It's getting to that time of the year when Santa comes to town. This time of year is also an uncertain time of year for business. Even if your business doesn't close over the Christmas period, it's likely that a lot of your customers are taking time off. This could have serious impacts on your cash flow cycle.
In our experience, the businesses who get through it best are those who are prepared for it.
Here's our tips for business survival in the summer holidays
Firstly, get your bank onside. Go to them early. Go to them with accurate data. Go to them knowing how much you need. There's nothing a banker hates more than a flurry of overdraft requests coming in the week before Christmas. Believe it or not, they're people to, who want as easy a run as possible leading into the break — make their life easy and they'll make yours easy.
Then, make it easy for the bank to say yes. When assessing any lending application they look at five main areas:
- Purpose: Why does the business need the lending (and simply answering 'the Christmas shutdown' isn't enough).
- Payment: Can you repay them, and how could you repay if the unexpected happened.
- People: Who is involved in the business and what is their track record with the bank, and what risk does the business face from its people.
- Position: What health is the business in, and why is it in the position it is in.
- Protection: What security is available, what additional securities could be available, and how could the bank get their money back if the worst happens.
Then, get the rest of your business in order. There are simple steps you can work through now to make sure you don't bleed too much over the holiday period. These include:
- Putting cash aside during the year to get through Christmas (probably a little late for this now...).
- Running down stock (within reason of course!).
- Completing as many jobs as soon as possible so you can get bills out the door promptly.
- Line up work for the New Year so that your staff can hit the ground running.
- Chase people who owe you money hard, now.
- Talk to your suppliers, especially those who might be paid late, so that you're onside with them.
In our experience, many business owners are caught by surprise with Christmas. They forget it's coming, forget to plan for it, and forget to deal with it early enough.
We're always happy to help in approaching your bank, or to help with any other decision you're grappling with — the chances are we've helped another customer through the same issue in the past. For a no-obligation quick chat please feel free to give us a call on (04 212 4977).
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