Businesses defy Brexit and Covid with international expansion
The downbeat market predictions and the continuing uncertainty of further lockdowns and Brexit leaves many businesses bracing themselves for a rocky 2021. But accountants are already hatching plans to beat Brexit and Covid.
In the last eight months, accountants and companies have endured new furlough schemes, lockdowns and now have to contend with the Brexit-related VAT and customs headaches.
But the speed in which these companies have responded to change has encouraged some practitioners and businesses to see the upheaval of Brexit and Covid as an opportunity to hit the reset button and even expand internationally.
This theme will be explored next week in a webinar with World First and AccountingWEB.
The Covid and Brexit pivot
Simon Smallwood from World First has seen first hand how the upheaval of the virus has forced businesses to innovate. He also sits as a non-exec director of a business that trades internationally and has had to make a lot of changes in the last eight months.
“If you ask business owners in that situation, whether or not they thought they would handle the level of change that they've experienced in the last months, a lot of them might be pleasantly surprised,” he said.
Smallwood points to examples of businesses that have pivoted their business model since the virus levels intensified, such as manufacturers that switched to making PPE equipment. “They were able to see how quickly they can go from developing the concept to getting those products to market,” said Smallwood.
A ‘kick-start’ moment
Alastair Barlow, the co-founder of flinder, also sees Brexit and Covid as an opportunity for accountants. “While there are undoubtedly admin headaches becoming Brexit ready this will also be an opportunity for many businesses and certainly an opportunity for accounting firms to get closer to their clients, or for the CFO and finance teams to shine, be more involved with the business and add value to stakeholders,” he said.
Barlow refers to this moment as a “kick start”. “Rarely does a business owner wake up one more and review or completely overhaul their business model; typically it’s a new senior member of staff bringing in experiences, an acquisition or indeed external factors such as political, economic, technological or legal factors that drive the need for change.”
Warren Munson, the founder of Inspire, also referred to the joint force of Brexit and Covid as a chance “to stop, reflect and reset your business or your practice”. But the regulatory nightmare that awaits accountants and businesses is going to root out those that go with the flow. “There are only a few times in history where you get that restart moment. And for me, 2020/2021 is that reset moment to actually go through your business in detail and reflect on all these things that are happening and make a difference or make a change.”
For these accountants, one key area they’re advising to overcome the fallout of Brexit and Covid is through international expansion. “I think we've seen more and more businesses look at the global stages as a much smaller environment,” said Barlow. “Notwithstanding some of the things to navigate to get there, but anyone in a bedroom can set up a global business these days.”
One way businesses are doing this is through ecommerce. Barlow already has a number of ecommerce clients and clients that are the marketplace. “They're the one-stop-shop; the global window for a designer and for anywhere in the world, selling through to anywhere else. And they are the kind of the hub that creates and facilitates that global trade,” he said.
Smallwood has witnessed that surge in ecommerce through the volume of transactions World First has seen completed online. But while a lot of businesses are experienced selling through online marketplaces in the US and Europe, Smallword highlighted that over 50% of online transactions take place in China.
“So for a business that is selling online, but isn't maybe selling directly to businesses or directly to consumers in China, there's an opportunity for them to double their addressable market overnight.”
And a key point, Smallwood adds, is that “technologies are reducing the risks or lowering the risks and the financial cost of business expanding businesses expanding internationally”.
Not an easy road
Although they are staying positive for the future, these are not Pollyanna accountants blind to the challenges of a no-deal Brexit or further lockdown restrictions.
Munson acknowledges that the forthcoming Budget will likely spell a tax environment change. “I think that there won't just be tax increases but also changes in the way some of these taxes are collected. From an accountant perspective, we've got to all be aware that that's gonna happen; whether that’s VAT changes, capital gains tax, or the transactional taxes.
“Right now, businesses need to keep a close eye on duty VAT if they’re looking to go global and expand internationally.”
And the opportunity to open your channel to different countries comes different challenges. “There's a whole host of things to think by when you're selling internationally,” said Barlow. “I harp on a lot about having clean data, but if you’re shipping to all of these countries that have different VAT or equivalent sales taxes, being on top of that data and understanding when you meet the threshold in which country is absolutely vital.”
Alastair Barlow, Warren Munson and Simon Smallwood will be joining an AccountingWEB and World First webinar on Thursday 3 December to explore the ways accountants and businesses can find new growth and beat Brexit and Covid and answer your questions.