Tis the season: A small business guide to holiday preparedness | Viewpoint | Rochester Business Journal


Listen to this article

The National Retail Federation forecasts that 2023 holiday spending will reach record levels of between $957.3 billion and $966.6 billion. For many small businesses, this time of year is especially important. According to Constant Contact, half of small and medium-sized businesses make around 25% of their annual revenue during the holiday shopping season.

To maximize opportunities for growth during the holiday shopping season and minimize risks associated with so much activity taking place during a brief period of time, here are tips for small business owners in four categories.

Forecasting and managing cash flow

Ever-changing consumer shopping habits, competition from national and online retailers, difficulties hiring employees and other issues small businesses face all year are heightened during the holiday shopping season. These factors and more can make it difficult to anticipate and manage inventory, sales and cash flow.

Short-period forecasts, for as little as two to four weeks, are best for accurate short-term liquidity planning. The process requires analyzing data such as year-ago sales numbers and expenses. Receipt tracking software can help manage, automate, track and reconcile your business expenses in one platform and, when integrated with your accounting tools, can quickly generate an accurate financial report.

Offering customers multiple payment options

An important way for small businesses to compete with larger retailers or e-commerce sites is to make it easy and convenient for holiday shoppers to pay for their purchases by offering customers a variety of payment options. Technology and point-of-sale systems make it simple and quick for small businesses to accept additional methods of payments that are increasingly popular with consumers.

An increasingly and preferred method is the digital wallet, an app that holds electronic versions of payment methods such as credit cards, debit cards and bank accounts. Consumers can then use their smartphone or table to make purchases via one of these options within their digital wallet app. In addition, these digital payment-based systems can integrate loyalty programs, receipt tracking, inventory management and other features to better serve customers and manage business operations.

Planning for unplanned expenses

Holiday and other busy shopping periods have the potential to leave business owners scrambling for cash due to unanticipated circumstances. These might include the need to purchase additional inventory to keep up with customer demand, perform equipment repairs or hire more employees to support store traffic.

In many cases, the best seasonal business financing solution to cover potential short-term needs is to have a business line of credit in place throughout the season. Costs and fees associated with a line of credit generally are more favorable than other financing options and borrowers only pay interest when they use funds.

Other options for small business owners to quickly pay for essential expenses during the holiday shopping season include business credit cards and short-term loans.

Protecting against cyberattacks and fraud

The holiday shopping season is also a busy season for cybercriminals. Small businesses can be especially vulnerable because owners and employees are busy and may be less diligent about following cybersecurity practices.

It’s important to make sure your small business is following standard best practices against cyber threats such as installing anti-virus software; utilizing strong, unique passwords for each account and changing them on regular basis; implementing multi-factor authentication that requires users to utilize two or more identifying credential when logging into a network system; and staying current on software updates.

In addition, be sure to log in to your bank accounts daily during the holiday season to view your balance and recent transactions. Any transactions that you believe are fraudulent should be reported to your bank immediately to limit your liability for unauthorized transactions. Small businesses should also use positive pay services, with their bank providing a nightly email of that day’s transactions that can be approved or denied by the account holder.

The holiday shopping season provides tremendous opportunities for small businesses. With the right preparation, planning and implementation, small business owners will be well-positioned to increase revenue, build customer loyalty and set the stage for a successful new year.

Dina Kempski is Regional Senior Vice President of Business Banking at Northwest Bank.

v



Source link