The price is rightSome SMEs will have started their Christmas promotions in the build-up to Black Friday in late November, but others wait to see shopper behaviour. Certainly, if a business owner finds some stock isn’t moving as quickly as hoped, many will decide to market goods at a cheaper price to shift items that will be unsaleable come January. Everyone loves a bargain and price promotions are a very effective sales tool, but don’t slash sales tickets in a retail crisis panic. Always consider the key factors in any promotional pricing strategy – your profit margin, whether cutting prices will damage your brand, and what to discount and what to keep at full price. There are other ways to boost sales – free delivery, money-off vouchers for the New Year, entry into a prize draw, or even a free gift. Be creative, and realise cheaper prices are not your only weapon when trying to win customers.
Cash flow concernsDecember is the month when retailers should take their highest revenue, but they also have many extra expenses to take into account. There are temporary staff to pay for, as well as longer trading hours, which also increases wage costs. Some companies pay long-term employees bonuses. Running out of stock is a disastrous prospect, so bosses stockpile items they know are likely to prove popular. But holding more inventory than usual also means higher storage costs. And there’s no guarantee products will sell as hoped, so firms may be sitting on inventory while still having to pay suppliers’ outstanding invoices. Of course, this all takes money, and many bills can’t wait to be settled in January. Boost Capital always sees a December spike in loan applications from retail SMEs in the midst of their busy Christmas period. Some plan ahead to use bridging finance to cover the extra seasonal bills, while others are surprised to be left out of pocket because debtors are away for Christmas, banks are under-staffed and working shorter hours, or the business has been hit by an unexpected expense, such as hiring last-minute staff to cover sickness. Invoice finance can be an option, others turn to their business overdraft, while many realise short-term funding, such as ours, can be arranged very quickly to get them through the immediate panic with ease. Keeping the cash flowing in the business is what matters both to make the most of the opportunities the festive period brings, but also to minimise the risk of business disruption, or even insolvency.
Christmas crimewaveFinally, be aware Christmas is not a season of goodwill for all men – reports of burglary against businesses increase in December due to shorter daylight hours, and some premises being unoccupied during the holiday period. It’s not unheard of for criminals to break into buildings as seamlessly as Santa Claus, and then clear businesses out of valuable inventory and equipment. Prevention is better than cure, so ensure all staff know proper security procedures, locking premises thoroughly at night and setting alarms. And, of course, don’t skimp on business insurance – if the worst happens, it could be the difference between the operation surviving or failing. SMEs should always remember their size can be a virtue, certainly when it comes to reacting quickly to unexpected change. Life always holds some surprises, but nimble small firms can adapt swiftly, and turn a problem into an advantage. So, keep your head this Christmas regardless of the challenges the festive season brings, and there should be much to celebrate in the New Year. Alex Littner is the MD of Boost Capital Image: Shutterstock
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