With the festive season coming in to full swing, the Centre for Retail Research has announced British families are expected to spend an average of £821.25 this Christmas on gifts, food, drink and decorations.
Despite this figure being a 1.3% increase on last years spend in the UK, the evergreen challenges facing seasonal businesses remain as strong as ever.
The festive period is a short one, and so seasonal businesses have little time for restocking or ordering in items.
Therefore, the majority of businesses face a substantial cash outlay to acquire stock before making any sales. This is a huge risk as these businesses basically put it all on the line in the hope that it pays off.
For a business like this, budgeting and forecasting is very important. The majority of sales come in October, November and December, so they need to carefully balance sales against costs in the earlier parts of the year.
Unfortunately, it's only really experience that can teach you this, unless you have business advice from a team like ours - there's no magic formula. But without accurate planning, or understanding your customers, the first ten months of the year could be much more difficult in cash flow terms than they are.
While there will always be customers who are buying throughout the year so they can spread the cost of Christmas, you need to make the most of opportunities like the tourist trade that kicks off in earnest at the beginning of July, to keep sales up during the off-season months.
Some tourists buy Christmas-related items because they don't think they'll be able to get them at home. But why not also stock a range of cards, gift wrapping and general giftware so that tourists and passing trade can buy, whatever the time of year?
Concentrate on strong, traditional British or local brands, with the tourist trade particularly in mind. Those visiting the area want something that is synonymous with their visit – give them that.
We cannot stress the importance of building excellent relationships with key suppliers enough. It will take a great deal of time, but it will be well worth it.
Like most retailers, the bulk of ordering is done in January and February. You can differentiate yourself by taking your stock immediately, rather than in early September. This helps suppliers save warehousing and storage costs, which gives you the bargaining power to negotiate favourable payment terms, as well as putting priority on a further stock order should you need one in the short festive window.
It's obviously good for you - but it's good for the suppliers too. You can only do the above because you’ll have built up a relationship and a reputation for paying on time and building mutual trust.
With the peaks and troughs in cash flow that go hand-in-hand with seasonal businesses, it’s vital that you diversify at the earliest stage possible and give your business the greatest chance of success.
One option would be to import and wholesale Christmas goods. This would put you in more of a supplier role, thus shifting your focus from customers on the street to seasonal business owners around the country or world.
Wholesaling means that you are depending on the demand of seasonal businesses, rather than trying to predict the demand trends of shoppers, which overall should reduce the risk associated with this channel of your seasonal business.
Don’t underestimate the power of the internet and e-commerce. Just because your business is centred around three months of the year, doesn’t mean it has to be run solely in a traditional market stall or temporary shop style.
Opening an online shop can generate valuable additional trade from across the world, all year round. With the additional help provided by social media and email, marketing your product and getting your website out there has never been more achievable and cost-effective.
If you would like to speak more with Accounts & Legal about helping your seasonal business thrive, why not get in touch with us directly or try our interactive Instant Quote tool and one of our business advisers will be in touch with you shortly.