How to overcome common EOY struggles
As many people are gearing up to celebrate, small business owners often find themselves distracted by all the things they need to do.
These distractions can not only take the fun out of the holiday season, but also sabotage your business success as you get caught up in the everyday struggles and stop moving forward with bigger business plans.
If you feel like you’re struggling as the holiday period nears, you’re not alone. Here are some common struggles and our tips for getting through them – and enjoying the holiday season.
Struggle 1 – unpaid invoices
Unpaid invoices are a concern for business owners all year round, with research showing 47% of invoices are paid late and almost half of small business invoices take 60 days to be cleared.
However, the holiday period makes this concern even more real. Many businesses close or have limited operations, which means wait times for payment stretch even longer during January.
Struggle 2 – hiring additional staff peaks
As people celebrate the festive season and take time away from work and business, other businesses start to heat up.
If you’re in retail or hospitality, the seasonal peak often hits bringing with it the struggle of hiring staff to deal with the influx of business (and paying for them). Not only does hiring new staff incur direct costs as wages and advertising, there are also indirect costs associated with time spent interviewing and training new staff. Often this means cash flow can be a problem down the track if a business is heavily skewed towards the tail end of the year.
Struggle 3 – purchasing materials upfront
Another common struggle that keeps some business owners awake at night is the need to purchase materials upfront. If you’re in the construction industry, for example, purchasing costly materials and equipment in advance of a job can cause a cash flow crisis before work even begins.
Struggle 4 – buying new stock to prepare for peaks
Investing in higher stock levels in anticipation of a seasonal peak can be fraught with risk. If you don’t have stock available to sell, you miss out on the opportunity to supply. However, if your product has a limited shelf life and you carry large amounts of stock, you may be left with product that needs to be discounted.
Struggle 5 – the show must go on
If your business is shutting down over the festive season, income is likely to taper off considerably. But there are still bills to cover, wages to pay and overheads to manage. If you aren’t prepared in advance, the cash flow strain could prevent you from enjoying a well deserved break.
Overcoming the struggles
How do you overcome these challenges (and have a happy holiday)? Here are some ideas to get you started on the road to peace of mind and business success:
- Negotiate upfront payments, require a deposit and be clear on payment terms to limit the number of unpaid invoices your business has to deal with. Read more about dealing with unpaid invoices and avoiding a cash flow crisis here.
- Find a mentor who’ll understand your struggles, help you through the tough times and build your business confidence, and expand your business network.
- Find ways to automate and streamline your business – so you avoid the little distractions and have more time to concentrate on bigger business goals.
- Invest in your business to get ahead. You can use a cash flow loan for any business purpose, from investing in new equipment or stock to staff training or covering a seasonal shortfall.
Don’t forget to plan ahead and use these tools for business forecasting:
Download our cash flow management forecast tool
Managing cash flow means you know how much money will be available to your business going forward, and it helps you anticipate how much money your business needs to cover debts.
Download our profit and loss projection tool
Develop projections, sales targets and pricing for goods and services into the future, and use the results to tweak your business strategy and model.
We spoke to accountant Peter Knight and small business owner Louise Lashlie about how to prepare now for the end of JobKeeper on 28 March 2021.View more
New year, new you! Now is the time to wipe the slate clean and get on top of your business finances so you can charge into 2021 full steam ahead.View more
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