29th November 2021
Iain Nairn MBE looks at how businesses can survive a challenging month, manage seasonal expectations and plan for a brighter new year
This time of year brings challenges for businesses.
Those who rely on the season for a substantial proportion of their turnover sit with their fingers crossed, hoping they bought and manufactured the right quantities and that demand is strong.
For others, the season is a quiet time, with staff taking holiday for an extended break. A 10 day break awaits for those of us whose businesses close for the Christmas holidays.
For businesses owners, this period might be a time of blessed relief and the chance to recharge the batteries (remember to buy some batteries now for the kids’ presents), but beware.
A 10 day break is more than most of us take for our summer holiday, but over this period the majority, if not all of your workforce, down tools. The loss of one third of a month to holiday and almost complete shutdown can have drastic effects on cashflow. So here’s the alternative Christmas survival guide.
Plan your spending
You need to understand your cash draw over the festive period.
Process payroll early, so that you know what you need to pay out ahead of the festive break. Look at what the costs might be for January too.
Your suppliers are likely to want a payment in line with their normal credit terms. Will you have funds available? If you’re struggling to make the full payment, talk to your supplier and ask for some time. It is the season of goodwill after all.
Collect your cash
For many years, I’ve been lucky to receive a cash gift from my Grandad. Now, most Christmases I’ve spent it before Christmas day, picking something up in the pre-Christmas sales. I knew that I would receive this gift… it was the norm.
It’s not quite the same in business though. Debts might not be paid on time… If you’re finding things tough, you can expect others to be in the same boat. Chase your customers for payment early to understand when you can expect funds to come in. And if you don’t want to come across as pushy, call to thank them for their business over the year… and then ask.
Stuck for ideas?
How do you buy a gift for someone who has everything they need, gets most of the things they want and turns their nose up at most of the gifts you buy them?
If you are stuck for ideas with your business – ask for help, advice, guidance. There are lots of sources of potential ideas that are easily accessible. Speak to your advisers, friends, family. Search the internet.
But, just like that jumper she always wanted, keep the receipt. While the idea that has been put your way may sound like a good one, make sure you’ve taken professional advice about it…you don’t want to stretch resources that are already under pressure.
Take some time for yourself
As a business owner it can seem like the phone never stops ringing. Make sure you do take some time to yourself as the down time will benefit you and spending some time with friends and family will remind you why you work so hard.
After the break
After the excitement of the festive period, review your plans again – January can be quite a let down after the celebrations.
The Christmas break will impact on your cashflow until the end of January, at least. 10 days without sales, 10 days without cash receipts and payroll to cover at the end of the month.
In 2019 and 2020, January was the month which recorded the highest number of company insolvencies. Things were a bit different in 2021 (another lockdown commencing on 5 January plus additional government support schemes) and if you follow the steps above, hopefully 2022 will buck the trend as well.
New Year’s resolutions
Just like puppies, planning, forecasting and thinking about your business aren’t just for Christmas. Make it a resolution to stick to. Planning won’t bring about difficulties but may give you time to avoid them.
As we head towards the festive period, look after your business so that it can continue to look after you, your friends and family.