The December and January period is normally a slow time for small-to-medium sized businesses, with most customers on holidays, suppliers operating on skeleton staff and budgets on hold. The Interface Financial Group’s David Hechter offers his top five tips for surviving the Christmas slowdown.
“Hope for the best, plan for the worst.”
Business owners and entrepreneurs are notoriously optimistic about their businesses and that is often the key to their success — optimism creates the energy needed to tackle inevitable business challenges. But optimism should not come at the expense of prudent planning, particularly when it comes to seasonal slowdowns.
Here are some tips to help you start 2010 with momentum:
- Stay on top of invoicing.
There may have been a mad rush to supply customers prior to Christmas. Prompt and accurate invoicing is obviously critical to managing cashflow, particularly if your clients and customers are themselves going to be away over the holiday season.
- Consider different scenarios.
Many businesses are finding it more difficult to forecast in today’s dynamic and tumultuous economic environment. As a result, business owners should ensure that they consider a number of potential scenarios for how their businesses might operate over the holiday season. For example, ask yourself, if sales are 10 percent lower versus the same period last year, then what does that mean for us? Or, if the sales we expect to have in January are deferred until February or March, what will that mean for our cashflow? Often, planning for the worst-case scenario is the best approach. At the very least, it will help you sleep at night!
- Know the availability of your key suppliers.
It is important to know if your key suppliers and partners (including financiers) are available during the holiday season and into January. You don’t want to be caught out needing something from them only to find out that a decision-maker will be overseas and not able to give you the necessary support, without having a backup arrangement.
- Consider financial alternatives.
With traditional bank funding becoming all but non-existent for small business, SMEs should consider alternatives, of which there are a range of different solutions, depending on the need. At Christmas time, a more flexible approach can be attractive to small businesses because they may not need a long-term solution.
- Implement mandatory annual leave.
It may be too late to enforce this year, but companies with full-time staff should consider enforcing Mandatory Annual Leave during traditionally slow periods. Many Australians do not take their annual leave (see the Government’s “No Leave, No Life” campaign) and the accumulation of annual leave entitlements can become a problem. Businesses should consider closing down when activity levels are slow. The period between Christmas and New Year’s is an obvious time to consider closing. This will have a significant impact on cashflow for companies that carry contractors. As an additional benefit, it’s a great opportunity for the business owners to recharge their batteries.
David Hechter is Director (NSW/ACT) of The Interface Financial Group, which provides short-term working capital funding in the form of a unique Invoice Discounting service.
Photo: Sean McGrath