A slew of bills, the need to pay for extra seasonal expenses, and a drop in customer numbers all mean the New Year can feel gloomy for SMEs in this industry. But the January blues lull should come as no surprise. And organised business owners can plan to ensure they start 2017 in a happy, hopeful, and productive mood.
SME owners in the hospitality field need a rest after the Christmas chaos, but the dramatic fall in trade in January still comes as a blow. Just as business dwindles, the accountant is likely to be in touch about the latest tax bill, with HMRC threatening penalties for those who don’t pay.
Businesses that don’t own their premises may be reeling from the last rent quarter day demand of 2016. Then, there’s the unpaid invoices for those extra costs over Christmas. These January blues can make for a stressful start to the year.
Even businesses that enjoyed a profitable festive period can struggle to cope. Perhaps it’s no coincidence the New Year is a busy time for insolvency professionals.
What needs addressing first? It’s a question your accountant can help to answer. If the business hasn’t got cash to cover immediate costs, identify what must be paid straightaway and in full. Next, weigh up if you can negotiate repayments.
Even the taxman is open to such discussions, thorough interest and late fees are likely to be charged on outstanding tax bills. Whatever you do, be careful not to become a so-called zombie company, one that is only able to pay interest on its debts, not the debt itself. Zombies are only a few steps away from not existing at all.
If bridging finance is needed, dipping into the company’s overdraft may be an option. However, banks and some other funders get nervous if they know borrowing is for outstanding tax. Plus, much conventional lending is slow to arrange.
Short-term, unsecured loans of the type we provide are designed for this type of scenario – fast, uncomplicated financial solutions for whatever business expense.
But there are so many funding choices for SMEs today, including invoice finance, which can be useful if a business is owed money. Perhaps this is less likely for hospitality firms, which tend to receive cash payments up-front, but it’s worth investigating.
Other innovative forms of alternative funding are tailored to specific business needs, so explore all options with the help of a commercial finance broker or by looking at online finance comparison platforms.
On the next page, find out how you can boost business when the January blues strike.