During times of growth, it’s all too easy to forget about planning for the sparser times. Yet as a small business owner, it’s vital to recognize and plan for the ebb and flow of sales that can happen throughout the year. If you run a business that depends on seasonal sales, you probably already have some form of cost control system in place for the rest of the year. For many independent retailers, up to 40% of annual sales are completed during the holiday period, according to the National Retail Federation. Even those not in retail may find that there are hard times when clients don’t seem as willing to use your services, with no distinct pattern or warning. So how do you plan ahead for these leaner times?
Plan Ahead
Although it may seem obvious, it’s important to plan ahead and set aside money to pay for necessary costs during slower times of year. However, if a lull in business is sudden and unexpected this can be easier said than done. Any month when you see extra money in your account, move it over into savings to give yourself a cushion down the road.
Cut Unnecessary Costs
Business owners must face two main types of costs: fixed and variable. Examples of fixed costs include monthly rent, insurance, and employee salaries. These must be paid monthly no matter what the market’s doing. Variable costs include office supplies, advertising, or travel, which could potentially be cut during lean times. Assess the situation carefully to see if there are any variable costs which could be cut, at least temporarily. You may be able to put off a major appliance purchase until you have more income coming in, for example.
Get Creative to Earn Side Income
Rather than making cuts, another approach is to increase your cash flow with side streams of income. Think about starting a website to earn advertising revenue, or use downsizing to your advantage by selling off old office equipment online. Although this Quicksales advert uses humour to get its point across, the suggestion of using online sales to access fast cash is a serious one. For example, if you’ve done away with an old fax machine in favour of scanning and emailing documents, you could sell it online to get some money back and help keep your business running.
Look for New Clients
It’s easy to feel panicked when your business is lagging. Rather than focusing too much on trying to push established clients into action, why not use this time to reach out to new clients? Set aside a bit of time each day to chase up on new leads and opportunities, to keep your business growing.
Use Technology
You’ll need to be aware of your business’s ongoing expenses throughout the year to plan ahead for sudden dips in sales. Think about investing in a software program to automate this process for you. Accounting programs can track your expenditures, forecast your profits and losses, and help you stay on budget. Another way to cut costs is to use cloud-based software, which is lower in cost than paying for IT assistance or your own server.
These are all just a few ways to improve cash flow throughout the year and help keep your small business on track even when times are tough. By planning ahead and getting creative with your streams of income, you can pad out your business accounts in any market.
