The aroma of pumpkin spice is in the air, but before you know it, the jingle bells will be ringing. For small businesses, autumn is the perfect time to get your finances in order for the busiest – and often most profitable – time of the year. The festive season can be a huge opportunity, but it also brings unique challenges. Here’s our guide to navigating the holiday season with confidence and ensuring you jingle all the way to profit.
Plan Your Festive Budget
Before you buy a single Christmas decoration or order extra stock, create a detailed budget. This should cover everything from marketing campaigns and seasonal staff wages to increased shipping costs and festive party expenses. Look at your sales data from last year. What were your most popular products or services? Which marketing efforts were most effective? Use these insights to allocate your funds wisely.
Get a Grip on Your Inventory
For many small businesses, Christmas means stocking up. It’s a delicate balance: you need enough stock to meet demand but not so much that you’re left with unsold goods in January. Use your budget to plan your inventory purchases. Consider supplier lead times and potential delays. Also, think about cash flow; paying for a large order can tie up a significant amount of capital, so ensure you have enough cash to cover other operating costs.
Manage Seasonal Staffing Costs
Bringing on extra hands can be a lifeline during the festive period, but it’s crucial to manage their costs effectively. Remember, it’s not just about the hourly wage. You’ll also need to factor in National Insurance contributions and pension requirements. Ensure your payroll system is set up to handle new starters efficiently and that you’re compliant with all employment regulations. Getting this right now will save you a lot of stress when you’re busy with Christmas orders.
Forecast Your Cash Flow
Cash is king, and never is that more true than during the festive season. You’ll likely have a lot of money going out for stock and marketing before the big sales rush begins. Create a cash flow forecast for October, November, and December to see the ebb and flow of money. This will help you identify any potential shortfalls and take action in advance, such as negotiating better payment terms with suppliers or securing a short-term loan if necessary.
Don’t Forget the Tax Man
Increased sales mean increased profit, and that, of course, means more tax. While it might seem a long way off, putting a percentage of your festive earnings aside for tax is a smart move. Don’t wait until January to think about it; by doing so now you avoid a nasty surprise down the line and can start the new year on a sound financial footing.
By tackling these financial tasks in the autumn, you can free up your time and energy to focus on what you do best: running your business and enjoying the festive cheer. A little planning now can make a huge difference, turning the festive period into a genuinely profitable and stress-free one.
If you need a hand with your festive financial planning, don’t hesitate to get in touch. We’re here to help.