Whether or not the government's Brexit bill goes through or we face a general election - there is no doubt that its an uncertain time for British business. Our Secretary General, Ed Mayo outlines three steps for any co-op to act on during this stormy period for the economy.
1. Good Governance
The first is to identify the critical risks ahead. Yes, you may have a risk register, but a the very real possibility of a No Deal Brexit is a new world and will bring in a period of extraordinary risk and that means that Boards have a unique role. It is not just operations. This a governance responsibility.
2. Good financial planning
The second is to focus on the financial impacts. All businesses will need to prepare for a short or medium-term disruption both to supply chains and to revenues. The challenges will be greater, possibly terminal, for businesses with a weak cash position. So what steps can be made for access to credit or to free up cash flow? The advice to any business facing cash flow challenges is always that you are best off starting an early conversation with your banking partner.
3. Live up to your values
The third step is to act in ways that draw on co-operative values. When it comes to economic shocks, the only way out is through collaboration. This may mean being ready in terms of marketing to communicate why products or prices may be changing, or prepared to help with payment terms or special offers to customers who face their own lean period. Stressing communication is a theme too for the supply chain, where better connectivity helps to build resilience. At a local level the same holds true; if there is an economic shock, businesses will need to work together in towns and regions.
Co-operatives UK can be a source of advice and support over the period ahead. Call on us or draw on our online tools to support work around these three steps. We will also be campaigning for a better policy environment for co-ops in the new economic circumstances.
I see that there will be opportunities for new forms of co-operation over time. The case for economic co-operation in the UK is that the vulnerability of small and medium enterprises can be mitigated by working together. This is how the small businesses of Northern Italy created global winners in design and fashion, with economies of scope and scale through networks of co-operation. It is how the German Mittelstand has operated with access to finance through co-operative banks that kept lending to business after the 'credit crunch' when investor-owned banks simply closed their doors when it came to new loans. If you are at risk on your own, it makes sense to come together.
One most promising place to promote economic co-operation is within the workplace, by progressively sharing ownership with the workforce. Co-operatives have an excellent track record of resilience in tough times, while not being immune to failure, and the reason is this – if you own a share of the business, you care for the business. Arguably, employee and worker ownership is the missing piece that can address both challenges likely to face a post-Brexit economy, which are the puzzles of productivity and of inclusion. Working with the Employee Ownership Association, we are championing the voluntary expansion of employee and worker ownership such as this in the UK, to see one million worker owners in the UK by 2030.
The best placed businesses to survive the turbulent times ahead are those that act like the very best co-operatives – businesses that have good governance, good financial planning and that live up their values.
Ed Mayo, Secretary General