Is Your Caribbean-Based Business Ready for BREXIT?
Ask any of the government ministers, business owners, residents or hoteliers who saw Hurricane Irma and/or Maria wreck life as they knew it in September 2017 if they expected that level of devastation and I am confident the answer will be no.
The approaching British Exit of the European Union (BREXIT) should be seen in the same way. You don’t know what to expect.
No decision has been taken on whether there will be a two-year grace period for both sides to work out the details of a new arrangement. That decision should be known by October 2018. Any change from the current union will affect how you do business with customers in Britain and Europe, your supply chain and your cash flow.
If you have not already begun to prepare, it is time to call your team together and discuss worse-case scenarios and a map out your business continuity plan.
SCENARIO 1 – April 1, 2019, you need to ship products to a company in Germany but can no longer use England as your transshipment point for free customs access and duty. You do not have an office or staff member in Germany to manage the customs clearings and payments. Shipping your product to Germany will require separate customs forms and processes. Is there a broker who can manage this additional process for you to ensure your deliveries are made on time? Having to pay customs duty in Germany will mean needing cash on hand at point of entry. How is your cash flow? How much would you need to clear shipments and pay the broker?
SCENARIO 2 – April 1, 2019. You need to ship five boxes of your coffee or craft product to the UK. Before BREXIT, the UK and the EU had one trade standard. Will the UK retain the same standards now that it is no longer part of the EU? You will need to know whether this will be the case or what steps must be taken to keep your products in compliance with changes. New compliance regulations could mean investing in different packaging, labels and even ingredients.
SCENARIO 3 – How will your NGO acquire funding? It is no secret and an obvious reality that much of the work being done in the region by governments, multi-lateral agencies such as CARICOM and the OECS and smaller non-profit groups are funded through the European Union. Because of the region’s history with Britain, independent Caribbean nations and overseas territories have been able to benefit from the fund. Britain is a major contributor to the EDF programme, but this will end. Will the Caribbean still be able to access the funds without Britain there to act as our champion? The European Development Fund – EDF 11 round, from which the Caribbean will receive 24 million Euros for private sector development, ends in 2020. What steps do you need to take to ensure your organization will continue to do the work it is currently doing if we are no longer eligible for future funding?
SCENARIO 4 – BREXIT happens, pound drops. Barbados is the #1 destination for UK travelers according to their tourism and investment website. Smaller islands such as Montserrat and the British Virgin Islands also enjoy positive tourism numbers from this destination. A drop in the value of the British pound means less money for travel and when they do, history has shown they are more likely stay closer to home. In addition, while North America provides the highest number of tourists to the region, a drop in the pound makes visiting the tiny European island much more attractive than a repeat trip to the Caribbean. How will a change in the value of the British pound affect your tourist-based business? What will be your back up plan? Are you considering targeting travelers from South America and/or Asia? How would you go about this?
SCENARIO 5 – BREXIT is a business opportunity for your company.Look at your revenue streams and which nations contribute to them. If your clients originate from the UK or the European Union, do you have a plan to communicate with them that the services you provide to them will not be affected? If they will be, what steps are you taking to have continuity of service? Maybe you got very comfortable using the UK as a conduit, how could you attract new customers by exploring new relationships in other EU nations?
The BREXIT decision will affect the Caribbean and it is a reality which you need to consider if you plan to stay in business and thrive. It could also provide the impetus to make some necessary changes to your business which can open your business to more opportunities and new markets.
Here are a few things you should do to make more informed decisions:
- Talk to your local Chamber of Commerce or the ministry which handles of economic affairs to find out where your country is in the decision-making process of handling business post-BREXIT.
- Keep your staff informed of impending changes.
- Communicate with your suppliers to see how they may be affected by any new requirements and whether this will increase your expenses.
- Communicate with your customers about how you are preparing to deal with the changes and provide reassurance of the continuity of service.
- Read business and industry journals and research BREXIT toolkits to get information on things you may not have considered for your sector.