Screen test your supplier

The cricket World Cup kicks off next month - another chance for pubs to cash in on a top sporting event.

With games set to begin around mid-afternoon, pubs that decide to show the tournament could see their slow winter sales hit for six.

Of course, the best way to enjoy major sporting events is on the big screen. But big screens have caused big headaches for some licensees recently.

Earlier this month Stockport-based supplier Satvision went into liquidation. It is understood that hundreds of publicans have equipment they have hired, leased or bought from the company. This week floods of licensees, who were customers of the company, called The Publican's offices, desperate for information.

Some had bought equipment from Satvision and were worried about technical support, while many were leasing equipment and wanted to know where they stood.

Back in November a similar situation erupted when the company Smartbox - another pub entertainment supplier - collapsed. Hundreds of licensees were left tied to hire-purchase deals for equipment they could not use.

Though the company ceased trading, licensees were still legally bound to continue paying for the equipment, including screens, modems and projectors.

However, Smartbox operated in a different way to Satvision. Licensees rented Smartbox systems, which offered on-screen entertainment, news and adverts.

As part of the deal licensees received a share of the advertising revenue from the system. They also signed finance deals to hire TV equipment through independent suppliers.

An emerging market ​

So what is it about these types of companies that makes them so susceptible to financial difficulties?

Experts in the field offer a number of reasons. Brian Pipe, who chairs the European council of not-for-profit industry organisation Infocomm International, believes that the AV industry attracts entrepreneurial types.

"Historically, AV is a cottage industry and it has lent itself to small, entrepreneurial, lifestyle businesses," he says. "But they don't lend themselves to the long term in a professional environment."

Peter Lloyd, editor of the trade's AV magazine, suggests this is the nature of the market. "One of the problems is it's an emerging market," he says.

"It's very new and people have seen it as a cash cow."

However, Peter acknowledges that some small companies that run adverts on screens have managed to succeed in business.

"Smaller chains that have run promotions have proved to be successful," he says.

"It's when companies try to compete with advertisers who are using Sky that problems occur. It's the nature of the business that the operators are under-capitalised entrepreneurs."

Brian also recognises that the industry is improving. "What is starting to happen is there are a lot more professional companies coming into the industry and some larger ones being run in a much more professional manner," he explains.

"Previously they had priced themselves out of the market."

Are pubs an easy target? ​

Obviously publicans are always keen to keep their costs down and when a cheaper option is available, it can be attractive. But is there anything that makes pubs particularly vulnerable to these propositions?

Peter does not believe unsuspecting licensees are a particular problem. "I don't think it's just the pub trade that is susceptible - there are a lot of other types of retailers who have come unstuck," he says.

"Many businesses are at risk because they are not always au fait with the AV and media industries. They are approached by skilled sales people and maybe convinced into taking on something they are not fully versed in."

However, the question of whether licensees should look to buy a screen outright or lease one divides Brian and Peter.

Brian suggests that if cash is a problem, then leasing is a viable option. "You don't have to buy outright," he says.

"I can understand the attraction [of buying], but if you look carefully at who you are leasing from and who will be around in the long term then it can be an option. But obviously if you go for the cheapest stuff, then you take the risk of getting burnt."

But Peter feels that if possible licensees should look to spend money upfront.

He says: "With prices falling fast, I would advise licensees to buy a plasma screen outright when they can. They can be bought for around £1,000. Obviously then you have an asset and you can sell it on after a year and still get some money back on it.

"If you plan to buy a new one every year you can always allocate the funds."

Meanwhile Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations, also advises caution.

"Always be very careful, especially when you are going to be leasing," he says.

"Look at whether you are going to be better with two large screen than one huge one, because I've heard of a lot of people having problems with projectors.

"Licensees should not just go for the first deal they come across. Seek advice if you are taking a lease. I know it can be tempting if you have a cashflow problem but maybe you are better off getting a loan. You can get big screens at very reasonable rates now."

So although there is no definitive solution, it seems that caution is the best approach when shopping around for AV equipment.

Established companies can be a good starting point - although Satvision had been trading for around 20 years, so even that is no guarantee. Just be clear about what you want before approaching a company and, as Brian Pipe puts it: "The old adage 'you don't get owt for nowt' very much applies in this situation."

Top 10 tips​

• Check whether your prospective supplier is well established and on a solid financial footing.
• Check whether they hold any relevant company qualifications, including quality assurance programmes such as ISO 9002.
• Check whether they are a member of a recognised and relevant trade body. There may be several that are appropriate, depending on the scope of the project.
• Check whether their personnel are properly trained and equipped for the job - do they have the right tools, safety equipment etc?
• Interview several of their existing customers that have had work completed similar to that which you are contemplating, both recently and a couple of years ago.
• Look at the total cost of ownership over the expected life of the equipment or system. Don't just look at the buy price of the hardware.
• If financing is attractive to you look at arranging it yourself via leasing, hire purchase or a dedicated bank loan.
• Consider your upgrade path and how you may want to enhance the system in two or three years time. Then consider putting all the infrastructure in at the outset.
• Do not get overawed by any one particular technology. Instead, ask yourself whether it provides value for money and will it do the job. Unless you feel you're also in the fashion business don't go for the very latest model.
• Take into account how the system/equipment will be used at different times of the day and week and make sure that your locations and sizes, power ratings etc take these varying requirements and conditions into account.

The views expressed by Mr Pipe are his own, independent of any organisation​