Manage supplier relationships, make cash flow management a priority and other small business tips from a consultant for making the most of the holiday season.

As the calendar inches closer to year’s end, small business owners need to prepare for both the seasonal rush that comes with summer, and the dip in trade commonly associated with the first quarter of the new year. Paul Watson, director of Oxygen8 Business Consultants, shares his tips for making the most of the busiest time of the year and avoiding some common pitfalls.

Temporary staff — to hire, or not to hire?

“Unless there’s little or no skill requirement – say, dishwashers in a cafe – try to manage with the resources you already have,” Paul advises. “Training and managing casual staff can drain resources from the rest of the team. “Instead, focus on helping your existing staff be as productive as possible by implementing processes and systems that empower them to do their jobs efficiently.” This might mean providing employees with extra responsibility that empowers them or providing specific training around working during the holiday period.

Make your supplier relationships a priority

Come the end of the year, people may be clamoring for products and for projects to be finished. Good relationships with your suppliers are critical to staying on top of demand and managing expectations. “Those relationships should be built up over time so you can develop the kind of loyalty that will stand you in good stead when you really need it,” says Paul. “Consolidate your key relationships and share your project forecasts so you can work together with your suppliers to meet demand so you do not have to shop around at the last minute.” Solid relationships can give you the opportunity to develop flexible arrangements. For example, you could ask your supplier to hold 200 items of a particular product you anticipate needing in December but can’t pay for until late February. “Consolidate your key relationships and share your project forecasts so you can work together with your suppliers to meet demand so you do not have to shop around at the last minute.” – Paul Watson

Cash management is critical

“There is a natural increase in demand towards the end of the year and with that comes the need to buy more stock,” explains Paul. “But that uptick in business is usually followed by a much quieter two to three months. So managing cash flow is really important. “For many businesses, January is a write-off and even if you get an invoice out, you probably won’t get paid for it until late February or even March. In the meantime, you still have to pay suppliers, rent, and staff.” So how can small business owners best stay on top of cash flow management? Paul recommends the following:

• Make sure you have a cash flow forecast so you can be ready for the slowdown in business that comes after the busy season. That might mean looking at a short-term loan.
• Get as much cash going through the business as possible. Think about making deposits and progress payments part of your payment terms and always get your invoices out immediately to reduce the cash cycle.
• Try to ensure a pipeline of work for the weeks and months after Christmas. Perhaps there are customers you weren’t able to accommodate at the end of the year – now is the time to get them on board and promise them first dibs on your availability, services or stock come January, February, and March.
• Be mindful of managing staff leave accruals. Some staff will prefer to accrue leave that has to be paid out upon their leaving the job rather than take the holiday time.
• There’s no harm in asking to negotiate flexible payment arrangements with suppliers and landlords if you have developed a good relationship.
• Control and manage your inventory and routinely clear out old stock which otherwise piles up.
• There’s no need to discount coming into Christmas unless you’re getting something in return.
• Avoid spending all the money in your bank account. You’ll be feeling flush as the seasonal rush kicks in but you’re likely to have a quiet period directly after. And remember you’ll have GST and provisional tax payments due in mid-January.

Good leadership counts for a lot

Small business owners need to take the lead with their teams, according to Paul. “A good team that performs well can do extraordinary things,” he says. “With the right motivation and the systems in place for them to do their jobs well, your team can work at 120% of their normal level. “Give them thorough day and week plans, reduce the opportunity for downtime and errors, and maintain great communication. “And finally, don’t forget to thank your staff for their efforts. Take the time to acknowledge and celebrate their achievements.”