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Five telephone best practice tips for small businesses

Improve your phone practices with these five top tips for businesses from www.smallbusiness.co.uk

The vital role of the phone call for sales and marketing in most industries and sectors is self-evident; from restaurant’s bookings, to car dealership’s enquiries, to telecom’s call centres. And yet, businesses have typically been far slower in updating their phone practices for the 21st century than they have in online marketing efforts. While the online customer journey is tracked, recorded and refined, businesses are slower to take the same data-driven approach with the trusty phone line.

What businesses risk forgetting is that sales, particularly for bigger items or services, still often boil down to the telephone call. Across industries, data overwhelmingly suggests that inbound calls have higher intent and a higher value per sale than most online response mechanisms.

At the very least, neglecting their phones is leaving businesses with an incomplete picture, with a complete lack of data on customers that are phoning up. At worst, poor phone practice is putting customers off. It’s telling that recent watchdog research showed that 28 per cent of consumers find being directed to the company’s website is the most annoying phrase to hear while on hold.

Here are five top tips for businesses on how they can improve their phone practice:

Treat phone data like browsing data

It is widely accepted that web analytics is essential for any company operating online; businesses need to know how traffic comes to them, the search terms people enter to get there, what sites they visited first, and where they went afterwards. This insight is indispensable, and organisations are more than willing to pay a premium to get it.

Equal attention should be paid to phone interactions – where as much data can be collected on customer behaviours to inform business strategy. If the same level of analytics that companies invest in to understand their online channels isn’t applied to the voice channel, there will be a huge blind spot in customer information. Web analytics may reveal how customers found your information and what they looked at, but what happens to the trail when they pick up the phone and call?

Apply phone analytics to track your marketing investment

As part of a phone analytics solution, unique, trackable numbers can be assigned to marketing campaigns and media channels to provide insight into customer response rates. With this information, marketing can optimise the channel mix for the best return on investment.

Businesses should ask themselves whether or not they understand how people are calling their business, during what time of day customers are more likely to call, or even why they’re calling in the first place. This type of information is indispensable when it comes to allocating marketing budgets across all of the different available platforms.

Use analytics to improve call handling

Call analytics can also help organisations better distribute internal resources to maximise the value of every inbound inquiry. Using analytics to understand when the highest influx of calls will be, and what customers are most likely to be inquiring about, call handling can be improved through measures like increased staff allocation and training, and call management optimised to resolve each query through the best, and most cost-efficient channel.

This is especially important, as one of the results of the rise of digital is that the voice channel has emerged as the way to resolve more in-depth, complex queries. Phone interactions with customers, therefore, provide the opportunity for higher-quality conversations than those carried out by webchat or other digital contact methods.

Automate phone systems

On top of live analytics, technology is also readily available to automate the entire call process, ensuring no customers are missed. So far this approach has been adopted largely by the hospitality industry, for example, in the ability to make restaurant or hotel bookings using an automated phone system. However, it isn’t hard to imagine how a business in most industries – from a retail outlet to an estate agents office – could automate incoming enquiries to some extent, at least to handle calls while the office is closed.

There are multiple benefits to automating phone calls. Using hospitality as the example, restaurants can ensure that customer bookings are captured, whether there is someone available to answer the phone on the restaurant floor or not – a valuable use of resources when staff are having a busy night. Of course, this data is captured in the bookings system, but the information can also be analysed to provide insights into customers booking behaviours and needs, to help them further enhance the restaurant experience.

Take an integrated approach to customer data

The practice of integrating different data sources, for example, a restaurant’s online booking portal, its phone analytics, and it’s till system – will unlock a great fortune of actionable information for businesses. While each data set has its own intrinsic value, it is when the full customer journey can be drawn from beginning to end that businesses can really start being clever.

If an estate agent, for example, integrated its web analytics, phone analytics, and sales ledger it would be able to see how a customer found their website, which properties they viewed and which they called about, how many calls resulted in the final purchase of a property, and how much the property was bought for. By compiling the data for hundreds or thousands of customers, the estate agent would be able to pull out trends that could inform its strategy. Say it identified customers in a certain age range had been making phone enquiries from digital advertisements, and these had a high sales conversion rate. It could make a safe bet that increased digital advertising spend would result in more sales.

