Cash flow is a perennial challenge for almost every small business, and over the past two years SME owner’s cash flow strategies have been challenged at more than any other time in living memory.
With some form of normality now being established in many states, some businesses have the potential to reap the rewards of a rejuvenated festive season, while others will be looking forward to a well-earned rest.
So, whether you’re aiming to capitalise on increased seasonal trading potential, or you’re in an industry that has a traditional Christmas lull, it’s important to have the right strategies in place. Here are our five top things to consider.
- Realistically forecast demand
After the two years we’ve had, you don’t want to miss out on any opportunity to maximise a trading spike – however having the right stock levels to take advantage is likely to require some investment.
While you don’t want to run out of stock early on, you don’t want to be left with a warehouse full of unsold items either, particularly if they’re perishable or seasonal. So realistically map out a few scenarios, have some contingency plans in place, and ensure you’ve got enough working capital to invest when you need it.
If your business is taking a break over Christmas, ensure you’ve got what you need to pick up again in the new year. Don’t leave ordering until after Christmas, as you’ll likely find others have done the same!
- Get as many invoices out as possible
The run up to Christmas is always a busy time, and it’s easy to let some admin tasks fall by the wayside. But don’t let your invoicing be one of them. With many businesses closing down over Christmas, invoices are unlikely to be paid during the last two weeks of December and the first two weeks of January, so if you’ve got invoices to issue, get them out – pronto! And consider reducing your payment terms to seven or 14 days, too. Don’t forget any unpaid invoices, either – make a concerted effort to chase those debtors before the holiday season gets into full swing.
- Get your staffing requirements sorted
Whether you’re entering a busy period or a lull, it’s important you have your staffing needs arranged over the holiday season. If you’re in the retail or hospitality industry for instance, you will likely need additional support, and with the overseas education and tourism sectors still at a standstill those additional staff won’t come from the traditional sources. If Christmas and New Year are quiet periods for your business, cut down to a skeleton staff, have a Christmas shut-down, or encourage leave to be taken!
- Communicate with your customers
Amid all of the lockdowns and rule changes, businesses opening and closing, it’s likely many of your customers will still be a little uncertain about what’s actually going on. So communicate with them about your business, and the plans for the weeks and months ahead. Many will also, understandably, still be nervous about Covid-19, so reassure them by detailing the prevention measures you’re taking to ensure they have as safe a time as possible when they’re engaging with your business.
- Have a cash flow back up plan in place
Of course, having the working capital to invest in stock and staff is vital at this time of year, which is why having a financial back up plan in place is critically important. If you need a cash injection to make the most of the festive opportunities, Bizcap can help. As Australia’s most open-minded lender, we can have small business loans of between $5,000 and $1m in your account in just three hours, meaning you can seize those opportunities in the here and now, maximise your business’s potential, and get the new year off to the best possible start.
The team here at Bizcap are ready to help – and will be working every day except public holidays to ensure you’ve got access to capital when you need it. Call 1300 922 223, or apply online.