How small businesses thrive during Christmas and New Year
Top 5 tips to help you through the festive season
If you own a small business, you’re probably aware that the Christmas and New Year period can be challenging and disruptive with juggling staff absences, cash flow and problems with suppliers due to shutdowns. Some industries will experience peak demand during this time, such as retail or tourism. Other industries, particularly those providing professional services, may experience a quieter period. Some small businesses will choose to shut down over the Christmas period to allow themselves a well-deserved break. These businesses may therefore face a decline in revenue resulting in financial difficulty. Whatever the challenges your businesses face during this time, you outline 5 tips to help prevent any unnecessary financial stress and ensure you have a stress-free break.
1. Stay on top of your cashflow
Cash flow can be incredibly challenging during Christmas and New Year. Many small businesses have limited cash flow, so this needs to be managed carefully, especially if this is the slow time of the year for your business. Ideally, you will have a cash flow forecast that details all your sources of revenue and all your expenses and ensure you are actively managing this.
You will need to keep a close eye on all your work in progress and send invoices for completed works to ensure your customers pay them before Christmas. It is also helpful to regularly contact your customers to encourage them to pay their invoices, negotiate early payment or partial payments for works in progress before they shut down. It is also worthwhile to have conversations with suppliers to negotiate extended payment terms over the period, which would be a massive help when managing your cash flow. Ensure you chase up overdue invoices well before Christmas to avoid cash flow problems in the new year. Plan when you will purchase stock, don’t overcommit yourself and tie up all your cash to stock at this time if cash is tight. Only buy what you need and delay purchases if they can wait.
2. Manage your Christmas spending
There is no doubt the festive season is an expensive time of the year. This time of the year usually means parties and gifts to show your hard-working employees your appreciation for their efforts. While we all love a good party and getting into the Christmas spirit, small businesses need to remember not to spend more than they can afford. Have a good understanding of your expenses for this time of the year, such as staff leave, Christmas bonuses, public holidays, gifts, parties and general overheads and plan how to cover these costs.
The tax implications of your spending need to be factored into the cost of providing parties or gifts. Expenses that are considered entertainment are generally subject to Fringe Benefits Tax (FBT) and will usually be tax-deductible, and GST credits can be claimed. If the entertainment expense is exempt from FBT, they will generally not be deductible, and GST credits cannot be claimed. Entertainment may include providing food and drinks, tickets to sporting events, movies and the theatre, and accommodation and travel expenses associated with the entertainment. Minor benefits are under the $300 per head threshold and are generally exempt from FBT. You may also want to consider non-entertainment gifts, which may include hampers, flowers, beauty products, wine, or gift vouchers. Tax rules surrounding entertainment can be complex, so it’s best to seek advice from your tax specialist for your particular situation.
3. Revise your business goals
Reflect on your successes and failures during the year. What worked well? What can be improved? Choose your goals for the new year and plan a breakdown of how you will achieve them. You may consider getting professional help and updating and revising your business plan and having a fresh outlook in the new year.
4. Show your appreciation
Send you employees, clients, suppliers and customers cards or letters of appreciation to nurture the relationships. It’s an opportunity to reach out and help to improve your branding, stand out from competitors, and improve customer retention.
5. Consider outsourcing and keep a Back-office
If you and your in-house staff are looking for a break but expect some customers will still need support, consider outsourcing to a team that can be available on-demand to meet your customer’s needs. This could be any back-office support such as answering calls and emails to providing accounting, IT and bookkeeping services.
How Accario helps Small Businesses with Accounting needs
You may not have the volume of transactions to hire an accountant full-time. We provide scalable accounting resources to suit you as you grow. You could start with a part-time accountant (or even pay for hours) and over-time push up to a full-time equivalent. The good news is that we will take your business in a more profitable direction.
There will come a time when you really should outsource or delegate all of your accounting. If that time is now, let’s chat about getting you your own Back-office. As an ISO9001 certified outsourcer, we will assign you a qualified accountant who operates skillfully at the highest level and who is managed by a local accountant.
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