By now even if you were unaware of Brexit before, you now know. If you are a small to mid-sized company not doing any international business, the Brexit may not impact you and you could well be perfectly correct. You also may be wrong, and a sensible person explores the ramifications just in case they are wrong.
Let’s start with what we now know; and never panic. Most pollsters called this wrong; so much for experts. If you are a boutique company doing business locally, with customers also selling locally, you may be fairly well insulated from this event. However your investment portfolio and hence liquidity that you need to help finance your operations may have already gone down as when there is uncertainly markets decline. On the sales side, even if you are a smallish local company, your client may be doing a fair amount of business (directly or indirectly) with foreign companies and US operations you service may have foreign ownership.
Having said that, what could happen if you have even some indirect sales exposure? Your goods will cost relatively more even if they are just a component to the European/UK end market customer and any other dollar denominated product such as oil, due to the increase value of the US$ . As noted, uncertainty is bad, people may cut back on buying goods and services “just because”. One more point, be prepared for opportunities (as well as risk) due to distressed situations. There may be black swan deals out there that we can’t predict, but once they happen be prepared to jump on them: great new applicants, distressed sales, business opportunities, etc. The answers are all the same: stay close to events and your customer and be prepared to act swiftly if needed.
To see all articles in this series please go to http://optimal-mgt.com/blog.