The economy is doing well despite the recent dips in the markets which is good news as we approach the final quarter of the year, proven to be one of the most profitable times for small businesses. A new study of about 300 US small businesses found that one-third of them admitted that Q4 was their most profitable time of the year. These findings do vary by industry with the numbers being 74% of online retailers and 71% of brick-and-mortar retailers reporting similar findings.
That data also revealed that the soaring of prices occurred despite 42% of small businesses stating that their costs increased by as much as 25%. With the rise of Q4 expenses, here are some ways small businesses can continue to manage their cash flow.
One way to reduce risk volatility is by finding new streams of income which will diversify the business during this peak season. Here’s an example: retailers could offer easy and affordable gift-wrapping options or personal gift messages for additional charges. Restaurants could look to provide valet service which would enhance the diner’s experience. This is very important for seasonal businesses who hope to assist their cash-flow during the off-season. For example, a construction company would look to introduce the service of adding insulation homes during the winter due to the building season slowing down. Another example would be a lawn care service which offers snow removal and plowing in colder regions.
Q4 might be a booming time for some companies, but they still may need to budget for potential revenue slumps in the coming months due to profit allocation from the holiday season. By predicting these kinds of slumps, you can reserve portions of your higher profits from Q4 to ensure that your cash flow is always positive. Make sure to keep an eye out for any surprises and maintain an adequate “cushion.”
One of a business’s most valuable asset is a good employee. If you want to retain these employees who are critical to the growth on your business without overextending head-count costs, you may want to consider freelancers or temporary workers who can provide the many services and flexibility needed without the requirement of spending as much as you would for additional full-time employees. One example would be hiring a virtual assistant who would be just as effective at monitoring email and phone messages as a full-time assistant, while less expensive.