How to win the holiday battle

| December 4, 2017

The holiday season is quickly approaching, putting many Australian firms under increased pressure, due to increased competition, staff holidays, supplier shut down periods, cashflow headaches and unforeseen outgoings. The holiday season can take its toll, both financially and emotionally, but taking a few simple steps can help smaller firms not only survive but thrive throughout the festive season.

To add to the stress, recent research also reveals uncharacteristically low business expectations for smaller retailers for Q4 2017, despite businesses usually heading into the fourth period with high hopes. The research suggests that businesses could be set for a very slow end of the year and a sluggish start to 2018.

If smaller businesses rely on a surge over Christmas, from consumers buying goods for gifts or gearing up for a big start to 2018, then it can be stressful and demoralising to fail to reach forecasted goals. The key to getting through a difficult period is to set realistic expectations about businesses performance and have contingency plans for the unexpected.

These six survival tips could help you negotiate the festive season and look forward to a truly happy new year:

1. Collect your dues: Make a note of clients who are sitting on outstanding invoices and deal with late payers so you can get that cash in your bank account before the holidays. Don’t be afraid to pick up the phone and politely yet firmly request payment now.

2. Declutter: Avoid paying interest on stale inventory or hoarding last season’s stock by selling it at a discounted price to get it out of the door. Even if you move it at cost or for a loss before Christmas, liquidating is a lot better than keeping your money tied up.

3. Shut up shop: If most of your clients are shutting up shop for a week or two, it might be financially sensible for you to follow suit, or at least maintain only a skeleton staff. There’s no point incurring the costs required to keep your business operating if times are quiet.

4. Tighten your belt: In the lead up to the new year, take a close look at your business expenses and your debt to see how you can manage your money more wisely. Due to the substantial seasonal impact on trading for most businesses, this is the most important time to understand your cash-flow. Understanding your fixed and variable costs will allow you to adequately provide for any slow-down in trading.

5. Recharge the batteries: Burning out isn’t going to help you, your staff or your business. Scheduling a bit of downtime can do you and your employees the world of good by helping to clear your head. Use the time to think about what you want to achieve in 2018 and set the foundations for a plan on how you hope to get there.

6. Have a contingency plan: Before you close the door and head off on your break, have a contingency plan in place in case of unexpected but conceivable events such as client emergencies, power outages or IT failures. Planning ahead will ensure a restful, well deserved holiday as you will have less to worry about.

Businesses with concerns about managing the requirements of the holiday period should seek professional help as soon as possible if these six steps aren’t enough. Options do exist and it’s important to explore them. If in doubt then speak with your advisers – accountants, legal representatives or an insolvency specialist – before it’s too late.

With a bit of thought and careful planning we should all enjoy a restful holiday season and come back refreshed for the new year.

Andrew Spring
Andrew Spring has more than 17 years’ experience in corporate recovery and insolvency, gained through work in the UK, Europe and Australia. He is currently a partner at insolvency specialists Jirsch Sutherland.

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