What’s vital to remember is the phone number is a part of a company’s integrated digital identity. With one on every desk, businesses have no excuse for allowing such an omnipresent business communications channel to become a sales analytics blind spot.

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SMEs fail to recognise email phishing attempts

The vast majority of SME companies are being fooled when it comes to phishing attempts, research finds. We are constantly informing our clients about the increase in online threats and this article from www.smallbusiness.co.uk affirms the concerns.

 

Results of a survey challenging respondents to spot fake emails used for phishing have indicated that 98 per cent of respondents (including a number of IT professionals) failed to recognise email phishing attempts.

The survey, conducted by IT services company, Conosco, targeted a select group of senior individuals across a range of SME companies, to gauge how well this ‘IT savvy’ group could identify increasingly sophisticated hacking attempts.

Some 70 per cent got more than half the answers right but only 6 per cent managed 100 per cent success, indicating that businesses remain exposed to risk. In fact, lack of staff awareness/training was highlighted as a significant security concern.

The ‘Real or Steal’ challenge involved participants judging a series of emails and trying to decide whether or not each email was genuine.

Out of the examples, most people (93 per cent) correctly identified a PayPal email as being fake. On the other hand, most participants were fooled by a phony LinkedIn message, with 63 per cent getting it wrong.

Phishing is an increasingly worrisome problem, particularly in the UK, as the annual Internet Security Report from Symantec (April 2016) points out.

In the report, the UK was ranked as ‘the most targeted nation for spear phishing attacks and ransomware in 2015’.

Max Mlinaric, managing director of Conosco says, ‘When there is a security breach in blue chip companies you tend to hear of it, and can wrongly assume large companies are most commonly targeted.

‘SMEs often present easier pickings for the hackers, as IT skills, security levels, awareness and sometimes personnel training are sometimes lower than in large companies which have deeper pockets. It is crucial that SMEs ensure their IT is as secure as possible, that complacency is battled and their staff are regularly trained in resisting phishing attempts.’

Read more from www.smallbusiness.co.uk

6 elements that make a winning team

We deal with all sizes of business and thought this is a great article from Business Matters Magazine regarding building a successful team and retaining great staff.

No successful big business owner is an island. You can keep a small business running by yourself, but if you are ready to achieve growth, then you need a team surrounding you.

Your team has to be the right for your business. Each individual needs to fit into your culture and they need to have the skills the company actually needs and that no one else on the team has.

Shweta Jhajharia of The London Coaching Group has spent 17 years coaching small businesses and has observed six elements that distinguish the truly winning teams from the failing ones.

Strong Leadership

It is important to hire team members who are better than in you the areas that they are hired for. This means as a team, you can achieve more. However, if you are unable to lead them and direct the flow of that team work towards the goals of the business, their strengths will be either unused or wasted.

A Common Goal

No matter what your skills as a leader, if you do not know what path you are leading them down, you are not taking them down the most successful route.

Everyone on your team should know, clearly and precisely, what they are aiming for individually, and how their goals contribute to the larger goal of the business. 

Rules of the Game

What you are aiming for here is a “loose-tight culture”. You should set some clear boundaries for what is acceptable and then within those boundaries, the culture should be loose and innovative. The best teams have the room to be creative, to take risks and to try new things, while keeping within limits of what is non-negotiable in order to ensure that innovation is directed towards results and not wasted energy or worse, negative outcomes. 

Action Plan

Knowing where you are headed is different from knowing how you are going to get there. You are not managing a team, you are managing their activities. This means you need to lay out a plan for the business and then, importantly, share that plan with your team. Sit down with them and run over how that cascades down to each of them. Where are their responsibilities? What are they accountable for? What do they have ownership of?

Supporting and Encouraging of Risk Taking

You have to let your team know that it is ok to try something new, take a risk, make a mistake – have fun. We want to enjoy our work and doing the same thing over and over is not going to achieve that. In fact, growth more often than not comes from your motivated employees seeing opportunities that you may have missed otherwise. 

Effective Management

The final element is understanding that management is what pushes a team forward. Leadership pulls a team together, but it is through management that you accelerate them.

The distinction between management and leadership is an important one that many business owners miss. In a nutshell, management is about making sure that the preparations are in place, that the systems are operating properly and that the proper leverage is being obtained to drive the team and the business forward.

Where your leadership is in explaining to your team WHY they are doing what they do, your management comes in when you are explaining to them HOW they are achieving the goals of the company.

