One week after the unthinkable happened we see the shockwave receding and business starting to get to grips with the reality. The Today companies, both Translation and Advisory, had considered in advance what action would be needed in the event of the vote going that way and there were contingency plans. One week on, it doesn’t look likely that the contingency plans need to be triggered.
When we considered the impact on our biggest clients we concluded that most wouldn’t be much affected by the decision beyond the immediate, short-term decision vacuum, and a number should actually see a significantly positive outcome. A minority group was considered to be at risk of a negative impact but even for them the challenge was around adapting to survive and thrive. We didn’t see any that could be considered in the “high risk” category because these companies are well-managed and can react to the threats. That’s good news for us – we’re a service business and our success is driven by our clients being successful. We enjoy being a contributor to that success and we build relationships based on our adding value and not just providing a service.
When we think about the factors affecting our clients the most important is the rate of exchange. Countries around the world are trying to push down the value of their currency so they can be more competitive in global markets. The UK has just accomplished that in one move. Countries are also looking to get benefit from more companies and individuals buying locally produced goods rather than buying from abroad as items bought abroad are now a lot more expensive. That’s good news for companies that produce goods and services for the UK market because they should see sales increase. It’s not so good for importers, who now have to consider buying locally, increasing prices, or taking a hit on profit margins.
The sectors that seem worse affected are construction, estate agencies, banking and media/telecoms. There is no denying the risk that these could all see a significant hit to growth and profitability in the short and even medium term. There is an argument that construction, especially house building, has been a bubble waiting to be burst for some time. Estate agents are in the same boat after a long run of profits that have seemed unsustainable for years. Banks are far better funded than they were in the past and can survive a dip, though we may well see cost cutting continue. The pressure is on companies in these sectors to adapt, look for new, growth markets wherever these might sit, and adjust their cost base as quickly as they can.
What can we see at this early stage? Some of the early panic has passed. Several banks were reported today to be having second thoughts on moving staff out of London to Paris, Dublin or Frankfurt. There may have been some posturing to encourage a remain vote, or the hard reality of how difficult it is to relocate business units and staff is becoming clearer. The FTSE 100 has bounced back but the 250 Index has not recovered anything like its value pre-referendum.
It’s said that 80% of companies in the UK don’t export. Many will be (or should be!) reconsidering that now as they become far more price-competitive and hedge their positions in the face of a slow down in the UK economy. Others will be renegotiating contracts with European suppliers and customers. We see a significant increase in enquiries in all these areas so it’s clear that many companies are already building their plans.
Those that aren’t doing anything need to start moving now. These changes mean almost all the rules are being rewritten. Regardless of the size of the business, management teams have to work out how they’re going to maintain growth and profitability. The job of leaders is to lead, and shareholders will not be sympathetic to those that remain paralysed into indecision and inaction. If they can’t work out how to react they will not survive for long.
How can Today Translations and Today Advisory help? We advise clients on markets and localisation as well as carrying out translations. We can help work out how websites should be changed to get access to new markets abroad, including building content in different languages and presenting that content in ways that will appeal to the unique characteristics of different nationalities and sectors. If your company is considering establishing a base inside the remaining part of the EU we can advise on the different options and can translate contracts for agency agreements, property transactions, personnel hiring and support services. If part of the strategy is investing currency that’s offshore now to buy assets or businesses abroad our Advisory business can assist with due diligence in any language and can advise on what needs to be translated for the Board to make the right decision and what can be left to local advisers.
The range of services we offer to international businesses or those looking to get access to overseas markets is wide and can be seen on our website here . If you would like a discussion with a specialist in any of these areas you can email [email protected] or call us on 0207 397 2772 to set up a call.
Ian Miller MBE is a member of our Advisory Board and has more than 30 years’ worth of experience in dealing with mergers and acquisitions and corporate strategy across a range of industries and regions.