Six in 10 small businesses fail in the first year, and cash flow is often a contributing factor.
In fact, only around half of all Australian small businesses are cash flow positive.
As the end of the year sneaks up on us, along with the pressures of seasonal business fluctuations, it’s particularly important to keep cash flowing into the business and to monitor the cash flowing out.
To help you manage cash flow as your business dips into the quieter Christmas and New Year period, we’ve come up with six hacks to keep your cash flow positive.
1. Manage staff
Wages are the biggest outflow of cash for many businesses, and the unpredictability of end-of-year demand can make staff management challenging. When things quieten down, ensure you keep only a skeleton staff and consider cutting hours. Roster staff according to your best business predictions and know where you can find freelance or casual staff if the workload suddenly increases.
2. Avoid impulse buys
There’s a big push to spend, spend, spend pre-Christmas and during the sales that follow. Avoid falling into the impulse-buying trap when it comes to business purchases. Make a list of things your business really needs and check it twice before committing to buy.
3. Find new markets
Christmas can be the perfect time to test out a new offering or push into a seasonal market. Can you offer something with a Christmas or New Year twist? Would your product suit a Christmas market day? Does the holiday rush and lull create demand for a specific product or service you offer?
4. Move old stock
It’s the time for reflection, setting goals and moving into a fresh new year. If you have old stock that’s simply not moving, it may be the perfect time to give it a little push – all while boosting your cash flow. Promotions should be well-timed for when people are purchasing gifts, and then move back into ‘sale mode’ during the traditional Boxing Day sales.
5. Prepare for peaks
To keep the cash flowing as the market heats up at Christmas, you may need to invest in stock or staff before demand hits. If your cash levels aren’t healthy enough to make this investment, consider a small business loan to keep things moving forward – and the cash flowing in.
6. Get social
The quieter periods are a great opportunity to catch up on all the things you wanted to do throughout the year but never had the time to action. Social media is a long burn but can pay off in the longer term. So perhaps you should finally get your business on social media? Or expand your presence to a new platform?
Social media stats for business owners:
- 24% of people use social media to follow brands or businesses.
- 64% of people are more likely to trust a brand if they interact with consumers in a positive way on social media.
- 47% of small businesses are on social media, as are 79% of consumers.
- Facebook is the most popular platform for businesses.
- 26% of small businesses advertise on social media.
Contact Prospa to find out how a small business loan can help you manage cash flow during a quiet period.