Right around the end of
September, every small business owner should start preparing their finances for
the end of the year. Even if you have a few more quarters remaining in your
fiscal year, there are a few significant reasons that the holiday season
matters more than others.
Here's why it's so
important, along with a few tips for organizing your small business finances
for the holiday season.
Why You Should Prepare Your Books for the Holidays
As a rule, every small
business should prepare for the holidays in a variety of ways, no matter the
industry. Here are a few reasons:
Prep for Market Trends in Your Industry
Depending on the
industry, you may see high revenue during the holidays, or it may be one of
your slowest periods of the year. Either way, planning is important because the
one thing that most if not all businesses can count on during the last few
months of the year is a volatile market.
It seems like every year, "uncertainty" is a buzzword for the holiday season — for example, one forecaster cited "unprecedented uncertainty" in Q4 2019 — and for good reason: there's only one time of year like the holidays, and a lot can change in the span of nine months.
Be Ready for Anything
So why should you be sure
your finances are in order before the holiday season? Because you know that the
next few months will be impossible to predict. If you own a small business in
retail, it's likely that you're expecting a jump in revenue, but how much? How
can you be ready for anything?
Capitalize on Your Opportunities
One of the things you need to be ready for is to capitalize on market trends. Every year, new and surprising statistics come out before the holidays. Here are a few to keep an eye on, courtesy of Constant Contact:
- Mobile is expected to have an impact on 87 percent of all holiday purchases.
- 65 percent of consumers plan to browse online and then go to a store to buy.
- 20 to 40 percent of yearly sales for small and mid-sized retailers take place within the last two months of the year.
When the holidays are around
the corner, you need to be agile even if you don't know how yet. You never know
when you're going to have to launch a new marketing campaign or beef up your
eCommerce options in preparation for a new market trend, and the holiday season
is a bad time to be hamstrung by not knowing what your finances will allow.
Start Planning for Next Year
The other reason that
your finances should be organized in advance of the holidays is that, before
and during the holiday season, you'll have to plan for the new year. For a
small business, each year brings new and exciting opportunities. The only thing
that can dampen that is uncertainty about your financial situation.
How You Can Organize Your Finances for Q4
We've talked about why
you should organize your small business finances for the holiday season. Here
are a few tips to help you accomplish that goal.
Stay Up to Date with Market Forecasts
Make sure you're looking at local, regional, and industry trends leading up to the holidays. What are you going to need to stay competitive? Is a spike or a slow period going to force you to adapt in a certain way? It's not enough to simply organize your finances — you must organize them with seasonal expectations in mind.
Make Sure You're Up to Date
For a variety of reasons,
accounting can be pushed to the side in favor of other things when you're
running a small business. No matter the reason, the holidays are the worst time
have a backlog of receipts waiting to be put in the books.
Make sure you sit down in
September or October (the earlier the better), and make sure you're not leaving
any expenses or invoices unaddressed.
Keep Digital Records
This will be much easier
if you have a system to manage your incoming and outgoing funds. Many digital
accounting software programs cater to small businesses, and as your business
ramps up (or slows down) for the holidays, you'll want to stay as agile and
efficient as possible.
Paper logs are fine if you're old-fashioned, but what if you want to manipulate the budget to see if you have the liquid funds to make a new hire or buy new equipment to handle the holiday rush? It's great if you're more comfortable with paper records, but let us warn you — digital bookkeeping cuts down on potential errors.
Keep Your Small Business Prepared
Organizing your small business finances is about more than simply keeping track. If you're up to date, you can be more aware and able to foresee potential issues and opportunities before they arise.