Tracy Ewen, managing director of factoring company IGF, warns businesses to prepare for the comedown after the Olympics trade boost.

The next 12 months in the run up to the London 2012 Olympics could provide a much-needed opportunity for SMEs to boost sales against a slow economy. For 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 £750 million 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 SMEs are already benefitting from the Olympics, in fact, according to the organisers of the London 2012 Olympics, small businesses will make up 70 per cent 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, SMEs 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 cash flow 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.

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.
 

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