There are, of course, hundreds of elements that affect how and why a team fails or succeeds. However, by keeping a focus on these 6 elements, you will build a very strong foundation for creating the kind of team that scores goals and wins results for your business.

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Data on staff at 280 UK firms may be at risk after Sage breach

From The Guardian : Accounting, payroll and payments software company says internal login was used to gain unauthorised access.

Sage, which provides accounting, payroll and payments software for businesses, has released a statement saying that an internal login had been used to gain unauthorised access to the data of some of its British customers.

The personal details of the employees of about 280 British companies were potentially exposed in the breach, a company source said. “We are investigating unauthorised access to customer information using an internal login,” the company said in a statement.

“We cannot comment further whilst we work with the authorities to investigate but our customers remain our first priority and we are speaking directly with those affected,” it added.

Sage, one of Britain’s largest technology companies, said it has more than 6m small and medium-sized businesses using its software worldwide. It operates in 23 countries but this incident is said to have only had a possible impact on customers in the UK.

The company said last month it was confident its revenue would increase by at least 6% in the current year ending next month, continuing a pace set in the six months to the end of March, when revenue rose 6% to £747m.

The Information Commissioner’s Office, which enforces the Data Protection Act, has been informed and the incident reported to the City of London police.

Last year almost 157,000 TalkTalk customers had their personal details hacked in a cyber-attack on the telecoms company. The hacking attack took place on 21 October and the company later admitted it had lost 101,000 customers and suffered costs of £60m as a result.

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New Insurance Act is upon businesses

An article on smallbusiness.co.uk looks at the biggest reform to insurance for more than a century has almost come into force but businesses are being warned to ensure that they do not fall foul of the changes.

The Insurance Act, which affects all new contracts from August 12 onwards, introduces a more policyholder-friendly regime. Billed as good news for business, the Act addresses the imbalance in rights and remedies, currently in favour of insurers, and provides enhanced protection for policyholders who all too often are tripped up by the onerous obligations presently found in commercial policies.

However, according to Garbhan Shanks, partner and head of insurance and reinsurance at Michelmores, businesses must keep their eye on the ball if they are to benefit.

Shanks says the Insurance Act fundamentally changes the way insurance is underwritten and corporate policyholders need to be fully aware of both its implications, and their duties, otherwise they run the risk of not having policies in place which will properly respond to protect their business and employees.

‘A fair criticism of many boards of directors is that they do not tend to engage much with the business’ insurance programmes, unless and until of course something goes wrong and there is a problem with the insurance responding for the company, or indeed themselves,’ Shanks says.

Boards should be currently overseeing that the correct systems and controls are implemented internally so as to collate the necessary disclosure information for insurers, he adds. If they do not, and a substantial loss occurs to the business where insurance cover is invalided or limited due to a failure to comply with the new regime, the spotlight may turn on directors.

Be prepared for the Insurance Act
‘Some businesses are still completely in the dark, whereas insurers are very well-prepared for the introduction of the Act. It is in their interests to have claims fail and businesses need to be careful not to trip themselves up by failing to comply with the new requirements,’ Shanks adds.

Under the Act, businesses will be subject to new more onerous disclosure obligations and will have to make a ‘fair presentation of the risk’ to an insurer before entering into a policy which requires them to either disclose every material risk which they know or ought to know; this will now require businesses to undertake a ‘reasonable search’ for information both inside and potentially outside its organisation. Failure to do so could result in claims failing and significant financial risk.

Shanks says, ‘The best thing is to open a dialogue and engage with insurers now to seek commitments from them as to what information and searches will be satisfactory from their perspective; that will hopefully bind them in to an agreed process and reduce the risk of any later arguments that the policyholder failed to give a ’fair presentation’.’

The experts’ step-by-step guide to cyber security

A very interesting article from The Guardian online regarding Internet security and how your business can be more informed and less likely to get breached.

Where does cyber security fall on your to-do list? If it’s not a priority, it should be because 60% of small businesses suffered a breach in the year leading up to October 2014. The worst of these breaches disrupted operations for an average of seven to 10 days.

Where can I educate myself about cyber security?

Not all small firms will have the budget to outsource their online security. The panelists pointed out that it is possible to get advice for free:

What risk assessments should I carry out?

