Summer can be a challenging time of year for small-businesses cashflow, with Xero’s Small Business Insights data revealing January and February see the lowest levels of cashflow positivity throughout the year. But it doesn’t have to be that way. In fact, the quiet summer period can be incredibly productive.
We spoke to four members of Xero’s small business advisory panel about their experience turning the quiet Summer into a successful season.
Tip #1: Don’t get spooked over summer
The seasonal pattern is very familiar to many businesses. James Begley, founder of Pickstar, learned this the hard way.
“I wish I’d known about the inevitable summer downtime,” he says. “When I started, business was quiet in December. I worried about it, wondering if I’d got my model all wrong. Then it happened again the next year, and it wasn’t until year three that I realised I’d need an annual buffer to cover this period. So you learn to batten down the hatches.”
Instead of dreading the quiet period, James suggests using this time to be as productive as possible behind the scenes.
“December is when we plan and talk about new ideas as much as possible,” he says.
Tip #2: Get those invoices in
Don’t let the season slow you down, there are ways to speed up cashflow at this time of year.
“I always tell my accounting clients, if you don’t get your invoices in by the first half of December each year, there’s a good chance you won’t be paid till February,” says Mark Lawry, a partner at Suntax. “I wish more small businesses understood this,”
Mandi Gunsberger, co-founder of Babyology, suggests getting on the phone to chase late payers at this time of year.
“We send automatic payment reminders too, but just getting on the phone and saying, ‘Hey, I know you said that money was coming last week, but nothing’s come in yet,’ can be the push someone needs.”
Tip #3: Stagger your outgoings
Think about ways to stagger your business expenses over summer. Pippa Oostergetel, founder of Squeak, staggers her wholesale orders whenever cashflow is tight.
“I haven’t ordered the stock yet – I’ll wait until I’ve got a little bit of cash that’s coming down the line,” she explains. “It’s about creating rules and procedures for yourself to aid your cashflow initiatives during typically quiet periods.”
Tip #4: Negotiate with staff for a win-win
To address the impact of payroll Mandi Gunsberger suggests talking to staff, as some may like the idea of having the entire summer off for an extended holiday, or to not work in school holiday periods and be with family instead. If you don’t ask, you don’t know.
“Our twenty staff all take leave between Christmas and New Year because it is so quiet for us,” she says. “They probably take a few extra days in January as well, and we give them one free ‘picnic’ day to spend with their families – which all helps our cashflow.”
Tip #5: Stop and reflect
Capitalise on this time to reflect on what is and isn’t working in your business. Pippa Oostergetel objectively looks at her sales.
“I look back on what products sold well last year, and I’ll partly plan around that,” she says. “I just have to make sure I’ve got everything ready in advance, as I don’t want to sell out. But at the same time, I don’t want to order in too much and be left with additional stock.”
For James Begley, December is for planning ahead in order to achieve longer-term profit.
“I say, ‘Well, if I can plan for the first third of next year, then that’s probably a good result’. Because from mid-January onwards, the work can come in a rush for us. We have to be prepared, so we are ready for anything from January onwards,” Begley says.
Penny Elmslie, Small Business Customer Director, Xero Australia
