Winter can mean different things to different businesses. For some, it may be their busiest time of the year, bringing a dramatic increase in customers and profit. For others, however, it could mean the opposite – a sharp fall in business.
Luckily, it doesn’t have to be this way. With some proper planning and preparation, winter doesn’t have to be a slow period for your business, it can actually be an opportunity to make important changes or set plans in place for growth. We spoke to a number of business owners to see what they do to make sure their business weathers the winter climate.
With the festive period placing additional strain on the margins of many businesses, winter is the ideal time to scrutinise the books and identify areas where savings can be made. By taking a fine-tooth comb approach to your overheads and outgoings, you could potentially make savings which will ease the financial burden of any profit lulls over winter.
Simon Brown, Managing Director of R&D tax credit consultancy, ForrestBrown, speaks about the importance of using any downtime to assess your finances, saying:
“With the inevitable downtime that many business owners experience at this time of year, thoughts often turn to finances, as many SMEs can face a cash crunch over the festive period. Stricter cash-flow management, particularly for companies that shut down for long periods over Christmas, can be crucial, as business owners seek to lengthen their runway to ensure there is provision to meet payroll, coupled with a certain anticipation of some late payments from their own customers.
“Almost two thirds of UK manufacturing businesses now recover their R&D expenditure through R&D tax credits, but each year hundreds of businesses still fail to take advantage of the valuable tax incentives available to them, despite the average SME receiving over £50,000 in R&D tax relief annually. If you’ve not explored the potential to recover your R&D costs then it could be just the early Christmas present that your business needs, with HMRC processing the majority of claims in less than 28 days. Claims can be submitted within two years of the period in which the R&D activity took place, so it’s particularly important to act quickly if you’re currently approaching the end of your accounting period, as the opportunity to recoup any R&D expenditure from the 2013 period will soon be lost forever.”Analyse, assess and make improvements
Winter means downtime for many businesses, but this doesn’t have to be a bad thing. Use this time well, and you can make vital strategy and operations improvements which could garner a healthy profit margin when business picks up once again. Even the smallest improvements could make a difference to how your business performs in the future, so it’s well worth planning your time during quiet periods to ensure maximum profitability going forward.
Avin Rabheru, Founder and CEO of Housekeep, recommends using winter as a time to make overdue improvements, commenting:
“As demand slows down in winter, it's the best time for online businesses like ours to focus on strategic planning. Improving organic Search Engine Optimisation (SEO) is a lengthy process, so we use the extra time in winter to create a backlog of rich content, revise website copy, and analyse and test user experience (UX). If you're considering a website redesign, rebrand, or other large-scale project, begin planning in winter so you can test, analyse and improve before launching this when demand returns.”
Retaining a healthy cash flow can be challenging through the winter, with retail businesses often overspending on stock as they anticipate a surge in demand over Christmas. This demand for stock, coupled with a seasonal increase in advertising costs and other overheads, can place additional strain on your bottom line — so it’s important to keep a handle on any spending.
Titus Sharpe, CEO of Expert Market and Entrepreneur of the Year 2015, highlights the importance of frugality over winter, to ensure businesses maintain a healthy cashflow, adding:
"Winter trading can be challenging for businesses, as it’s usually a time of feast or famine. For retailers it’s challenging to stock appropriately for the surge in demand and for everyone else revenue dips can cause cash flow issues. We always find we have to be very careful with our advertising and other spend over the December period to ensure we are very frugal. This really helps us ensure that our cashflow remains strong."
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Managing business finances through the winter months comes down to balance, frugality and careful planning. By anticipating seasonal demand and consumer spending habits, you can keep a consistent cash flow that isn’t adversely affected by lulls in spending (which can have a big impact after the new year).
Finally, Justin Tunstall, owner of Town Mill Cheesemonger, confirms the need to plan ahead to ensure your business is ready, saying:
“Consumers’ habits may change over the Christmas period. Regulars may flock to a bigger town or city, and visitors may be in short supply. Juggling stock, staffing levels and cashflow is a challenge best met by planning ahead, but it’s imperative to tweak those plans as reality replaces conjecture. Consumers often batten their hatches in the New Year, reducing our cash turnover, but the previous month’s invoices will still need paying.”
For individuals tasked with managing their business’ finances, an energy contract with Gazprom Energy offers a simple way to keep tabs on your gas and power costs — even during the demanding winter months. To find out more, visit the homepage or call us now on 0161 837 3395
The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.
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