On June 23 the United Kingdom voted to leave the European Union (E.U.). Many were shocked at the outcome of “Brexit” and the markets reacted badly. The day following the vote, the pound dropped down to the lowest level against the dollar since 1985, stocks in the U.K. and U.S. fell, and on June 27 the Standards & Poor’s rating agency downgraded the U.K.’s rating from AAA to AA. E.U. leaders continue to hold meetings to discuss the fall-out of Brexit.
In the middle market, Brexit has added to concerns for dealmakers who are already worried about the upcoming U.S. presidential elections. There are many questions about what will happen in terms of economics, regulations, taxes and business agreements. While most middle market companies are focused on the U.S. market, Brexit has the potential to bring about change for those who don’t trade directly with Europe.
Challenge or Opportunity?
While concerns about trade and the markets are valid, Brexit, like other tumultuous events, is also an opportunity for bold leaders who aren’t afraid to take action and be proactive. While your competitors are panicking about the future, you can use the current climate to your advantage.
For example, with the stock market plunging two common reactions are to panic about the future or take a risk and buy stock. If you follow the common sense maxim of “buy low, sell high,” your course of action seems self-evident. The day following Brexit, Barclays and the Royal Bank of Scotland’s stocks dropped sharply and trading was suspended briefly on June 27. But did the stock really lose 17% in one day, or was the market overreacting? One week later, the markets seemed to be stabilizing.
Consumers Favor Independence over Bureaucracy
Whether or not you support Brexit, the vote seems to indicate that people are tired of bureaucracy. The same could be true from a business standpoint; people (your potential customers) now favor flexible startups over large, established corporations. They expect their voices to be heard and for businesses to listen to their feedback and address their concerns.
Think about the rise of Uber over taxis. Uber is nimble, fresh and technologically advanced – you can order your ride via mobile app, track your driver, and leave reviews. Pricing is typically cheaper than taxis and changes in real-time according to supply and demand. On the other hand, taxis are seen as slow and ineffective. “Uberization” is occurring across countless industries even traditional ones such as healthcare and financial institutions.
Regardless of whether or not you agree with Brexit, there’s no point in panicking or digging in your heels wishing for the circumstances to be different. In business, it’s impossible to control market changes or shifts in consumer demand. In order to be successful, you must adapt and use these conditions to your advantage. Take action and put together a plan that will allow you not only to survive, but to thrive in a changing climate.
Poll: What do you think?
What impact will Brexit have on your business?
* The opinions expressed in this blog post are not meant to be used as legal or financial advice.