leave a live dragon out of your calculations, if you live near him.”
? J.R.R. Tolkien, The Hobbit
When I tell people that we are spending a fair bit of time planning for Brexit opinion is fairly evenly split between those who are also planning, those who aren’t planning because how can you with no deal agreed yet and those people who feel our caution is overstated.
It is interesting because no one would neglect to plan for Xmas but it’s a similar situation. You know the date, and you know it will have an impact on your business but you don’t know any more details than that. The big difference is that Xmas happens every year so we have all been able to build up the business equivalent of “muscle memory”
Brexit, on the other hand, is a one off that none of us have ever experienced before
The one certainty we have is that whether Brexit is a threat or an opportunity it is going to happen and it will have an impact on business. Therefore, like the proverbial dragon, it needs to be a major component in our plans for 2019.
“By failing to prepare, you are preparing to fail.”
? Benjamin Franklin
It's no secret that Best Years were badly caught off guard by the recession of 2008. At that time the majority of our customers were the major High St retailers ranging from Next and New Look to Harrods and Mothercare. When the crash came they looked to their suppliers for extra margin and extended payment returns and since we were both unwilling and unable to give them what they required we lost a huge chunk of our turnover in a devastatingly short space of time.
Our experience of going through a period of change without plans, and having suffered the consequences of the lack of preparation, we are especially sensitised to the implications of it happening to us again.
There is always the assumption that small business can turn on a sixpence. We can react quickly and efficiently to change because we are not overburdened by overheads and thousands of employees. Whereas this is true it is also true that changing costs money. You can still change without a budget but it takes time, time to change your products, or your customers, or your logistics or even the way in which you communicate your brand.
If we had more available money, then we would probably not be so adamant about our need to plan, but since we are a typical SME we have to substitute time for money and try to plan as far in the future as possible.
“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
? Abraham Lincoln
So how can we prepare when there is no plan yet?
The things which affect our business are pretty evenly split between those things we can influence and those we can’t.
We have no idea what the final Brexit plan will be or what impact it will have on the exchange rate. We don’t know whether Dover will seize up and turn Kent in to a car park, or whether there will be only minor disruption. And no one can tell what impact it will have on our economy.
What we do know is that 80% of our sales come from 20% of our product range.
Due to a software update in Felixstowe we know what a 4 week delay to deliveries feels like.
And we know the rate at which we need to buy dollars in order to maintain our prices.
Just these few key facts form the backbone of our Brexit plans.
We are planning to focus all our resources in to just 25% of our toys, stockpiling and over ordering our best sellers. It means that some of our toys will run out of stock during 2019 but it will ensure we have plenty of stock of our dinosaurs.
We have also decided that we must continue to bring in new products so that our ranges stay fresh, but we need to do this with a much tighter budget than normal.
And we are buying as far forward on the $ as we can. This may mean that we lose out if sterling recovers but will ensure that we have surity around our prices.
By concentrating on the things we know and the things we can influence we have been able to put together a plan which may not be perfect but does at least give us a certainty of where we will be taking our business over 2019.
“Plans are of little importance, but planning is essential.”
? Winston Churchill
There' s no point pretending that our plans will be foolproof.
We do not envisage that we will have thought of every consequence of Brexit or that our plans are 100% accurate. How can we if there is no plan from the government yet?
However being a small company we can be flexible and we will continue to think and plan for the future as we get more information and feedback.
Ultimately the plan is that we will position ourselves in a place where we will be able to pick up the opportunities that change presents rather than just fending off the unexpected.
To hear more from Best Year then visit their site here -