FOR IMMEDIATE RELEASE
CHRISTMAS is a time for cheer – not least of all for the retail industry, which experiences its busiest time in December. But it can also bring some unexpected, and not always joyful, surprises for small business owners. Logistics hiccups, bad weather, and problems with cashflow all have the potential to make the coming weeks less about jingling tills than juggling problems. So, what actions can small businesses take that will still see them having a happy and productive end to the year?
Boost Capital has five key pieces of seasonal advice.
1. Delivery dilemmas
Presents under the tree are an essential part of Christmas, so failing to get orders to customers is a disaster any retailer must avoid. When delivery firm City Link (http://www.bbc.co.uk/news/business-30602326 ) went bust on Christmas Day two years ago, about a million parcels were stuck in its depots, with SMEs and major retailers scrabbling to find alternative providers. Whether a company sells online, or uses a combination of bricks and mortar and e-commerce, having a robust, trusted logistics set-up is vital, especially during the festive celebrations. Having a back-up plan doesn’t hurt either.
Getting products onto the shelves quickly, then out of the door just as fast can be the difference between success and failure at this time of year, so supply chain and courier services must be up to the job.
- Find the best courier for your size of business based on cost, turnaround time, and ability to track parcels. They will represent your business to the customer, so choose carefully.
- Test both orders and returns processes before the Christmas rush hits.
- Keep details of a second-choice courier firm to hand in case problems emerge with transportation, or if your usual company can’t honour delivery dates.
Another pragmatic way to minimise logistics difficulties is to encourage people to use a click-and-collect service, with customers ordering items online or by phone, then physically coming to a store to take them away. This removes the hassle of parcel deliveries being missed at home, and the returns process also becomes easier if an individual can see what they’ve ordered in the shop. Plus, there’s always the possibility someone may buy extra items in store once they’ve seen what’s on offer.
2. Weather washouts
Some disruptions to trade can’t be foreseen, and many businesses have found their happy Christmas deflated by bad weather. Storms can have a big impact on footfall on the high street – heavy rain last December saw many shoppers buy online or use retail parks. Another blow came because temperatures were mild, so clothing retailers struggled to sell the expected levels of winter wear (https://www.theguardian.com/business/2015/dec/20/warm-december-nervous-uk-retailers-christmas-sales-panic-monday ). Then, the winter floods of recent years saw many SMEs left with damaged stock they couldn’t sell, or work premises out of action, causing firms to shut up shop altogether. Long-term forecasts aren’t reliable enough to predict such things, but it is wise to imagine every such eventuality – and possible response.
Drawing up a risk assessment and business contingency plan is the best way to be prepared if something unfortunate occurs.
- Ask yourself: what are the key elements to the business? Identify essential processes and equipment, as well as vital suppliers, customers, and staff.
- Weigh up how the company could operate if any of these elements were out of action. For example, would the company’s e-commerce function still work if the physical store were closed?
- What would be the first thing to do if things go wrong? Which emergency service should be called, or which are the necessary employees, suppliers, or customers to contact if a problem arises?
- Devise a recovery strategy, whether that’s making an agreement with another business to share space temporarily if disaster strikes, or planning with a third-party supplier that they could look after customers if you were unable to do so.
- Keep an up-to-date list of temporary workspace providers, so you can relocate at short-notice if required.
3. The price is right
Some SMEs will have started their Christmas promotions in the build-up to Black Friday in late November, but others wait to see shopper behaviour. Certainly, if a business owner finds some stock isn’t moving as quickly as hoped, many will decide to market goods at a cheaper price to shift items that will be unsaleable come January.
Everyone loves a bargain and price promotions are a very effective sales tool, but don’t slash sales tickets in a panic. Always consider the key factors in any promotional pricing strategy – your profit margin, whether cutting prices will damage your brand, and what to discount and what to keep at full price. There are other ways to boost sales - free delivery, money-off vouchers for the New Year, entry into a prize draw, or even a free gift. Be creative, and realise cheaper prices are not your only weapon when trying to win customers.
4. Cashflow concerns
December is the month when retailers should take their highest revenue, but they also have many extra expenses to take into account. There are temporary staff to pay for, as well as longer trading hours, which also increases wage costs. Some companies pay long-term employees bonuses. Running out of stock is a disastrous prospect, so bosses stockpile items they know are likely to prove popular. But holding more inventory than usual also means higher storage costs. And there’s no guarantee products will sell as hoped, so firms may be sitting on inventory while still having to pay suppliers’ outstanding invoices.
Of course, this all takes money, and many bills can’t wait to be settled in January. Boost Capital (http://www.boostcapital.co.uk/small-business-loans-uk/retail-business-loans/ ) always sees a December spike in loan applications from retail SMEs in the midst of their busy Christmas period. Some plan ahead to use bridging finance to cover the extra seasonal bills, while others are surprised to be left out of pocket because debtors are away for Christmas, banks are under-staffed and working shorter hours, or the business has been hit by an unexpected expense, such as hiring last-minute staff to cover sickness. Invoice finance can be an option, others turn to their business overdraft, while many realise short-term funding, such as ours, can be arranged very quickly to get them through the immediate panic with ease. Keeping the cash flowing in the business is what matters both to make the most of the opportunities the festive period brings, but also to minimise the risk of business disruption, or even insolvency.
5. Seasonal Security
Finally, be aware Christmas is not a season of goodwill for all men – reports of burglary against businesses increase in December due to shorter daylight hours, and some premises being unoccupied during the holiday period. It’s not unheard of for criminals to break into buildings as seamlessly as Santa Claus, and then clear businesses out of valuable inventory and equipment.
Prevention is better than cure, so ensure all staff know proper security procedures, locking premises thoroughly at night and setting alarms. And, of course, don’t skimp on business insurance – if the worst happens, it could be the difference between the operation surviving or failing.
But Alex Little, Managing Director of Boost Capital still has an optimistic outlook for 2017. 'SMEs should always remember their size can be a virtue, certainly when it comes to reacting quickly to unexpected change. Life always holds some surprises, but nimble small firms can adapt swiftly, and turn a problem into an advantage. So, keep your head this Christmas regardless of the challenges the festive season brings, and there should be much to celebrate in the New Year.'
As a specialist small business lender, we're champions of the SME sector. We are here to help UK SMEs achieve their full potential by providing fast, flexible, and hassle-free small business loans.
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20 Dec 2016 09:30
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