With more than 2 million SMEs operating in South Africa, small businesses are an imperative part of the economy and an invaluable source of employment. Being an entrepreneur can be stressful: you need to consider revenue, cash flow, being able to pay staff, and ensuring you are covered for the ups and downs of doing business.
Like most things, businesses are vastly impacted by seasonality. Holiday periods like December, can majorly affect your SME, depending on your industry. It can be a huge boost if your business is based on seasonal tourism, or it can be a downscaled month if you have shut-down periods. Both of these could pose a threat to your business, and it is important that you safeguard against these.
When the Festive Season is your Busiest Time
1. Ensure you are adequately staffed
It is essential that you have the right number of staff in place for an influx of customers. This can be forecast according to previous years as well as tourism and travel trends. Speak to other small businesses in your area to get a sense of their expectations of footfall in the holiday period. Also, have insurance in place to compensate your staff should you not hit your expected revenue targets.
2. Be vigilant
Crime tends to increase during peak season. Avoid having too much cash on the premises, increase your security measures, change your routines, and have the right insurance in place to cover theft. Prepare your staff for the influx of customers and train them to be safe and vigilant.
3. Be financially ready
While you should avoid having too much cash on your premises, be sure to have the right float for your business. Plan ahead to have cash flow during busy times so you can pay additional staff, stock up ahead of time, and manage the additional costs that come with the busier seasons.
4. Manage your stock
Plan and manage your stock well. Too much stock (especially perishables) could go to waste and lead to revenue loss. Similarly, you need to have enough stock to cater to your customers’ needs and capitalise on the seasonal uptake.
When the Festive Season is downtime
1. Be covered to look after your staff
Preparing to carry staff costs during slower periods is essential. If you can reduce staff shifts – or use the time for staff to take leave – it can help you save costs in the long term and have the full staff complement in place during peak seasons.
2. Protect your assets
A complete shutdown makes your business more vulnerable from a security point of view. Employing additional security measures and insurance in advance is a good way to safeguard your assets as break-ins, vandalism, and other related incidents can be more prevalent during the quieter periods and when businesses and office parks are empty. Be sure to check your insurance cover before November comes along.
3. Be financially ready
Manage your cash flow effectively during quiet times to ensure that you can handle your fixed costs. Build an insurance or loan plan so that you are covered for lower cash flow times and should you have an emergency.
4. Manage your stock
Don’t over-invest in stock during this period, especially perishables. Your cash flow could be impacted if you over-invest in stock that you cannot convert during quiet periods. However, at the same time, it is important to get stock orders in on time so that you are prepped and ready when opening for the busier seasons.
The festive season should be about celebration, whether it is entertaining and enjoying a busy business season or taking some much-needed downtime, being prepared for the business ups and downs can give you peace of mind to enjoy the season knowing your business is well protected.