The festive season is fast approaching and it’s typically boom time for the retail, leisure and hospitality sectors. There are some tradeoffs for small businesses though. Understanding cashflow, managing staff, as well as identifying potential shifts in customer buying behaviours over this period is crucial.
One of the biggest challenges for small businesses over the festive period is the number of public holidays. Working on public holidays attracts penalty rates for employees. If you are considering extended operating hours, you will also need to consider the financial impact of paying staff to be there. Business owners in certain sectors in the State of Queensland have to pay full- and part-time staff 225 per cent of the ordinary rate on public holidays and casual workers 250 per cent loading on their standard hourly rate. These include the restaurant, hospitality, pharmaceutical, retail and fast food sectors.
The Queensland State Government also wants to see Christmas Eve recognized as a part public holiday after 18h00. Queensland would become the third Australian jurisdiction to make the change, following the Northern Territory and South Australia.
Alleviating the financial pressures associated with this comes down to preparation. In addition to budgeting for wages and possible penalty rates, business owners also need to know their market.
Do some number crunching under different scenarios as well as a risk assessment. This will help you to understand what the impacts on your business will be if customers suddenly flooded into your business or if most people left town on holiday over the festive season; what the impact of penalty rates for employees will be if you stay open on public holidays; whether or not it is worth it to offer extended operating hours based on revenue expectations; how many employees you would need to deliver your products and services and whether or not your suppliers
You have to be realistic about how many extra sales you will make to warrant operating longer, on public holidays, and if at all. In addition to extra wages and paying penalty rates, you must consider the added utility costs as well as other expenses you might incur such as being charged premium rates by your suppliers for working outside of their usual operating times. You will need to make provisions for all of this, and some small businesses may find that it is not financially worth it to offer extended hours or stay open on public holidays.
A cashflow projection will help to determine whether or not you can afford to stay open or if it is better to close. You will need to work out the break-even figures to get a clear picture of whether you can afford either of these scenarios.
Different scenarios, cashflow projections and revenue expectations might sound daunting. A business coach can help you understand what numbers are crucial and how to do the calculations. They will also help you implement a system that will work out the numbers so you don’t have to re-invent the process next time. All you will need to do is run the system you designed with your coach.
The fact of the matter is that peak time for one business is another’s downtime. This includes companies in the same industry but in different locations where customer buying patterns and demand for their products or services might differ during the holiday season.
The jolly old man in the red suit isn’t the only one that benefits from good old-fashioned planning over the holidays. Make your lists and check them twice.
Brad Flynn, certified ActionCOACH