Business Management zone

London 2012: A golden opportunity for small businesses?

With the Beijing Olympics over, the world's attention now turns to London. If Team GB repeats the success achieved in China, more sporting glory is guaranteed but what about small business owners looking to benefit from the Games? Dan Martin examines how SMEs can ensure they end up on the winners' podium rather than out of the medals in 2012.

If the organisers are to be believed, staging the world's biggest sporting event will not only provide a boost to British sport but also to British business. According to the Olympic Delivery Authority (ODA), the effort required to ensure the Games run smoothly means that thousands of companies will benefit.

Despite these claims however, many SMEs are sceptical that they will gain any real long term rewards predicting that the biggest benefits will be enjoyed by large organisations.

So with these points in mind, how can small firms get involved?

Just for the big boys?

According to the ODA, 18,000 companies, 90% of which are SMEs, have so far registered their details on the CompeteFor website where 2012 tenders are published.

The figures suggest that many entrepreneurs believe they have a chance of securing major contracts but not everyone is convinced. Christos Papakyriacou, managing director of Alpha Micro Components, for instance says he spent five months tackling a long list of requirements but gave up believing that all the big deals will be won by large businesses.

The ODA has been quick to respond to such criticisms claiming that a level playing field has actually been created. Entrepreneurs, the organisation says, who don't comply with the requirements are referred to services such as Business Link for help on how they can.

With the eyes of the world on London, it was always inevitable that organisers would impose strict standards on suppliers. Papakyriacou is likely to be proven right in his claims that all Tier One projects will all be carried out by large businesses but that doesn't mean SMEs can't get involved.

You've got to be in it to win it

The ODA says that out of the 7,000 main contracts, 75,000 sub-contracts are up for grabs. It is here where SMEs probably have their best chance of grabing a slice of the action.

Gordon Glenister, from the British Promotional Merchanise Association, intially had some concerns but after meetings with the ODA claims he believes small firms can get involved. He says SMEs should be doing all they can to make themselves attractive to buyers.

"If you want to play in the big league, this is what you’ve got to do," he adds. "Some companies may moan that the tender application process takes time but tell me they haven’t got a much more sustainable and better running business on the back of it."

Other business support organisations are taking a similar line. Phil McCabe, spokesperson for the Forum of Private Business (FPB), says whether entrepreneurs like it or not the sort of standards demanded by Olympic organisers are here to stay.

"We can make a noise about the strict requirements but they're not going to go away," he says. "It's important to educate yourself and seek out advice on how you can go about winning contracts for the Games and other events."

Small businesses, particularly those with no experience of working on a major project, should consider tightening up their processes to increase their chances of winning a contract. Among the points to address are arranging to accept e-payments, upgrading financial systems to provide more detailed management information and formalising terms and conditions in staff contracts.

Andy Webber, from Lloyds TSB, one of the main sponsors of London 2012, says if small firms ensure they are geared up to cope with such contracts, they will have a much better chance of winning them. "Make sure you've got sufficient suppliers, staff and finance in place," he advises. "It's vitally important to ensure you can cope with the cashflow issues involved with not being paid for contracts until you’ve fulfilled them."

You will also be looked on favourably if you adhere to ISO standards, have achieved Investors in People accreditation and can demonstrate sustainable business practices.

I heard it through the grapevine

Another way of getting involved is by listening out for details of tenders won by large firms in your sector which require sub-contractors. Kevin Fisher, managing director of Portmere Rubber, who has suppled rubber seals for gates used to control the River Lea which flows through the main Olympic site used this method.

“We found out about the contract through word of mouth because we're in the industry and linked to the people who make the gates," Fisher explains. "There was lots of people involved but we didn't have to go through the formal tender application process."

Fisher advises fellow entrepreneurs to follow his example. "Keep your eye on the press or government websites for details of secured contracts," he advises. "Most large projects are broken down into lots of smaller projects so get on the phone and talk to the big contractors."

Entrepreneur Christos Papakyriacou, who was put from attempting to win a main contract by the complex registration system, has also turned to this 'back door' approach. "We're currently pursuing getting involved through companies like Serco which are traditionally very good at exploiting government contracts", he says. "They've got whole teams that are geared up to do just that and know the right people."

Small firms should also cement existing relationships. It is estimated that 80% of Tier One and Tier Two suppliers will meet demand through their existing supply chains so may sure you keep in touch with major clients who may well be involved with the Games.

Strength in numbers

One key way for small firms to get involved is to partner up with other businesses. Some entrepreneurs may be turned off from getting together with what they perceive to be rivals but whereas you may not be able to handle certain contracts yourself, you are much more likely to do so by combining forces with others.

Partnerships can be created on a informal basis by simply contacting other suppliers or you could consider contacting organisations which are assisting businesses in what's known as consortium tendering. The Thames Gateway Business Club for example is filing joint bids on behalf of its members.

The future

Entrepreneurs who are lucky enough to win Olympic work or even just go through the application process will put themselves in a good position to secure similar deals in the future. With the Commonwealth Games due to take place in Glasgow in 2014 and England’s bid for the 2018 World Cup, those companies who have already experienced the procurement process will be at an advantage.

There is also a drive towards encouraging larger firms to add more small businesses to their supply chain. A key factor in London winning the race to stage the Games was the emphasis on legacy and long term regeneration projects after the Games. It is here, believes the FPB's Phil McCabe, that small businesses will see benefits.

"There are an increasing number of Tier One suppliers who are looking to give contracts to smaller businesess driven by contractual obligations pertaining to corporate social responsibility which stipulate diversity," he says. "The key point in diversity of procurement is engagement with smaller firms."

Number of comments: 1

Print Friendly Mail to Friend Post Comment

---

David Thorp, 1-Sep-2008

Olympics Act
Your highlighted the need for entrepreneurs and SMEs to address the Olympic-standard requirements of the ODA and LOCOG, in order to secure tenders to supply. Yet there’s another time bomb for small businesses lurking round the corner as we near the Games, and that’s the severe and unnecessarily restrictive provisions of the Olympics Act.

Whilst we are told that the Olympics are going to offer valuable ‘UK plc’ moments, the Act is designed to prevent organisations from making any associations between their activities and the Games, unless they are an official sponsor. Even if companies become suppliers, they will not be able to advertise their products and services in any way that implies they have been used in the Olympics.

Small businesses who want to use the Games to promote their business will find they’re breaking the law if they use particular words in particular combinations, even if their business is relevant (sports equipment or clothing retailers, for example) and no matter how small the company is. The law, promoted by LOCOG, deems ‘an association’ to have been made by as innocuous a promotion as, for instance, an advert for a tanning salon using the tagline ‘Get bronze in 2012’.

It’s entirely right that the sponsors who will be investing up to £80m for 16 days’ worth of exposure are protected from ambush marketers seeking to gain publicity for nothing, but another thing entirely to assert that the likes of Coca-Cola and McDonald’s need protecting from small companies merely wishing to trade relatively harmlessly on the back of what is, by definition, a cultural event, not a protected brand. How stringently the law will be applied in the case of small companies will become apparent over the next four years; but how many small firms will be in a position to take the financial risk of contravening this heavy-handed legislation?

The Olympics Act is unlikely to significantly reduce the risk of ambush marketing anyway, because the companies that are willing to go out on a limb will do so regardless of potential fines. All it does is make it difficult, if not impossible, for small companies to make a relatively innocent buck by jumping on the Olympics bandwagon – which, if we’re supposed to support the investment of £9.325 billion of public (and lottery) money, is the least our businesses should be able to gain from the show coming to town.

David Thorp
Director of Research and Information
The Chartered Institute of Marketing