It’s starting to seem as if that’s a question not even the politicians know the answers to, but here are my honest thoughts.
No one likes uncertainty. Businesses don’t like it. Customers don’t like it.
I’ve been MD of this business for the last 10 years and I have seen changes in government and changes in policy and nothing makes as big a difference to business as uncertainty and the lack of confidence that it brings.
So probably the most worrying thing right now is that no one knows what the plan for the future is. But that will change.
Before the referendum, the campaigning on both sides pretty much added up to, ‘doomed if we do, doomed if we don’t’. Add to that, the recent resignations of Johnson and Farage, who led the leave campaign, its only human nature that a lot of people are thinking, ‘Doomed, then.’
But we’re not, are we.
Having said that, there are some issues that are going to affect our business, and probably yours as well.
The exchange rate.
The value of the pound has fallen and some people think it will fall still further.
Apart from making holidays more expensive, what else does that mean?
The wet leisure industry import an awful lot of the products that we sell from overseas and a weak pound will make those imports more expensive. There are a few spa and hot tub manufacturers in Europe but most of the big boys are based in the US and a falling exchange rate is going to put up those prices.
Saunas and steam rooms come almost exclusively from Europe and the value of the pound is going to negatively affect their price.
Pool equipment from pumps to heat pumps, automatic cleaners to pool covers come, in the main, as imports and what we pay the manufacturer is going to go up as the value of the pound goes down.
If that happens, when that happens, every business is going to have to decide whether to pass that price rise on to their customers or take a slimmer margin. My guess is that most businesses will choose to do a mixture of both.
Of course, a changing exchange rate is a normal part of the business environment. One of the things that we do at Golden Coast is to ‘forward contract’ our foreign currency so that our exchange rate is effectively fixed and therefore we can ensure stable pricing for a period of time no matter what happens to the value of the pound.
As I’ve said, a lot of wet leisure products are imported from Europe and being a member of the EU meant that there were no tariffs or restrictions put on trade between us and the continent.
I don’t think that’s likely to change. Britain is an important market for almost all countries in Europe and I think that tariff free trade is something we can expect to see carry on.
Across the country, most businesses seemed to feel that banks weren’t lending money readily enough anyway and Brexit will only make that worse in the short term.
If you were thinking of borrowing to expand or just extend your business overdraft, that’s probably going to be more difficult now and if you do, think very carefully before you commit.
Cash flow problems have long been one of the biggest issues that businesses in our industry have to face and, for a short while at least, that’s likely to become an even bigger problem.
Our customers aren’t going to get poorer – or richer – overnight following Brexit but they might feel less confident and less sure about the future. Its consumer confidence that affects whether people invest in a new pool, a spa or a sauna so I’m afraid to say that I think sales will dip a little. Although whether it’ll have more impact than this horrible ‘summer’ weather that we are having, is hard to say.
So is it, ‘Keep calm and…?’
The process of leaving the EU will take at least 2 years so at least in that regard, we know what the future holds.
In my experience, when times are uncertain or challenging, it’s the businesses that stick to their guns that do the best.
We’re going to concentrate on bringing you innovative products that have got real appeal for your customers. We are going to concentrate on being a source of advice and knowledge for you and your business – whether that’s technical support and product knowledge or marketing advice. And we are going to concentrate on customer service.
Those are the things that we are known for. Those are the things that we can actually control.
We are going to keep our marketing activity going. It’s easy to see that budget as something that you can quickly save, but if you stop marketing you can equally quickly disappear from your customer’s minds. I would suggest that you do the same.
Having said that, we’re going to keep a weather eye on developments in the market and in the economy. Perhaps some areas of the industry will slow down, perhaps they won’t but whatever happens there are still hundreds of thousands of pools, spas, saunas and hot tubs out there that will need maintenance, service and accessories.
So yes, in a way it is ‘keep calm and carry on’. And sometimes that’s the best advice.