The most important thing is to make sure you understand what data and information you hold. “What are the crown jewels within the business?” asks Del Heppenstall, who leads KPMG’s cyber security teams across the southern and midlands regions. “These could be IP, financial, customer details, employee records – once you have a handle on what it is that is important to your business and where you store this data, then you can begin to assess the threats and risks that these information assets will be open to.”

Business owners should also take a look at their digital assets, such as domain names and trademarks, and ensure they have “secured all of your brand names with more common domain suffixes”, says Stuart Fuller, director of commercial operations and communications at NetNames. “You can also see if any third parties have registered domain names using your business trademark or brands that could be taking away website visitors (and potential revenue).”

You can do a simple domain name search using www.who.is, to see if domain names are registered.

How can SMEs instil a culture of information security in the workplace?

It just takes one person clicking on a dodgy link to put an entire enterprise at risk. Training staff to follow cyber security procedures could save you a lot of time and money in the long run. Emma Philpott, CEO of the IASME Consortium Ltd, suggests the following:

  • Include cyber security elements in staff contracts
  • Implement training for staff about the basic controls and why they need them
  • Hold regular discussions about what the threats and risks might be and how these change over time

Other suggestions included launching a safe phishing campaign to track improvements following training and developing an acceptable use policy.

Should small businesses dissuade staff from bringing in their own devices to work (BYOD)?

Allowing staff to bring their own devices to work is often more affordable than buying company equipment, but businesses need to have a BYOD policy. As a minimum, devices should have anti-malware on them and be regularly patched, says Philpott. “Ideally they would also be encrypted, capable of being tracked and remotely wiped but then there may be issues about who owns the data.”

You should plan ahead for if a device goes missing. Stephen Hind, who provides cloud solutions consultation and implementation for DrPete, says: “All the big cloud providers offer mobile device management so if a device does go missing the company can wipe the account from the device. If you cannot do this you need to ask yourself the question of how you would cope in that scenario.”

There are other ways that risks can be mitigated. Dr Stephen Moody, solutions director for EMEA at ThreatMatrix, says: “If, for example, users are connecting to business assets through a web portal then services can be run when users connect to check for malware on the machine and also provide additional frictionless authentication protection (if, for example, a fraudster has gained access to a staff username and password). This doesn’t require anything to be installed on the user’s device.”

What’s the best way to make sure that remote workers do what they can to avoid a breach?

With more businesses offering staff the option of home and remote working, avoiding a breach can seem out of your control. Panelists suggested activating a two-step verification process to sign in so users do not rely on a “static password”.

Remote workers should also be aware of who is working around them in a public space. Privacy screens can help shield your computer from prying eyes. Users should also be aware of the public spaces they use to operate online, specifically using open Wi-Fi connections.

 

Flexible workplaces advocated for Olympics period

We found this good article on smallbusiness.co.uk where businesses have been urged to engage with their workforce and consider introducing flexible measures to discourage ‘sickies’ during the Rio Olympics.

The four-hour time difference means that many of the biggest events of the Olympics are scheduled to take place during normal working hours and early hours of the morning, tempting employees to skip work or stay up later than normal to watch Great Britain’s gold medal hopefuls in action.

Subsequently it is highly likely that the Olympics will trigger a wave of last minute holiday requests, higher levels of lateness and sickness absences, dips in productivity caused by tiredness, plus a surge in internet usage as employees try to keep up with the coverage, according to Vanquish Integrated People Solutions.

Nick Whiteley, general manager at the organisation says that sporting events can often have a massive impact on staff attendance but with the Rio Games taking place at the height of the summer holidays, when organisations are already short-staffed due to school holidays, the impact of staff absences could be devastating.

‘As the nation gets gripped by Olympic fever and employees realise that many of the gold medals will be decided in the early hours, managers need to brace themselves for an influx of last-minute requests for days off and the possibility of staff arriving to work late and a little bleary-eyed after their late night antics,’ he adds.

Although the Opening Ceremony is just two days away there’s still time to put a policy in place to support employees who wish to watch the Olympics.

‘A quick consultation with staff members will help managers gauge interest in the Olympics and put necessary plans in place to avoid disruption and maintain productivity levels.’

Offering employees the flexibility to work from home or make up lost time at the beginning or end of another shift is a simple way to improve staff morale.

