Martyn Kendrick, regional director for Lloyds Bank Commercial Banking in the North West, on how Liverpool’s food and drink sector can capitalise on the booming visitor economy
According to figures from Liverpool City Council, cultural events in the city generated more than £85m for the local economy last year.
From the Giants Spectacular, which attracted more than 1.3m people, to performances from Van Morrison and The Dubliners at the city’s Irish culture festival Feis Liverpool, a world-class programme of cultural events has been essential to the growth of the city’s hospitality businesses.
It’s unsurprising, then, that there was huge disappointment among the independent business community when the organisers of the Liverpool Food and Drink Festival announced that it wouldn’t be returning for a 12th instalment in 2019.
In previous years the festival attracted 40,000 visitors to Sefton Park for the weekend-long celebration, launching some of Liverpool’s most popular restaurants and serving as a platform for independent bars and eateries.
Many of these businesses will have no doubt been counting on this year’s event as a revenue ‘banker’ and a key part of their growth plans. As such, they will have already begun investing in resources and potentially additional staff.
Where operating margins are slim, the situation will have forced businesses to take a more forensic approach to managing their finances to ensure they are still in a position to make the most of the many other seasonal events coming up.
Here, there are several things business owners can do to carefully manage their cashflow and ensure they’re prepared for any eventuality:
Plan ahead
Businesses across Merseyside will already have an idea of when they’re set to experience peaks and troughs of activity. While some cancellations are unavoidable, using robust forecasting to plan for key dates, such as the upcoming Bordeaux Wine Festival or the BBC Summer Social in August, means that they can invest in their success without running the risk of overtrading.
Firms should consider investing in specialist working capital management tools that allow them to evaluate their cash flow and collection cycles as well as identify where future pressure points lie.
Expect the unexpected
There are some events that can’t be anticipated, and the Food and Drink Festival proves just that. However, not every unexpected turn of events is bad news.
Many hospitality businesses will have felt the benefit of the good weather over the Easter Bank Holiday and, if Britain experiences another heatwave, it could lead to a surge in activity as residents head to their nearest pub or beer garden, boosting takings for local bars and restaurants.
When looking to meet these sudden upticks in demand, short-term solutions such as overdrafts, business credit cards or short-term loans could offer firms the flexibility they need to take swift action.
Think of the supply chain
But it’s not just the bars and restaurants that will be left having to think fast in this scenario. The businesses that supply these establishments can also face a sudden surge in demand and need to closely manage their working capital or risk losing valuable business.
We know from our latest Working Capital Index that businesses across the North of England have a total of £116bn tied up in the day-to-day costs of doing business. This is cash that could be released and reinvested to ensure firms have the funds available to build their business from opportunity to opportunity.
A first practical step is to invoice and collect debts on time or even early. Flexible financial products such as invoice and asset finance are tools through which businesses can capitalise on a bumper summer of activity. Invoice finance, for example, allows suppliers to release up to 90% of the value of their invoice book, typically within 24 hours.
The cancellation of the Liverpool Food and Drink Festival is yet another reminder that even the best laid plans may have to be adapted in response to the unexpected.