Brexit could be "like a heart attack" for UK design firms says consultant

Brexit crisis: uncertainty following the Brexit vote could prove "almost terminal" for small architecture design firms in the UK, according to a consultant who advises creative businesses.

Massimo Gray, who advises architects and designers on business strategy, said there was a risk that clients and customers would hold back on placing orders, putting companies under severe strain.

"My biggest fear for the smaller businesses is that if, as a result of the loss in confidence and instability we are experiencing, we see a pull-back, or stalling on ordering, then this may cause an issue with cash flow," he told Dezeen.

"A lack of cash flow for a business is like a heart attack. It can be very difficult to recover from; almost terminal."

"It's important to stick to, and reinforce, brand values, and remember that creativity has been the core driver for the business," he advised.

"This creativity doesn't need to change: in fact we are probably going to need to harness it and focus it even more going forward."

The silver lining of the current situation was that the fall in the value of the pound made British products and services cheaper abroad, Gray said.

"Clients can buy cheaper, or buy more with the same budget," he said.

Gray, who has an MBA in international economics and worked in finance for 12 years, is a mentor at InnovationRCA, the business incubator at the Royal College of Art in London, and is CEO of Bethan Gray Design London, the company set up by his wife, the designer Bethan Gray.

The creative industries are worth £84.1 billion to the UK economy each year, and the sector is growing at almost twice the rate of the wider economy.

Below is an edited transcript of the interview with Gray:

Ross Bryant: How are your clients reacting to Brexit?

Massimo Gray: Most of my clients have founded businesses and generated success in the era of collaboration and globalisation, and would characterise themselves as outward-looking and international. Their businesses thrive in a community known for its openness, and easy transfer of labour and ideas.

In my community Brexit has somewhat been perceived as a vote against globalisation and this multi-cultural exchange. As no one was really expecting this result there has been widespread shock and disbelief. Clients are having to come to terms with it through, and are seeking advice on what to do next.

Ross Bryant: What are you advising them to do next?

Massimo Gray: In times of stress or panic it's important to stick to, and reinforce, brand values, and remember that creativity has been the core driver for the business. This creativity doesn't need to change, in fact we are probably going to need to harness it and focus it even more going forward.

A lot of the businesses that I support also have collaboration at their core, and it's important, even if the Leave vote seems to throw up a different point of view, that creative businesses keep on looking at ways to collaborate and share ideas, and work on joint goals.

Of course major change throws up opportunities as well as challenges. Since the Brexit vote I've been on the phone to clients running through those potential situations.

It's an important time for all businesses to reassure their key clients, and try to understand how Brexit might have benefitted their clients, for example, if they are based overseas, then because of the fall in the pound exports have become more competitive. Clients can buy cheaper, or buy more with the same budget.

Ross Bryant: What do you think Brexit means for small design businesses?

Massimo Gray: Small design businesses tend to be more at the mercy of cash flow and rely on one or two key clients. My biggest fear for the smaller businesses is that if, as a result of the loss in confidence and instability we are experiencing, we see a pull-back, or stalling on ordering, then this may cause an issue with cash flow. A lack of cash flow for a business is like a heart attack. It can be very difficult to recover from; almost terminal.

Ross Bryant: What impact do you think Brexit will have on the UK’s design industry and its business with Europe?

Massimo Gray: The design industry has grown up with globalisation since the early 90s and I think it's very hard to separate or contemplate a change in that interdependency. Design has been a major benefactor of this phenomenon.

If we look at London, whilst we do not know what shape Brexit will really take, a risk is that the talent pool in the UK shrinks and London becomes less vibrant and culturally diverse, not to mention Brexit unleashing some other rather unpleasant things.

In my experience, over the last eight years, I've seen that successful design businesses have had to push to export as most of the growth opportunities have been overseas. If Brexit means we end up with tariffs on the export of goods to Europe then of course this would be detrimental.

Ross Bryant: Is there any good news for UK design businesses?

Massimo Gray: It's hard to gauge right now. The fall in the pound certainly makes exporting better. Overall Brexit is going to force us to be more resourceful and innovative, even more creative.

Any fracturing of Europe itself, and dissolution of the single currency, may allow certain regions of Europe to become low-cost producers again, but no doubt there would be tremendous turmoil before we arrive at that.

Ross Bryant: Has European legislation been prohibitive for small businesses in the UK?

Massimo Gray: Not excessively in my experience. I would say it's been the overall burden of legislation and paperwork that has been prohibitive for small businesses. Even for a small business, there can be a day week needed to keep up with the paperwork. And that's just not conducive to growing a business, especially one with creativity at its core.

Ross Bryant: What about funding?

Massimo Gray: So much funding for creative and manufacturing sectors has been pulled in recent years, and now we are threatened with EU funding also being pulled. The creative sector needs to be well represented to make sure that in a post-Brexit world there is still funding available.