‘If it’s not feasible to offer flexi hours due to the nature of the business, encouraging staff to swap shifts could be a suitable alternative,’ Whiteley says.

‘Failing that, managers could bring a TV or radio into work or relax their rules surrounding Twitter and internet use in the workplace so employees can keep up with the action.’

He adds that, whatever measures organisations introduce, managers must clearly communicate their arrangements and boundaries to employees to discourage sickness absence, apply the rules fairly and consistently so not to discriminate against individuals and enforce their absence policy by tracking lateness and sickies.

Five Ways to Grow Your Business

We found this article on smallbusiness.co.uk and think it just reminds businesses on the areas to focus:

Beauty is in the eye of the beholder, but it’s safe to say there’s one trait that’s attractive to all business owners: profitability.

Any entrepreneur knows that getting your business off the ground requires a lot of time, research and investment. Once your business has established itself and you are finally making a profit, you might want to start thinking about how to grow your business to the next level. There are many possibilities for doing so, depending on your business, your resources and how much hard work and money you are willing to invest.

1) Increase sales to existing customers

Perhaps the easiest way to boost your sales is to persuade one-off or infrequent customers to buy more regularly and become repeat customers.

To do this you need to keep on top of who your customers are and what they bought previously so you can target them effectively.

When they make their first purchase ask them if they mind having newsletters and special offers sent to their inbox. This gives you a reservoir of customer data to target with marketing messages, which you can tailor to particular segments depending on what they’ve purchased previously (for example, you could target those who’ve bought a PlayStation games console from you with PlayStation games).

Another option could be seeking out lapsed customers (those who used to buy from you but have stopped) – have they been swayed by your competitors?

If so, think about how you can win them back. You could introduce loyalty schemes or discounts for bulk orders to win these customers back as well as to attract new customers.

2) Attract new customers

You need to attract new customers to really grow your business. Central to achieving this goal is increasing awareness in both your local area and further afield – for example through an SEO campaign or advertising in relevant offline and online media.

In our social-media-obsessed society, it’s never been easier to use the internet to your advantage. Read our guide to social selling and how to use it to boost your sales.

Another way of drawing in customers is to talk to your target demographic and find out what it would take for them to buy from you rather than your competitors. To this end you could ask them to complete a survey in your newsletter and at the point of sale, whether online or in your store.

Reviewing your prices and assessing them against the prices set by your competitors can also be an effective way of increasing sales.

However, it is also worth keeping in mind that while discounting your prices might increase sales, it will adversely affect profits if you cut prices too drastically.

3) Improve

Improving your products or services is a sure-fire way to grow your business.

Word-of-mouth recommendations are one of the most invaluable forms of advertising. The rise of the online reviewing culture means that good value and high standards are rewarded – and poor service punished – more than ever before.

Customer feedback has therefore become an even more integral part of improving your offering. So check reviews on, say, TripAdvisor if you’re in hospitality or relevant sites for your industry, take your customers’ criticisms on board and adjust your product or service accordingly.

However, it is also important to weigh up the pros and cons of making these changes. A minority of customers might claim, for example, that your shop is short-staffed, but hiring extra staff may simply be financially unaffordable.

4) Diversify

Many small businesses are one-trick ponies, with a single product, service or group of customers, and this can be good for start-ups that want to focus their time and energy on doing one thing perfectly.

But as your business grows, so do the opportunities. Diversification can be a great growth strategy, not just for growing revenues but for spreading your risk too. For example, if demand for your core product or service suddenly drops, then you have other revenue streams to fall back on.

Diversification can be done in a number of ways:

  • By selling products or services that naturally complement your existing ones (like if a nail bar hired a masseuse or a laptop retailer introduced a repair service)
  • Adapting existing products, or how they are marketed, to appeal to a new group of customers
  • Selling your products or services online for the first time
  • Or selling/exporting your products or services to a different region or country (increasingly doable for online retailers, while selling the master franchise for an overseas territory is a cost-effective option for offline businesses)

5) Open another location

When business owners think about growth, opening another location is often the first thing that springs to mind.

However, you need to make the decision based on what is best for your business – and this might not necessarily be what’s best for your personal finances in the short term.

It’s perhaps not wise to open a second location until your first outlet is profitable and running smoothly. You also need enough capital to make it happen.

