With the rush of filing taxes now subsiding and fourth quarter in full swing, it’s time to come up with a strategy for the holiday season to take advantage of a small business’ best months for sales. To experience the full benefit of this crucial sales time, cash flow planning is a must to be ready for increased inventory purchases and payroll needs. This is a time where having accurate and timely financials are truly your friend. Luckily, there is still time to get your financials in order for a smooth holiday sales season.
Cash Flow Considerations
This pre-holiday sales planning requires cash flow management. For more detailed information, you can read our cash flow article here, but in the meantime, let’s dive in to what needs to be thought through in the near term. Cash flow planning is best understood when you have an accurate look into your books. Who is handling this? Are they up to date? Do you have previous year’s records to help understand how sales may look this year?
Step one is to get your books up to date to see what you are working with. Only then can you have an idea of what you have at your disposal and start deeper, more meaningful planning. Take a look at your cash flow statements and note any trends so you can prepare for predictable dips. While it’s not the greatest idea to get into debt, having a line of credit or loan with reasonable terms may help get your business the bump of cash needed to increase your inventory levels in higher sales periods.
The next step is to look at where the money truly should be spent for greatest gains to the company. Inventory will be a top priority, so if you haven’t been able to restock, now is the time. Reconsider big money items, like holiday parties or bills that can wait until the new year. Reconvene after you’ve made your holiday cash back and consider a thank you party if you think company morale would benefit.
Sales require inventory and inventory requires cash. Now’s the time to leverage your vendor relationships and make your cash go further. Will you be able to receive product with a minimal deposit? Drop ship directly from the vendor? Negotiate longer payment terms? Sometimes all it takes is a simple conversation.
Take a look at sales trends from previous years or months. Invest in hot ticket items and new things that will move. If you buy too much and can’t sell it, you’re not helping free up cash. Invest some time into sales planning and product launch strategies for new or forgotten items to give your company the best opportunity to get them moved.
Look for opportunities to move large quantities of inventory at once. If you have dealers, offer them incentives or explore curated sales sites who can help move large quantities and expand your customer reach. Reach out to social media influencers who may be able to expand your sales audience.
Personnel and Payroll — Bonuses, 1099s and Overtime
To have enough manpower for holiday sales or cover your employee’s time off, it is likely you will need to hire temporary labor or invest in overtime hours for existing staff. You will need sufficient team members to sell the items either physically in a store front or behind the scenes online and there will be increased hours required to update social media outlets and update your website for promotions.
This is also a time for bolstered customer service efforts. You will likely receive more questions regarding items, follow up inquiries after purchases are made and more. Don’t risk tarnishing your reputation over a lack of communication with those that buy your product. If your marketing is doing its job, a lot of these may be first time customers so you will want them to come back.
Shipping and processing are also crucial for holiday orders. Customers will want their orders at certain times, so it is best to have enough staff to stay on top of order processing and shipping as well.
Try offering commissions or sales perks to motivate employees to be rewarded versus a higher pay rate. This method of payment can help both parties involved. It offers motivation for your team to make sales and keep the increased cash outflow inline with the increase in sales. If you will be offering holiday bonuses, these extra payments also need to be considered in your cash flow plan.
If you are hiring contractors aka 1099 employees, there will be different tax considerations to stay on top of too. We have more resources surrounding independent contractors here. Make sure you can support your operations with enough people focused on all of the important facets of sales.
Keeping it All Recorded
As your amazing holiday sales unfold, you will need timely and accurate recording of revenue, inventory and personnel costs. This is imperative for tax time and to get a more accurate forecast for the year ahead. Stay on top of your books and ensure all items are recorded and accounted for.
There is a lot to consider to take advantage of your best opportunity each year for sales. It all stems from having up to date records, mostly the ability to forecast and manage cash flow. Accountfully can help in all facets of this process, so it’s not a mad dash each holiday season. We keep your records up to date, have intelligent software to predict and show trends, and we keep vendors happy by staying on top of your bills and keeping the lines of communication open year round. Once tax time rolls around, we have you covered there too.
There is still time to get things sorted out before the rush goes live. Tell us about your business — its challenges, goals and more. We can help get things on track for you.