The Gigantosaurus Is Coming… Ignore Bonehead. Protect Yourselves.

You may be forgiven for unfamiliarity with the story of the gigantosaurus, especially if you don’t have young children.

The gigantosaurus is a book by Jonny Duddle, essentially it’s a modern version of the ‘boy that cried wolf’ and worth adding to any parents collection. The story for anyone still in the dark, is one of a small dinosaur called Bonehead, who volunteers to be the lookout for his friends while they play. After repeatedly warning of impending doom in the form of the gigantosaurus on several occasions, his friends ignore him and finally when the mighty prehistoric beast appears for real his friends don’t believe him.

Giantosaurus Brexit

The parallels with Brexit seem stark. The third deadline is rapidly approaching after two botched attempts. I for one have become immune to the relentless barrage of options and outcomes. Time itself limits the potential for the third deadline to be honored, despite the promises of the leading Conservative leadership candidate.

Large multi-nationals with seemingly limitless resources, have prepared for the scenarios they can foresee. SME’s are not as fortunate. Back in January, less than half had plans in place for Brexit according to one survey.

The landscape doesn’t look so different this time around, few additional businesses have planned. It’s quite easy to see why. Business, in order to prepare, need to see an expected final destination and construct a route around potential pitfalls. Certainty is lacking, especially given that two of the outcomes are polar opposites, requiring different strategy.

A personal example. My business, Welland Power,  builds diesel generators, predominantly for export outside of the EU. We have grown rapidly recently and hold the Queens Award for International Trade.

Ignoring my supply chain risk on the diesel generators major components for the moment, my main focus is on the movement of Sterling against the Euro and the Dollar. As Sterling falls, my products become more competitive to my international customers, as it rises, less competitive.

Short-term, in a no-deal scenario, I expect the pound to fall, which should generate a lot of interest in our products. If we decide to stay in the EU, the pound may rise, having the opposite effect.

How can I plan for both scenarios? In the first I need lots of stock to satisfy demand, in the latter I need almost no stock as my sales will fall sharply. That is of course based on my currency forecast, whereas i could be wrong. You can always be wrong.

Regardless of if you choose to listen to Bonehead (I will leave this analogy to your own individual preference), try to protect yourself for whatever outcome may finally arrive. With the two extremes seemingly more likely, a rapid change in either direction will certainly destroy some businesses, who have not planned, or planned for the wrong outcome.

Consider your planning under both scenarios and make sure it holds up to the dangers that lie ahead.