Just as kids are making their list and checking it twice – so should you, especially when it comes to prepping your small business finances for the holiday rush. According to Deloitte, 2015 holiday retail sales are expected to increase by up to 4% overall.
Keep this simple premise front of mind: a little planning goes a long way. Take the time now to set yourself up for success come December so you’re prepared for all it brings. Below are tips for getting your business finances in order for the holiday season.
Pay Those Bills
Expenses are a reality in any business and should be managed efficiently. But when you’re a do-it-all small business owner, it’s easy to let a stack of bills pile up. Unfortunately, this makes for a less-than-ideal cashflow situation.
When we say cashflow, we’re referring to the money that comes into your business as revenue and gets paid out in expenses. It’s a key metric for measuring the financial health of your business.
Many business owners simply login to their online banking when they want to know how much money they have. But that figure doesn’t account for the stack of bills on your desk. By paying bills right away (or at least accounting for them as they arrive) you can have a better idea of where you stand financially than your bank balance can provide.
Recoup Outstanding Invoices
If your customers pay you by invoice, you likely know that it takes a reminder or two before you get paid. The calm before the holiday season can be a good time to send some final reminders before even more invoices are issued.
Like unpaid bills, outstanding invoices also influence your cashflow. Let’s say you have $1,000 in your bank account but owe $200 in bills and have $500 in outstanding invoices. Some basic math ($1,000-$200+$500) tells us your business actually has $1,300 to its name.
Put your outstanding expenses and invoices to bed before the busy season starts and go into the holiday season with a clear view of your cashflow.
Forecast Sales and Increase Your Inventory
Another beneficial way to prep for the holiday season is to forecast your sales and plan accordingly from there. If your business has gone through the holiday season in prior years, you can consult your records, and compare it to your growth, in order to anticipate how much your sales are likely to increase. You can even get granular and look at sales history for specific inventory items. There’s a good chance some sell better than others.
Many businesses experience sales fluctuations. To help forecast your sales, put down your guaranteed revenue. For example, if you sell subscriptions or have any long-term contracts, include those immediately. If your business has many first-time customers, it will be more challenging to forecast your sales.
Try to be as accurate as possible. Look at your previous sales and check if there’s been a consistent trend of growth.
Look at your conversion percentages from non-holiday periods (use Google Analytics and set up conversions and goals) and guess how much your traffic might increase during the holidays. You can use this to help forecast your holiday sales by looking at your expected traffic and expected conversions.
As a general rule of thumb, be conservative when it comes to forecasting sales. Once you determine the items that are your big sellers during the holidays, you can adjust your inventory. After all, nothing is worse than missed sales due to low inventory.
Bring Your Tools
If you’re going into your first holiday season or don’t have records from previous years, then you should implement the necessary financial tools to start tracking your sales. Here’s a list of some types of software most retailers can benefit from:
Make It Easy (for You and Your Customers)
Customer service and convenience often draw customers to small businesses. Use these principles to your advantage. For example:
In-store, online and mobile
Admittedly, opening a small business is a daunting task. And the thought of migrating your business online is equally daunting. But with all-in-one solutions such as Shopify – it’s easy to build and maintain your online presence. Let technology do the heavy lifting to set into place all the back-office functions, such as inventory management, analytics and more. Think about how you go about your daily life – which, chances are, includes lots of smartphone time. So be sure to leverage technology to establish and manage your mobile shopping experience.
Xero’s online quotes help you get jobs more quickly, which then speeds your invoicing – ultimately improving your cashflow. You can conveniently create an online quote from anywhere. Then, when it’s time, you can quickly and easily convert the quote to an invoice – and your customers can respond with equal speed and ease. This means that you get paid faster. In fact, Xero, on average, has seen that online invoicing reduces the time to get paid from 43 to 31 days.
Consolidate Your Back-Office and Involve Your Accountant
Modern software is increasingly being moved from the desktop to the web. The beauty of online software is that two completely different systems can connect and share data. When an item is bought in your store, a point-of-sale system can let your inventory system know and your payment system can send the transaction to your accounting software, updating your financial records. Once the software is implemented and connected, the sharing of data happens in the background while you run your business.
Be Proud of Your Small Business Roots
Don’t worry about keeping up with big box stores if that’s not you. Unless there’s clear value for your business, there’s no need to run a Black Friday or Cyber Monday sale. That’s because these dates don’t define who you are as a business.
Take a moment to think about who you are – both as a business owner and business. Think about why your customers frequent your business throughout the year and embrace it. Remember, shoppers prefer small businesses for the family setting, charm, customer service and unique merchandise (these feelings apply for both brick-and-mortar and online businesses). Capitalize on your niche by participating in celebrations of small businesses, such as Small Business Saturday.
Embrace the Holiday Spirit
For as joyous as the holiday season is, it can also be stressful and overwhelming when it comes time to shop. Many people loathe going into a crowded shopping mall or lining up at the crack of dawn. So provide them with a pleasant experience that is unique to your business.
Keep doing what you’re doing and you’ll reap the benefits of the holiday season.
About The Author
Iris Yau is a down to earth kind of gal, boba milk tea lover and marketing guru at Xero. Xero is beautiful online accounting software for small businesses. Sign in any time, anywhere, from any device. You can link your Shopify account to Xero in the Shopify App Store.