The holiday season can be a boon for businesses that successfully prepare for it. During this peak period, you may need to balance increased customer demand with available stock, holiday closures and fluctuating staffing levels.

Here are a few ways you can navigate this tricky time and start the New Year in a strong financial position.

Maintaining cash flow

While maintaining efficient cash flow is a year-round exercise, the holiday season can be a particularly turbulent time for paying bills and wages. There are several things you can do to manage the money coming in and out of your accounts.

Firstly, only make purchases that are essential to your operations during the holidays. This will help to keep your expenses down. You can also request deferred payments from your suppliers to spread out your costs over a longer period.

Secondly, chase up any overdue invoices and consider adding late fees or halting delivery until outstanding balances are paid. Conversely, you can also offer a discount as an incentive to customers who pay their invoices early.

For those customers who tend to settle their accounts at the last minute, you can issue a series of reminders. Digital invoices will also make the payment process as quick and easy as possible.

Forecasting demand and stocking inventory

Not sure how much inventory you should have going into the holiday season? Or have you ended up with not enough stock or too much?  By analysing your past sales and the current state of the market, you can form a prediction of future sales and use this to make decisions about stock levels. Make sure to take notes through this holiday season of any outlying factors and their effect to improve the accuracy of your demand forecasting for next year.

While there are various methods for estimating customer demand, the process can be simplified to a few key points for small businesses:

Examine sales trends: Look at your past sales data for the holiday season. Take any unusual circumstances, such as the pandemic, and current market conditions into consideration to then determine the average daily demand for your products or services.

Determine lead times: Use purchase order receipts to calculate how long it takes you to replenish your stock. Make sure you also consider your suppliers’ regular delivery dates and potential shipping delays during the holiday rush.

Set stock levels and reordering: Once you have an idea of how much stock you’ll need to meet demand, add a buffer to this and set reorder dates to avoid over or understocking.

Communicating with your customers

Whether your business has extended hours or an office closure during the holidays, it’s important to clearly communicate this information to your customers.

Use all available channels to spread the word about your holiday operating hours. These could include your website, social media accounts, email signature, automated replies, invoices and, of course, your shopfront if you have one.

The more places you can publish this information, the better your chances of avoiding customer confusion and frustration.

In the case of an office closure, ensure all incoming enquiries received before the closure have been answered and automated replies are set up to let customers know when you will resume normal operations.

We’re here to help

There are finance options available that your broker can help you with to make sure your business is fully equipped for success this holiday season. Get in touch today.