How to win the holiday battle as a small business owner
As the holiday season quickly approaches, many Australian small businesses find themselves under increased pressure, due to increased competition, staff holidays, supplier shut down periods, cashflow headaches and unforeseen outgoings. Following are a few tips and tricks to help Small Medium Businesses (SMBs) keep their head above water.
Studies showing that 60% of businesses fail in the first year, Christmas can be incredibly testing for SMBs and it can either make or break a business that’s just starting out.
We see first-hand the pressures that business owners face at this time of year. The holiday season can take its toll, both financially and emotionally but there are simple steps that can be taken to not only survive but thrive throughout the festive season
To add to the stress, recent research [Dun and Bradstreet, Business Expectations Survey, 2017] also reveals uncharacteristically low business expectations for Q4 2017, despite businesses usually heading into the fourth period with high hopes. The research suggests that businesses could be set for a very slow end of year, and start of 2018.
If small businesses rely on a surge over Christmas, from consumers buying goods for gifts or gearing up for a big start to 2018, it can be demoralising, not to mention stressful to not achieve forecasted goals. The key is to set realistic expectations on the businesses performance, and then to plan for the unexpected in any event.
Six survival tips for the festive season:
1. Collect your dues: Make a note of your clients who are sitting on outstanding invoices and deal with late payers so you can get that cash in your bank account before the holidays. Don’t be afraid to pick up the phone and politely yet firmly request payment.
2. Declutter: Avoid paying interest on stale inventory or hoarding last season's stock by selling it at a discounted price to get it out the door. Even if you move it at cost or for a loss, liquidating is a lot better than keeping your money tied up.
3. Shut up shop: If most of your clients are shutting up shop for a week or two, it might be financially sensible for you to follow suit, or at least maintain skeleton staff. There’s no point incurring the costs required to keep your business operating if times are quiet.
4. Tighten your belt: In the lead up to the New Year, take a close look at your business expenses and your debt to see how you can manage your money more wisely. Due to the seasonal impact on trading for most businesses, this is the most important time to understand your cash-flow. Understanding your fixed and variable costs will allow you to adequately provide for any slowdown in trading.
5. Recharge the batteries: Burning out isn't going to help your business. Scheduling a bit of downtime can do you and your staff the world of good by helping to clear your head. Use the time to think about what you want to achieve in 2018 and set the foundations for a plan on how you hope to get there.
6. Have a contingency plan: Before you close the door and head off on your break, have a contingency plan in place in case of events such as client emergencies, power outages or IT failures. Planning ahead will ensure a restful, well deserved break.
Businesses who have concerns about managing the requirements of the holiday period should seek professional help as soon as possible. Options do exist and it’s important to explore them. Put simply, it’s important to speak with your advisers - accountants, legal representatives or an insolvency specialist - before it’s too late.