A boost in trading during this summer's events will be followed by a tough dip in revenues the following quarter. Are the UK's businesses realistic enough to prepare?
The tide is falling and rising for businesses in the UK this year. A summer boost in trading will likely be followed by a worrying dip in revenues, according to new research by business insurers Aviva.
One quarter of small and mid-sized businesses in the UK expect a boost from this summer's events. After the Diamond Jubilee delivered a boost in revenues for some 27 per cent of SMEs, a great number of companies are ready to capitalise even more on the London Olympics.
Many business leaders made changes to their business to respond to this summer’s calendar of events. Increasing opening hours, stock levels and taking on extra staff was the most typical reaction.
Although this entrepreneurial spirit is favourable, over a fifth of business leaders expect trading conditions to toughen alarmingly in the aftermath of the summer's events. This calls for the need to remain realistic and careful throughout these months's revenue boosts.
Looking ahead, the mid-market is polarised on trading for the rest of 2012. Some 28 per cent say they expect strong or improved sales in the second half, and 37 per cent assume average sales. That leaves 20 per cent expecting poor sales and 15 per cent are “unsure” of sales levels.
David Bruce, commercial product manager at Aviva, commented: “SME owners are hanging on in there. Trading conditions clearly remain tough, while it seems many owners are perhaps being more pragmatic than optimistic in their forecasting of future revenues.”
Even in the summer boom, the numbers of SMEs cutting permanent or temporary staff, or reducing pay, hours or benefits, have increased from six months ago. The good news, however, is that the number of SMEs concerned about cash flow declined from 37 per cent twelve months ago to 31 per cent today. Worries about rising costs have seen a slight increase.
“The downside of the summer boom opportunity is that many SMEs are clearly worried about what will happen later in the year. Recent figures from the Office of National Statistics shows that the UK recession has deepened which adds weight to this concern. SMEs need to look at their business plans now and make sure they prepare ahead for this expected bump, even while enjoying the good times,” said Bruce.