Preparing Your Small Business for the Holidays
Whether your business is in retail, manufacturing, or service, the winter holidays often spark an uptick in consumer activity and sales.
Recent data from the National Retail Federation (NRF) illustrates this: The NRF forecasts a 4.3 to 4.8 percent increase in holiday sales for November and December compared to the same period last year. That’s a boon for businesses everywhere.
On the other hand, many owners have come to rely on holiday sales as an important part of their annual totals. You may be one of them. Small businesses ranging from equipment and supplies dealers to furniture and clothing stores tally winter sales that make up 16 to 30% of their annual totals. As a result, even with the favorable forecast, your business might be feeling the pressure to perform.
Preparing yourself in a few key areas, however, will enable you to overcome the particular demands of the peak shopping season and maximize sales and profit:
1. Identify your sales expectations.
Be specific and realistic about your business goals for the seasonal short run. What sales targets do you hope to meet or exceed? How far can you stretch your business toward fulfilling these targets?
Consider analyzing your past-season totals, product-specific sales data, or marketing trends. You might research competitors’ sales profiles or content insights. Every bit of information will help you identify expectations and clarify revenue projections. In turn, these will improve the big-picture management of your cash flow.
2. Track your inventory levels.
Out of stock. It’s the dreaded, three-word alarm certain to slow or kill any sales momentum your business is hoping to generate. It tests your most loyal customers and forces others to shop elsewhere. And it happens more often than you think.
A recent State of Small Business Report indicates almost 43% of small businesses surveyed in the U.S. either manually track their inventory or fail to track it altogether. Given this backstory, it’s hardly a surprise when inventory levels show zero on the frenzied Friday of a holiday week.
To ensure your readiness and a healthy outlook for the long term, take proactive management of your inventory. Review your top sellers from past seasons to set stock levels for the current one. Keep one step ahead of your inventory counts so that you can adapt accordingly should sales fluctuate. Most importantly, adopt an automated inventory management system for your business, which can streamline real-time tracking and reordering of your stock and generate up-to-date reports.
3. Anticipate your staffing needs.
With the oncoming holiday rush, you may also need to hire additional staff for your sales floor, stock room, or customer service. If so, you’ll need to act quickly, given the competitive demand for seasonal hires.
The Wall Street Journal reports the recent growth of unfulfilled, low-skill jobs like seasonal retail. For small business owners, the result is a competitive “arms race” to hire temporary employees. Josh Wright, chief economist at iCIMS Inc., notes this pivotal trend:
“Retailers are hiring sooner in the cycle and increasingly investing in training. They’re dropping their standards and then training hires to allow them to be more productive employees.”
So, prepare as early as possible with a clear and efficient staffing strategy. Allow your inventory levels, for example, to determine when to staff up. But remain flexible and attuned to how your sales season is actually progressing. You may need to trim your hires if the numbers just aren’t adding up.
4. Be mindful of your cash flow.
Whether your concerns revolve around boosting seasonal inventory, staffing, or marketing efforts, a healthy cash flow remains the all-too-important factor as to whether your business succeeds or slumps. With ambitious sales markers and operational stresses, you can easily overlook the proper and careful management of cash flow.
In the event of a negative sales forecast or unexpected downturn, you’ll need fast, secure, and dependable financing to shore up your business. Our recently announced Online Lending Platform for Business offers a vital solution. Tailored to the needs of business owners, our platform gives you access to a host of financing options through a suite of self-check tools.
Find the exact type of loan you need and go back to doing what you do best — keeping your business thriving this holiday season.
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The information mentioned in this article is for informational purposes only, is intended to provide general guidance and does not constitute legal or tax advice. Each person’s situation is unique and may materially differ from the information provided herein. You should seek the advice of a financial professional, tax consultant and/or legal counsel to address your specific needs before any financial or other commitments regarding the issues related to your situation are made. Popular Bank does not make any representations or warranties as to the content contained herein and disclaims any and all liability resulting from any use of or reliance on such content.