Here are three essential practices involved in sailing through seasonal peaks and troughs from retail bank Aldermore.
1. Managing cash flow
That old adage ‘cash is king’ never resonates so much with SMEs as when the quiet period hits. Cash might not be coming through the door at the rate you’re accustomed to, but there are still staff and suppliers to pay, and you’ve got to have the provisions in place to do just that. Likewise, preparing for busy periods (like Christmas for a retailer) usually means a substantial financial outlay to cater for demand.
Effective planning is the easiest way to keep cash flowing through the business. A cash-flow forecast drawn up at the start of every financial year and reviewed at regular intervals should help to determine where the tight periods will be and where you should be putting provisions away to cover them.
However, business doesn’t always run smoothly. To keep finance moving favourably, it’s advisable first and foremost to try and secure punctual payment from your clients. This might be easier said than done, but late payment is actually one of the biggest threats to SMEs with a quarter of small businesses reporting that they have experienced cash flow problems as a direct result. Where possible, offer clients an incentive for paying on time or try to negotiate some proportion of payment up front.
Finally, if cash flow is an issue, alternative finance solutions like invoice factoring and discounting allow companies to unlock cash capital from unpaid invoices without taking on expensive loans.
2. Getting the staff
If you’re a business that can make use of freelancers (such as creative or public relations), then taking on the least number of permanent staff you need and building a solid database of reliable freelance staff is probably the easiest way to manage turbulent resource requirements.
Alternatively, if your team are getting bogged down with the everyday during busy periods, it might be worth considering taking on temporary staff to free up essential team members for more productive tasks. Many retailers offer fixed-term contracts to help them satisfy demand over busy periods like Christmas without committing to staff they might not need when the hype calms down.
The key is to get to grips with your industry’s traditionally busy and quiet periods and plan ahead to make sure appropriate arrangements are in place. Of course, that’s not always possible, so it’s advisable to develop a solid relationship with a local recruitment consultant or staffing agency to make sure that if you need to, you have somebody that understands your business to call on at short notice.
Outsourcing work rather than doing it in-house is not a new concept, but one that often goes overlooked. Like hiring temporary staff to free up the core team, outsourcing to reliable partnering businesses can be a great relief.
Many SMEs are part of a core network of trusted businesses that they can rely on to complete key tasks on their behalf when there’s simply too much to handle. Often these networks develop organically, through industry influencers and business owners getting to know each other over time, but to find out more about the businesses operating on your doorstep, local networking events and business meet-ups are a good place to start.
4. Maximising on quiet periods
One of the biggest mistakes made by small businesses is not maximising on the quieter periods by filling them with essential practices like stocktaking and planning. Although housekeeping can feel a bit demoralising because it’s not proactively bringing new business through the door, it’s actually one of the fundamental elements for success.
If you’ve already worked out when your quiet periods are likely to hit, it’s advisable to schedule accordingly, so suspend product development during peak months to focus on the demand of the customer and vice versa.
Marketing is another oft-neglected part of business planning. Although spending a lot of time on a marketing strategy can feel a bit self-indulgent, establishing and promoting your business identity is always at the heart of a successful business. Methods of marketing are constantly evolving, with emergent trends like digital content marketing and social media quickly gaining traction, it’s really important to stay ahead of the beat.
And remember that it’s ok to have a holiday. Rather than sitting around stressing about business being slow, taking time out of the office for a week to relax and do things you enjoy can really help to get some perspective and come back to the table with a fresh pair of eyes.
Seasonal fluctuations always raise three core concerns: cash flow, staffing, and scheduling. Forward planning and savvy preparation are the only way to ensure your business will weather the seasonal rush in style.
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