From sales strategy to holiday budgeting, experts share what small businesses should focus on now to stay financially strong this quarter.
“October is a bit of a strange time of year tax-wise,” tax agent Bianca Coventry explains. When asked what she usually does for her clients at this time of year, Bianca, owner of Indigo Business and Accounting Services, says a bookkeeping spring clean is usually on the cards.
“It’s a great time to tidy your Xero file or bookkeeping system before things get hectic,” she says.
Morgan Wilson, director of accounting and advisory firm Creditte, agrees: “October is when a lot of SME clients start to lift their heads and actually look at the numbers,” he explains. “We’re having more forward-planning conversations: cashflow leading into Christmas, budgeting for holiday slowdowns, and getting systems in shape before the holiday rush.”
But what does a financial spring clean look like? We asked Bianca and Morgan what sort of things small-biz owners should be thinking about at this time of year. Whether you’re expecting a sales rush or a holiday lull, here are some things to consider doing right now to get your ducks in a row for next quarter.
Review and de-clutter
Both professionals emphasise the importance of getting up to date with your financial records and understanding where you are – truly – before holiday fluctuations pop up. If you’ve got some time, Morgan adds, go deeper than just surface-level indicators like profit and loss – and don’t just rely on cash in the back as a sign of financial health.
“What are [your reports] actually telling you, and does that actually connect to what you’re seeing?” he prompts. “You might get X amount in profit from Black Friday sales – but that doesn’t really mean anything when you’ve got a bunch of expenses as well.”
One way to start getting a clearer picture of your finances that Bianca recommends is hyper-segmenting your financial records in your accounting software.
“I don’t dump everything under the category of sales,” she explained. “I have a category of every kind of sale that I make, so I know what’s making the money, and I can see very clearly things that don’t sell.”
The same goes for expenses – and, if you match specific expenses to sales, you can get a clearer picture of the true ROI of each individual business investment.
Once you’ve got a clearer picture of what you’ve got in your books, your next spring clean step is to de-clutter.
Maybe you invested in some new tools or subscriptions before EOFY, but they’re just not moving the needle in your business. Now’s the time to cull.
If you sell products, look at your inventory and check price increases on stock; do you have the money to cover these, especially for sales season? Consider cutting these as offerings in future, or adjust pricing to suit.
Prepping for a lull
For many businesses, the upcoming holiday period may signal a lull in sales. Now’s the time to make sure you have enough set aside to cover expenses – or consider strategies to keep cash flowing while business is slow.
“It’s a matter of what you can do to get cash in the door – potentially not delivering those services throughout those times, but still getting paid for work that you might do in the future, or work that you have done,” Morgan said.
This might look like putting new clients on monthly direct debits or putting some energy into chasing outstanding invoices.
Getting sales-season ready
If you sell products, you might be feeling the pressure to participate in the sales season. But Morgan recommends resisting the urge to follow the crowd blindly. In many cases, he said, these sales end up unprofitable – or even costly.
“Two years ago, we signed a client who had just done a 50 per cent discount Black Friday sale,” he recalled. “They felt like they had to do a Black Friday sale, and like they had to do something astronomical to try to get a voice in a very crowded space. They were losing money on every sale.”
Before you participate, verify that your margins are sufficient to apply discounts. Also, keep in mind the extra overheads that sales could necessitate. Things like additional staff, penalty rates, or optimising your website to withstand higher traffic can get costly.
Most businesses don’t actually use sales to make profits. Morgan suggested using them as an opportunity to clear out old stock or attract new customers. If the latter is your goal, don’t forget to build post-sale customer retention plans and invest in strategies to get their details in your database. After all, repeat purchases are where your real money will come from.
This article first appeared in issue 50 of the Inside Small Business quarterly magazine.
