In a move that could have an impact on some businesses in the British hospitality sector, the government will lower the maximum amount that can be spent at fixed odds betting terminals from £100 to £2. Here, Martyn Pullin, Partner in our Teesside office, explores the issues that smaller firms will face, and provides advice on the steps that businesses can take to navigate challenges.
The reduction in the maximum spend at fixed odds betting terminals (FOBT) is a sensitive issue, with people debating the government’s social responsibility versus the impact on the high street at length.
Whilst attempts to tackle problem gambling should be welcomed, there is clearly a significant commercial impact in reducing the amount that can be spent to £2 and major players such as William Hill and Ladbrokes Coral have already warned that they will have to close shops and cut jobs as a result.
But it’s not just high street chains that are set to suffer. Many social clubs rely on sub-letting part of their premises to betting shops, which rely on FOBTs as a much-needed source of income.
With the hospitality sector continuing to struggle, reducing this income source could be the final blow for many social clubs across the country. So what steps can firms take to ensure that the odds aren’t stacked against them?
It’s been a challenging few years for independent social clubs, with falling memberships, high maintenance costs and increased competition eating into their margins. Many social clubs have pursued alternative sources of revenue with sub-letting part of their building being a valuable income generator. In the Tees Valley region, income from this source can be more than £10,000 per annum.
It’s therefore not a surprise that many social clubs are worried about the effect the new legislation will have on their business. It could intensify issues for clubs that are already struggling.
For those in difficulty, seeking advice from a professional business adviser is key. They will be able to provide an objective view and help business owners to implement steps that can help them to overcome their issues.
The earlier a business seeks advice the more successful the outcome is likely to be. We often find that owners only approach an adviser for support when they’ve been experiencing troubles for a long time, which sometimes leaves little time to find a solution and may mean there is no other option than to close the company. Creditors are also more likely to restructure debt when approached early, as they’re keen to receive some return rather than see a business collapse entirely.
Social clubs across the UK could potentially face some tough challenges in the year ahead but the key to navigating these issues is to access support. For many firms, the consequences of failing to do so could be terminal.
For those in difficulty, seeking advice from a professional business adviser is key.Martyn Pullin Restructuring Advisory