If you do take the leap then make sure you do your research. Stay focused on your bottom line, choose your location carefully based on demand for your product and the level of competition in that locale and ensure that you have well trained and prepared staff in place – including a manager you can trust and rely on – before you launch.

How to stop late payers causing a cashflow crisis

Charise Marsden, debt recovery manager, at Keeble Hawson writes for smallbusiness.co.uk on how business can prevent late payments causing a cash flow crisis for your business.

Late payment is the most common reason for a cash flow crisis in businesses. If a number of customers, or even one big customer, fall behind there can be a far-reaching, destructive domino effect right down the supply chain.

The detrimental effects can also impair growth and spark redundancies. Cash flow problems are the number one cause of business failure.

It is therefore vital that suppliers are aware of how to prevent or tackle the different reasons for late payment of undisputed debt.

With some organisations it’s simply unofficial policy: they pay in their own time and if suppliers don’t like it, they can find new customers. So, if you don’t want to be prey to the whims of a stubborn financial director, always do your research – client knowledge is everything in credit management.

Legal status of customers

Rigorously check the name and legal status of each new customer, conduct credit checks and demand references from their existing suppliers before deciding whether they are likely to be a reliable payer or not.

Other businesses could be paying suppliers late because they may genuinely have a cash flow problem due to being one of those dominoes hit by another bad payer.

However, worries about their reputation and credit references often stop them being upfront about their difficulties and they may run through myriad excuses such as admin problems, staff absences, IT glitches, and the old chestnut ‘payment has been sent – hasn’t it arrived?’

In these situations it is important to remain calm. Avoid rushing to sour what could continue to be a profitable commercial relationship for years to come with threats or a leap to litigation.

Court action is the most expensive route to recovering outstanding payments and is also a public exercise, which might prompt dispute and counterclaim. All that aside, it is often unnecessary.

Much of the time, the difference between resolution and rancour is effective communication – and engaging a good debt recovery team can be the deciding factor.

Its professionals will talk to the debtor, emphasising that they want to find a discreet solution outside court. And once faced with their involvement and their stated objective of helping, rather than hounding, the customer often opens up – discussing frankly and confidentially issues it had been so reluctant to air previously.

As a result, a mutually beneficial arrangement is brokered in most cases. This might see the debtor being given more time to raise what is owed, or establishing a repayment plan that suits both parties.

There are times when the only choice is litigation.

In these circumstances you will have to decide whether it might be better business to write off the debt: it boils down to whether the recovery costs justify the amount owed.

While proceedings should be a last resort, be prepared just in case – which means always having access to the evidence created by scrupulous recordkeeping. Put every agreement and amendment in writing and know where you stored them.

Written records can vindicate a claim, whereas the memory of a verbal contract may not.

The best chance of preventing/recovering late payments is summarised in three vital steps – know your customers, keep a written record of all your dealings and secure the right support when problems occur.

 

Brexit and the road ahead for small businesses and sterling

In this piece taken from www.smallbusiness.co.uk, Jonathan Watson discusses how businesses should plan for the future following Brexit and its impact on sterling.

Theresa May, new prime minister, has said ‘Brexit means Brexit’ and now it’s time for businesses to start planning for it. We have already seen some big movement on sterling exchange rates but what is next and just how can businesses plan for the future?

Brexit has had instant drawbacks, notably the plummeting value of sterling from the economic shock, and prolonged uncertainty until it is clear what it actually means. The positives are less tangible at present but a weak pound, whilst not overly positive for the UK, makes inward investment in the UK more attractive and allows businesses to explore new markets with a lower cost base.

The success of Brexit will be largely determined by the deals struck between the UK, EU and countries overseas, coupled with the reaction and willingness of business leaders and people driving the country forward. As 99 per cent of UK businesses are small and medium-sized enterprises (SMEs) it is vital they are supported as it is their success which will provide stability for the UK on this bumpy road ahead.

Brexit and the bumpy political and economic road ahead

Theresa May has committed the UK to Brexit helping a light rebound from sterling’s slides of 13 per cent against the Euro and 15 per cent against the US dollar. There are always winners and losers from large currency fluctuations, however let us look at how sterling will react and the impact on business.

To make important investment decisions business leaders and decision makers need confidence about the future. I expect the pound to react in a similar fashion as prior to the EU Referendum reacting to the headlines and rising on good news, falling on bad. The Bank of England is likely to pencil in interest rate cuts for August and markets widely expect an expansion of quantitative easing (QE) too. The last time the Bank of England cut interest rates and initially launched their QE programme was in 2008-09 when the pound dropped to near parity with the euro.

