With the festive season looming, entrepreneurs often get caught up in the rush and forget to step back and analyse how their business operates within this busy period of the year.
According to Nimo Naidoo, project manager of the Sanlam / Business Partners Entrepreneur of the Year Competition®, the festive season can be one of the most busy and costly periods of the year, especially for businesses operating within the tourism, hospitality and entertainment sectors.
Naidoo says that although most businesses have seasonal highs and lows, no matter which industry they’re involved in, many businesses within the lifestyle and hospitality sectors depend heavily upon revenue generated during this period, and can sometimes survive on this revenue throughout the year.
She says that businesses operating in these industries therefore need to take care when putting budgets in place. “Business owners operating in industries heavily reliant on seasonable revenue need to budget very carefully to ensure that they don’t overspend or extend themselves throughout the year.
“Expenses such as maintenance, taxes and equipment purchases need to be scheduled on an annual basis, and therefore businesses may need to budget far in advance for these expenses. If not properly budgeted for, businesses may run out of capital before these expenses are paid.
“Close attention also needs to be paid to cash flow and credit records, as having good credit is crucial for a seasonal business.”
Naidoo advises that seasonal businesses should plan carefully for the upcoming busy periods. “When careful planning is not done ahead of a busy period, business owners often spend valuable time planning, when they should be implementing and taking advantage of the increased amount of potential clients and customers. This potentially lucrative period only comes around once a year for most seasonable businesses, so should be taken advantage of.”
She says that advance planning can also help businesses reduce costs considerably. “For example, businesses which need to increase production in the festive season may be able to negotiate discounts from suppliers and service providers if the necessary orders are placed and arrangements are made early enough.
Naidoo says that although certain businesses consider November and December the most important months of the year, owners often struggle with staff productivity during this period. “The holiday season often has a very significant impact on labour productivity. As the holidays draw near and as the “Christmas spirit” begins to take hold, even the hardest working and most dependable of workers may very well find it hard to be productive. Making use of an incentives system to motivate staff during this period can prove to be successful as it encourages staff to work towards a specific target or goal which ultimately benefits the business.”