Why the right advice can safeguard new ventures after Brexit
Friday 5th August 2016
The UK’s impending departure from the EU following the Brexit vote has led some business ventures to temporarily halt while investors and entrepreneurs take stock of the situation.
The uncertainty around what the referendum result means for the UK has understandably resulted in an air of caution across many sectors, and leisure and hospitality is no exception, with business owners keen to safeguard their existing properties and tread carefully as they move forward.
However, despite some analysts’ expectations, the reality is that the Brexit vote has actually caused comparatively little disruption, particularly now the dust has settled and markets are less volatile.
I highlighted this in a recent blog looking at why the results of the EU referendum may actually be good news for the leisure and hospitality sector, particularly in tourism hotspots, but the truth is that opportunities in all areas will remain.
Proceed with caution
The key will, of course, be caution – something we saw in the wake of the 2009 recession, which caused a deep-seated level of uncertainty, but which still saw many businesses continue with growth plans. Although talk of another recession seems to be premature, there is no harm in adopting an approach that takes into account all potential factors.
Taking the right advice will be essential in safeguarding any new ventures; while broader business plans can certainly remain in place, some changes may need to be made to the way in which these plans are achieved.
Figures in July revealed a 0.6 per cent rise in GDP, after a 0.4 per cent rise in Q1, meaning 14 consecutive quarters of growth in the UK. It also put to bed some rumours of a major dip in the nation’s fortunes.
It must be noted that the figures will only be affected by a week of post-Brexit activity before the end of June, with the third quarter figures likely to be more telling, but the general sentiment from the government and sector leaders has been the same – if business continue to invest, the effects of the referendum vote will be muted.
The conundrum for the leisure sector is that consumer behaviour plays such a significant role; business sentiment will only go so far, and ultimately the habits of consumers will determine whether venues are successful and whether expansion is feasible and potentially lucrative.
Following the recession, consumers engaged in a significant amount of belt-tightening, which extended to how disposable income was spent. A broad move to eating and drinking indoors would certainly impact the sector, but as I recently explained – with the aid of Visit Britain figures – there appears to be little sign of a slowdown in the leisure and hospitality sector.
The key for business owners, then, will be weighing up potential consumer activity against business development plans and gauging whether the two are still in parallel.
The challenge, as ever, is to remain ahead of the competition in terms of identifying new avenues for growth and prosperity, while minimising risk.
So far, banks and lenders have been bullish about the impact that Brexit will have on the sector and their own businesses. Understandably, many pubs, bars, restaurants and hotels; had expressed concern about whether the uncertainty created by the referendum result would lead to restrictions around lending, but this does not appear to be the case.
On the contrary, any dip in fortunes has simply been a reflection of the economy in general waiting with bated breath. Even though the Brexit result was widely against expectations, assurances from the government, overseas businesses, suppliers and trade partners about future agreements means that any hesitancy has only been temporary,
Chains in particularly appear to be buoyant about their prospects for the months and years ahead, but small businesses will also have the opportunity to exploit gaps in the market, particularly if some of their closest competitors are happy to sit back and wait.
As always, it will be prudent to take advice about any venture before embarking on it, but – as with any sector – the impact of Brexit does not mean doom and gloom, and may even create opportunities for businesses willing to forge ahead.
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