By Tracy Ewen, Managing Director of IGF
The next 12 months in the run up to the London 2012 Olympics could provide a much-needed opportunity for businesses to boost sales against a slow economy.
For small- mid sized enterprises (SMEs) in the South East of England, particularly retailers, the London Olympics will offer a great opportunity to take full advantage of the growth that half a million visitors to Britain will bring (consumer spending is expected to rise by £750m in the coming months according to Visa). But b2b companies also stand to benefit — there are opportunities to provide services and products to both the companies and the public sector bodies involved in the Olympics project.
Many businesses are already benefitting from the Olympics, in fact, according to the organisers of the London 2012 Olympics, small businesses will make up 70% of all Olympic contractors. However there is a potential downside for the host nation of such a huge event that smaller businesses should be aware of. Historically, Olympic cities experience an economic boost prior to the Games followed by a slump.
So while companies see a boost in turnover in the months leading up to the event, businesses may need to be prepared for the downside that may ensue once the festivities come to a close. Companies will need to make sure that they manage their finance carefully during the prosperous Olympic months in order to be ready for the year after the event where growth traditionally drops off. Careful cashflow management can make sure that there are no nasty surprises. The post-Olympic blues will not necessarily hit businesses straight away, but could do so up to a year down the line when companies will have to face the tax implications of a boost in turnover in the previous year.
As a result, owner-managers and finance directors need to look at suitable options such as invoice finance to manage their cashflow issues effectively and smooth over the peaks and troughs that a changing economic time can bring. Invoice finance is effectively a cash advance on all invoices raised to enable businesses to manage any potential cashflow problems that might be occurring or be experienced down the line.
The benefit of invoice finance over a bank overdraft or a loan is greater flexibility, as cashflow situations improve with every new customer signed. Invoice finance can make available funding of up to 90% of the gross value of unpaid sales invoices, including those outstanding when the facility commences.
Small businesses should certainly take full advantage of the opportunities for growth and development that the London 2012 Olympics can bring. However they should also have a ‘post Olympics’ plan to ensure that the after-effects of a slowdown do not outweigh the positive effects that the Olympic Games could generate.