Every four years, cities around the world compete to hold the Olympic Games and thereby attract a global audience. They concoct elaborate, and sometimes far-fetched, plans (sustainable, electric-powered Zamboni knock-offs, anyone?) that require spending heaps of cash upfront in the interest of making even more money during the games and in the years to come. But do small businesses really benefit from Olympic attention? For the most part, it seems, they do — especially if they’re proactive in winning contracts and take the time to understand the market before the games arrive. And of course, it helps to be in an area, like green tech, that’s already poised for long-term growth.
In 2003, after winning the contract for this year’s Winter Olympics, Vancouver, British Columbia, began preparations by spending and spending, then spending some more. Estimates vary regarding the final price tag of the 2010 Winter Games, but it’s generally agreed to be upward of $1 billion Canadian. Fifty percent of spending by the Vancouver Organizing Committee went to local suppliers in Vancouver, while another 43 percent went to other Canadian companies.
For one small business, the impact was noticeable even before the Olympics began. Kootenay Knitting Company, a 10-year-old clothing retailer based in Cranbrook, British Columbia, scored a highly sought-after contract as a licensed manufacturer of Olympic-themed hats, sweaters, and scarves. As a result, it had to hire more than 30 employees to help its core group of 10 to 15 workers meet the increased demand.
Dealing with the spikes in cost and demand Olympic opportunities bring can present serious challenges for local small businesses. North Vancouver-based restaurant Cilantro & Jalapeño resides in a popular tourist area called the Quay, where bus hubs depart daily to Whistler Village, Whistler Olympic Park, and Cypress Mountain. Before the Olympics started, organizers predicted that about 10,000 people per day would pass through the Quay going to and from different events. With this in mind, the restaurant’s owners figured that if they kept business as usual, they would actually see a deficit of roughly $5,000 over these two weeks as a result of additional spending required to keep pace with foot traffic.
In response, they created a new business plan that cut down estimated payroll by 35 percent and overall costs by 25 percent, while still preserving the essence of their business. This drastically improved the speed at which meals were prepared, decreased employee stress levels, and significantly improved productivity levels.
It appears to have paid off. According to co-owner Diana Novoa, who checked in with us two days in to the Olympics, the restaurant is seeing the same volume of sales it would normally see in July, “which means that this year we will have two summers,” she says of the restaurant’s busiest time of year. “We are using the Olympics as a way to take a risk, change the menu, change our business tactics and expectations, and see what happens.”
Big payoffs, however, aren’t guaranteed, and simply being a small business that happens to serve the city hosting the games may not mean instant jumps in revenue. For example, Paula Sandland, owner of Tracks Outdoor Adventures, which offers snowshoeing and hiking tours on Vancouver Island, saw a limited uptick in bookings leading up to the games. “People are coming to Vancouver mostly just to see the games, not be tourists,” she says.
Others, however, contend that the impact of the Olympics to small businesses can’t be fully expressed in a balance sheet. They hold that it’s really more about the enduring branding of a city, and that despite whatever logistical problems arise, such global exposure is sure to pay longer-term dividends.
James Tansey, director of the Centre for Sustainability and Social Innovation at the University of British Columbia’s Sauder School of Business, is confident that there will be a number of impact areas, particularly in green tech, which he says is a $1 billion industry in Vancouver. The Vancouver games, he notes, aimed to be the most sustainable Olympics yet. “There will be a number of short-term boosts, and also some long-term as Vancouver comes to be known as a green tech city with a variety of tourism opportunities,” he predicts.
Tansey, in fact, is betting on it. He’s president of Offsetters, a British Columbia-based carbon asset management company that recently won an Olympic contract as the first-ever official carbon offset supplier to the Olympic movement, helping prevent a minimum of 118,000 tons of carbon emissions from entering the atmosphere. “Because of our association with the Olympics, we’ve already won new accounts that won’t go away after the Olympics,” he says.
History may be the strongest indicator of how the numbers will shake out for Vancouver and its small businesses over the long-term. Official estimates from Utah claim that between 1996 and 2003, the Salt Lake City Olympics generated $4.8 billion in total sales, 35,000 job hours in employment, and $1.5 billion in earnings for Utah workers. And since the 2002 Olympics, Salt Lake City has hosted World Cups, U.S. championships, and Olympic trials using its newly created or improved infrastructure, which has likely continued to positively impact small businesses in the area.
Looking forward to 2012, London appears to be following in Vancouver’s well-placed tracks, as more than a thousand U.K. businesses have won contracts worth more than 5 billion pounds (about $8 billion in U.S. currency) to help build the venues and infrastructure for the London 2012 Summer Olympics. So far, 98 percent of the awarded contracts have gone to U.K. companies, and 68 percent of those companies are small and mid-size firms.
Such numbers sound promising. And yet, long after London’s last fireworks display lights up a night sky filled with onlookers from around the world, there will surely be some entrepreneurs left wondering if playing host to the Olympics resulted in the economic victory they had expected.