Tips for keeping Cashflow steady during the Holiday Season.
Every business owner hopes to celebrate the season with their employees, but it’s hard to focus on the spirit of the holidays if your cashflow is tight. Small business owners often feel the strain of the season since people may be less likely to do business at this time of the year. If holiday season cashflow is a concern, keep these tips in mind:
● Cut your costs – All business owners can benefit from regularly reviewing their expenses. Take time before the holiday period to see if there are any ways that you can cut back. Make adjustments and ensure that you have a financial cushion for added security.
● Invoice in advance – Clients can be hard to get hold of once the holidays roll around, and their cashflow may tighten up as well. Ensure that you get paid early on by sending invoices in advance.
● Speak with suppliers – If things are looking tight, have straightforward and honest conversations with your suppliers. Many vendors are willing to work with you if they know that you’re honest and reliable. Set up payment plans when possible.
● Follow up on payments – if you have lingering invoices, take time before the holidays to collect payments. Make calls and send emails to anyone who is behind, and set up payment plans with customers if you need to collect outstanding balances.
With a bit of planning, the holiday season doesn’t have to be financially stressful. Lay the groundwork now for a successful end of the year so that you don’t have to worry about low cash flow.
Planning for Seasonal Dips in Income.
Seasonal dips in income can be highly challenging when you’re a small business. But there are proactive ways to predict, plan for and overcome these dips in revenue.
The key to dealing with seasonal dips is to know when they’re most likely to occur, and to have measures in place to spread your income and revenue pipeline over the course of the year.
Understanding Seasonality in your Sector.
If your business is seasonal such as pool supplies, or a ski gear specialist, you’ll be used to the peaks and troughs, but many ‘non-seasonal’ businesses experience times during the financial year where sales and revenue peak – and, on the flipside, where sales and revenue experience a pronounced dip.
When income is low at certain times of the year, it makes for challenging times.
So, what are the key ways to plan for this kind of seasonality?
- Forecast your seasonality – it’s vital to know WHEN you’re most likely to experience any seasonal dips. Looking at benchmarking reports for your industry is one way to predict the seasonality in your niche or sector. But you can also use your own accounting data to great effect. Look back through your profit & loss reports and spot where the peaks and troughs have occurred over preceding years.
- Charge a premium in peak time – one straightforward approach is to apply premium pricing for your products/services during the busy season. By increasing your pricing, you boost your overall revenue, giving you more working capital to see you through the leaner months when sales and income are at their lowest.
- Offer additional peak-time services – offering added extras and other additional service lines during peak time is another way to maximise the season. In the months where customers are most engaged, look to upsell these premium services and offer more value. Satisfied clients will be more inclined to pay for added extras, giving you an increased revenue stream from the same number of customers.
- Target other markets – exploring other related markets is another useful tactic. When you’re experiencing downtime, look for other ways to monetise your existing assets, products or services. For example, if you’re a hotel where sales peak in summertime, offer discounted conference space in the winter months to boost revenue.
- Diversify your products/services – if one product/service has a known seasonal dip, look at adding an additional product or service to offset this downtime. For example, a a ski resort could promote bike-riding or hiking breaks during the warmer summer months to keep revenue constant. Likewise a pool maintenance firm could establish an outdoor fireplace business for the colder months.
- Have a regional e-commerce strategy – If you’re dependent on a small local market, broadening your marketing and e-commerce strategies can help to attract a wider customer base – and bolster sales. Paid advertising through Facebook, LinkedIn or Twitter can easily target new geographical markets, bringing in new customers and giving your revenue a much-needed uplift during seasonal troughs.
Talk to us about planning for seasonality
If your business is struggling with seasonal dips, and the resulting impact on cashflow, come and talk to us. We’ll help you identify the timing of your seasonal downtime, and come up with a clear strategy for stabilizing your income across the year.
Get in touch to start beating those seasonal dips.