With the holidays right around the corner, initial visions of sugar plums dancing in your head have likely made way for long shopping lists and travel plans, and I bet your wallet’s already feeling it. Trees, decorations, presents, food, parties—it can all add up.
But what about your small business’s finances? In the midst of the mad holiday dash, don’t forget to think about your small business. The last few months of the year are incredibly important for businesses and can make a huge difference in your overall net profit. According to the National Retail Federation, nearly 30% of annual sales come from the holidays alone.
Give yourself one less thing to worry about by taking the time to square away your business finances and set yourself up for success this holiday season. Here are five tips to help you prepare your business finances for the holidays.
1. Run Key Accounting Reports
Before preparing your business finances for the holiday season, you need to know what your business finances are. Run key accounting reports like a Profit & Loss Statement, Balance Sheet, and Statement of Cash Flows to gain a clear idea of where your business stands.
If you aren’t already using accounting software to keep your business’s finances organized, now is the time to start. Accounting software makes it easy to run reports and lets you track income, manage expenses, stay on top of bills, and record employee’s hours—all of which are incredibly important during the holidays. By automating your business finances, you can save time on your accounting process and get back to running your business.
2. Analyze Your Sales
Carefully examine your company’s sales. Use reports like Sales by Item to determine which items are selling and which are slow-moving. Use this information to stock up on the right inventory before the holidays. Reports like Sales by Customer can also help you determine what type of customer is purchasing your goods or services. This knowledge will come in handy when you create a holiday marketing plan and sales strategy to maximize your income for the holiday season.
3. Create a Q4 Budget
Take a look at your annual budget and see if your business is on track to meet those goals. If so, are there any ways you can exceed your goals? If not, is there anywhere you can cut expenses, or are there any holiday sales or promotions that could help you reach your desired profit?
If you don’t have an existing budget, create a budget for Q4. Consider where you want your businesses finances to be by December 31st and think of practical ways you can attain your business goals. Give yourself time to dream and brainstorm before the holiday season ensues so that you have clear goals from the start, instead of trying to create sales goals and strategies too late in the game.
4. Make Sure You Have a Strong Cash Flow
Take a careful look at your business’s cash flow. One of the easiest ways to do this is using the Statement of Cash Flows report. Does your business have enough money to:
- Purchase holiday inventory?
- Hire new holiday employees?
- Cover possible overtime hours?
If you’re worried about having enough cash to run your business during the holidays, it might be time to consider a working capital loan or small business line of credit. This way, you can cover any unexpected expenses and prepare for holiday sales by purchasing the inventory you need and hiring enough hands to cover increases in sales. Luckily, there are plenty of fast small business funding options that your business could benefit from.
5. Streamline Your Invoicing Process
One of the biggest parts of managing your business income is making sure you send out your invoices on time. If your current invoicing process is slow and tedious, consider invoicing or accounting software. Most software will let you quickly create professional, appealing invoices and accept payments from customers directly online, which increases the chances of your invoices getting paid on time. Invoicing and accounting software also offer great invoicing automations like recurring invoices, automatic late payment reminders, and the ability to auto schedule invoices.
Streamlining and automating your process before the holidays begin can help you save time and stay on top of your holiday invoicing. After all, the faster you send your invoices out, the faster you can get paid.
By following these five tips, you can successfully prepare your business for the holidays. May your business’s finances truly look merry and bright by the year’s end!