The holidays are a time when many small businesses generate their highest revenues of the year, but it can also be a time when cash flow challenges become particularly acute. Stocking up on inventory, hiring seasonal employees, and surges in demand can all present potential cash flow pressures.
This year, many businesses also face additional challenges like inflation and supply chain issues, so strategic cash flow management is even more critical. Here are three cash flow tips for retail-based small business owners as they prepare for the holiday rush, which the QuickBooks Holiday Shopping Report suggests could result in $88 billion spent at small businesses this year.
Data-Backed Decision Making
Having a cohesive view of your business’s financial picture can help you make more strategic cash flow decisions and set you up for success as the pace of business picks up during the holidays. Financial technology tools can now give small businesses powerful forecasting capabilities that look into the near future and make tailored recommendations to manage through potential cash flow problems.
A comprehensive look-ahead allows business owners to understand demands like restocking inventory or running payroll so you know where you need to (and can afford to) spend or whether you need to pivot. Having this in place leading up to the holidays could ensure businesses aren’t bottlenecked as they try to keep pace during the busier season as well as help lay the foundation for strategic, data-backed decisions to become a lasting practice long after the holidays have passed.
A great example of how to leverage data to prepare for the holidays comes from Jamahl Grace, co-founder and co-owner of Grace+Love Candle Co., which expects to see as much as 40 percent of its annual revenue come from holiday shopping in 2022. Grace shared he was able to make this prediction based on years past as well as current trends thanks to the data in QuickBooks where he manages his finances.
Evaluate Working Capital Options
Whether you’re looking to buy more raw materials, increase your marketing spend, or pay seasonal staff, additional funding may help you drive more sales or bridge a short-term cash flow gap. Loan options can vary, so small businesses should look for offerings that have no origination fees, no prepayment penalties, and no hidden charges that might work against them down the line.
Time will also be of the essence around the holidays, so the speed of getting those funds in your bank account will be another key consideration. Financial technology platforms like QuickBooks have integrated small business loan offerings, meaning accessing capital can be faster with applications taking just a few minutes, decisions as fast as 30 seconds, and funding as fast as one day to two days.
Have a Comprehensive Payments Solution
Businesses can only earn revenue if they’re able to get paid! By accepting any way a customer wants to pay for their holiday purchase, you’re able to speed up that payment, helping your business stay cash flow positive. Have a payment solution that allows customers to pay in-person with debit or credit card, but also offers mobile and online payments as more people gravitate toward contactless transactions. Another key consideration is the speed at which that money is processed and is available to you. Look for solutions that offer instant deposit to your bank account to avoid any lag in those funds getting put back to use in your business.
There’s no denying that the holidays can propel a retail business’s trajectory, helping some to start (or end) the year off right with strong financial footing. By leveraging data insights, planning ahead, understanding working capital options, and getting a sound payment strategy in place, small business owners can feel confident and prepared going into one of the busiest — and for many the most important — times of the year.
Rob Daniel is the director of product management at Intuit QuickBooks, a platform of embedded, interconnected financial tools.
Total Retail is the go-to source for executives looking for the latest news and analysis on the retail industry. Be sure to bookmark this helpful and relevant site: https://www.mytotalretail.com/
BRA note: We are very pleased to mention that CohnReznick (who can help you significantly with your accounting and financial decision making) has joined BRA as a Supporting Vendor Partner.
All BRA Regular or Distinguished Retail Members can benefit from a complimentary financial statement and tax return review to identify missed opportunities. You’ll also be able to discuss and review current retail and consumer topics and trends with CohnReznick industry leaders. In addition, all BRA Retail Members will receive 10% off CohnReznick standard hourly billing rates.
If you would like to be introduced directly to Jeff via email, please send an email request to me at email@example.com – Doug Works, BRA Executive Director
If you are not yet a BRA Retail Member, you can easily opt in to either Regular (no cost) or Distinguished ($100/yr.) Membership via this super simple join form