An important bone of contention in this new relationship is access to the single market and allowing free movement of people; there are no deals to achieve access to the single market without allowing the free movement of people. The only example is the Swiss who voted in a 2014 referendum to restrict free movement, however the implementation of this failed due to the EU stating that doing so would result in Switzerland losing access to the single market.

Article 50 is the legal mechanism for leaving the EU and it states that in any deal the member who is leaving is not party to the negotiations. Ultimately it is for the EU to propose a plan which Britain has to then accept or reject. Until a new deal is agreed, the UK has a cloud of uncertainty hanging over it which will prevent and limit investment and reduce business confidence to take key spending and employment decisions.

With so much uncertainty as to what type of deal the UK gets and with the Bank of England poised to act to stimulate the economy we now need to look at the implications of a weak pound and what business can do to manage the shifts.

Is a weak pound good or bad for the UK?

The answer is that it depends on individual circumstances. Any UK manufacturer importing raw materials from the Eurozone has seen their cost base jump by 13 per cent since the EU Referendum. Most companies could not just absorb 13 per cent increase in costs, and profit margins would be hit. On the other hand, if you were a film producer whose production company has many US-based clients you have just been given a 15 per cent pay rise; the recent movements would have worked in your favour. Significant exchange rate fluctuations also affect companies in the production chain or businesses located near to the primary business impacted. An example could be an IT business whose main client is a local manufacturing business that is heavily reliant on importing raw materials from the EU. The IT business has no direct exposure to currency fluctuations however they could potentially lose their main customer because of currency shifts.

A weak pound is likely to be the result of financial stress and loss of confidence in other areas which causes negative impacts on the economy such as the loss of jobs, less confidence and reduced spending in the economy. Using UK export data from 2008-2009 (when sterling was at its weakest in recent years), Gross Domestic Product from the same period and finally the value of sterling, it shows that a significant fall in the value of the pound did not have a significant impact on increasing exports and improving GDP.

A weak pound gives a great opportunity for businesses to explore new prospects overseas and in different markets. With the pound likely to err on the weaker side for the next few months and perhaps beyond, now is the time to take advantage of a discounted UK. This has already been seen by overseas investors with the stock markets rebounding and some London-based estate agents reporting an increase in demand following the referendum.

How can businesses manage such risks?

Communication with key suppliers and customers in terms of exchange rate implications is important. Foreign exchange brokers will provide useful orders to help businesses plan and secure costs in advance utilising contracts such as ‘forward contracts’ where one can fix a currency rate in advance for a period of up to 18 months or more. This tool is available for both buyers and sellers of currency allowing exporters paid in a foreign currency to lock in current buying sterling rates to guarantee profit margins. In such cases it really does pay to be prepared; we have had many cases where certain businesses have not made firm plans on their currency exposure and have been caught out with a much increased cost base.

Exchange rate clauses in contracts are vital to avoiding difficult and potentially embarrassing conversations down the line that could disrupt further business opportunities.

Conclusion

The new deal is critical to the success of Brexit since access to the single market is vital to the UK economy. It helps support the SMEs that make up over 99 per cent of the UK’s businesses. While not all of them are exporting to the eurozone, any barriers to trade will have a negative impact on the ones that do and this will have wider economic consequences.

Looking at the Bank of England’s commentary, businesses should be preparing for rates to fall lower but also embracing and planning for new opportunities moving forward. The UK’s overseas suppliers and customers have not disappeared since June 23rd. Extracting the full potential from these relationships requires a strong government, some tough negotiating and an all-round tenacious determination to make it work.

Let us not forget that business leaders have been here before, we have only just picked ourselves up and dusted ourselves off following the financial crisis. From an exchange rate perspective, we have gone back about three years with most sterling rates including GBPEUR back to rates last seen in 2013, however the dollar of course is the exception having hit a 31-year low.

Businesses need clarity, simplicity and certainty. Unfortunately it will be many months and perhaps years before we get this certainty. From an exchange rate point of view, the pound could fall further so businesses should be braced to deal with it and making plans to use it to best exploit the future opportunities Brexit will offer.

Jonathan Watson is chief analyst at currencies.co.uk.