With the economic recovery still looking to be some way off, small and medium sized enterprises are finding trading conditions tough at the moment. In fact, many commercial property businesses, especially in the retail sector, are being forced into administration as a result of huge quarterly drops in revenue.
As a response to this, many SMEs are now making the decision to diversify their businesses, offering incentives such as sales and buy one get one free offers to entice customers into their commercial properties.
This is especially pertinent at the current point in time, with visitors from all over the world flocking to various parts of the UK as a result of a packed summer of entertainment. Obviously, the Olympics have attracted thousands of tourists to British shores, yet other events such as the annual Edinburgh Fringe Festival are also playing a role in boosting custom for commercial property businesses in the vicinity of activities being held.
Hopefully, in this important year for Great Britain, traders and commercial property business owners will see a marked improvement in sales, which have steadily dropped since the start of the recession in 2008.
According to Aviva’s bi-annual SME Pulse, a study looking into trends pertaining to SMEs, the Diamond Jubilee has had a large effect upon the fortunes of many commercial property businesses. It reports that 27 per cent of businesses recorded a boost in revenue in the weeks surrounding the Jubilee celebrations, with some SMEs reporting up to 30 per cent in revenue growth.
However, this figure goes to show that businesses must be prepared to be innovative regarding events such as the Jubilee. One in five SMEs admitted to actively capitalising on the Queen’s 60 year anniversary, either through introducing special offers, introducing new products and services or putting more money into promoting and advertising their commercial property.
Commercial product manager at Aviva, David Bruce, says; “Diversification is an excellent way to protect and grow the bottom line, while efforts to capitalise on the Jubilee and summer sporting boost are other examples of this.
“For some SMEs, the investment has paid off, with revenues increasing markedly already this summer.”
In fact, the summer of sports in Britain this year has resulted in the number of SMEs diversifying business techniques in their commercial properties rocketing. During the past six months, there has been a marked rise in businesses which are utilising sales techniques such as reducing overall prices, diversifying into new areas and offering sales and promotions in a bid to win custom from competitors. The Olympics have lent optimism to business owners, with one quarter of SMEs expecting to see a rise in profits thanks to the number of visitors arriving in the UK over the next month or so.
Unfortunately, this optimism isn’t set to last, as 22 per cent of small commercial property businesses are concerned about the short lived boost the Olympics will bring. They believe that, while trading for the last part of the second quarter may rise dramatically; this will lead to a plunge in 3rd and 4th quarter revenues.
Mr Bruce continues; “The downside of the summer boom opportunity however, is that many SMEs are clearly worried about what will happen later in the year.
“Recent figures from the Office of National Statistics show 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.”
Especially important in small and medium sized commercial property businesses’ preparations is ensuring that insurance coverage is up to date, Mr Bruce warns. Around a fifth of SMEs intend to change their business models temporarily in order to capitalise on sales opportunities this summer, through such tactics as employing extra staff, multiplying stock levels and keeping their commercial properties open for longer hours. Yet only 52 per cent of these businesses have checked whether these changes will affect their insurance policies with the insurance company they are protected by, which could have severe implications for their business should anything go wrong.
Mr Bruce concludes; “Even the smallest changes to a business can affect the insurance policy that needs to be in place. Changes to stock, staff and opening hours are just some of the examples of this.
“Insurance brokers are a fantastic resource for information on these types of issues and should be a first port of call for SMEs when they are looking to alter their business.
“Maintaining a relationship with these experts is key to understanding the risks in the business.”
Are you the owner of an SME and have an opinion on how the packed British summer of events will affect your business? Have you recently made changes to your commercial property or business model, and if so have you fully checked the implications with your insurance broker?
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