It is that time of year again, when retail fervour increases along with spending expectations in what has become euphemistically known as the ‘silly season’. Shoppers abound and the retail environment seems awash with cash. The pre-Christmas and traditional Boxing Day sales bring about the long-awaited cash ‘rains’ for retailers, big and small. But this visage hides what is all too often a sad reality for many retailers – that they’ve been holding out for Christmas in a last-ditch effort to ‘right the ship’ as it were.
So, how does a financially struggling entity deal with the competing pressures this time of year brings? Here are a few tips:
* Think about your inventories – if you hold old stock, discounting slow-moving stock pre-Christmas may create sales momentum, enabling you to clear the decks for newer and/or higher turnover stock post-Christmas to capitalise on demand. Turning inventories into cash is rarely a bad thing!
* Manage your Payables and Receivables – remember, people go on holidays over Christmas and well into January. If you are depending on getting your invoices paid for cash flow, factor in extra time. Similarly, your suppliers are unlikely to make allowances for delays, so ensure that you have sufficient cash reserves to avoid having debtors
and creditors out of sync over the holidays.
* Treat warning signs seriously – the many pressures the holiday season brings also bring stresses to businesses. Are you relying on the lead up to Christmas as the financial saviour of your business? Are you ignoring key business indicators that would otherwise cause you to seek help, in the hope that more sales will cure the problem? Taking prompt advice need not come at the expense of your business, but ignoring obvious early warning signs almost certainly will.
* Take some time to reflect – the longer days and the stresses of rampant trade often provide little time to reflect on your business performance. Make time to analyse your performance and to make changes needed to improve, or to capitalise on emerging opportunities. Remember, time spent working on your business can be more valuable than time spent working in it.
The Christmas holiday period is a time of year for celebrating and enjoying the important things in life – family and friends – as well as the achievements of the past 12 months. On behalf of the entire Vincents Canberra team, have a happy and safe holiday season, and a prosperous 2015.