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Managing Your Small Business Cash Flow This Holiday Season



by Stephen Sheinbaum, founder of Bizfi

The end of year holidays is a time of joy, good cheer and, too often, cash flow headaches for small businesses. For example, retailers and restaurants must invest heavily in inventory and then wait for those sales to materialize, professional service and home improvement businesses may need to have their workers put in extra hours for last-minute rush jobs, and may be forced to wait until after the New Year for payment.

If your small business is going to get through the holidays with its cash flow in the black, you should follow these five tips:

1. Make a list and check it twice.

Go over your current inventory and income statement to establish a budget for new inventory. Go back to your point-of-sale (POS) terminal records from last year to refresh your memory of best sellers and the items that took a loss. Staying within budget, ordering more of the former, as well as looking for items that can help build on their seasonal popularity.

2. Seasonal employees.

Good customer service is critical during the holidays. Make sure you have the right number of employees on the right days, and are quickly trained to be as effective as your year-round workers. Designate established employees as mentors and be sure to reward them for their efforts. Don’t skimp on background checks just because you’re pressed for time.

3. Go digital on receipts and invoices.

There could be a lot of new customers coming through your doors during the holidays so in order to make them repeat customers, take the first step by receiving their contact information. For example, many new POS systems allow you to email customers their receipt. If your business must invoice customers to receive payment, try using an electronic invoicing program. An e-invoice system lets you immediately send professional invoices, even right from the job site. New online programs also make it easy for customers to quickly send you their payment.

4. Incorporate technology to track inventory.

If your POS system comes with inventory tracking, use it; if not, try one of the many free inventory tracking apps like Stockpile as the reports these tools generate can help you to re-order quickly and plan for next year. If your business sells expensive items, look into the logistics of equipping them with radio-frequency identification tags that can alert you if merchandise is leaving your store without payment. Given the high price of “shrinkage” during the holidays, investing in technology can be a bargain.

5. Plan for after the holidays.

Your operating budget for the holidays could very well be higher than normal, but you also need to think ahead to January and February. While you may save on labor, cash flow could be crimped by returns or late payers. Think, too, about what you can put aside from your holiday sales to get your business through a slow time later. Are there January and February events that you can market to? This is an opportunity to use the email addresses you’ve gathered from your receipts to create a campaign that gets the word out.

Finally, think about the funding you may need to get through the holidays. Short-term capital can help you acquire inventory or do a quick marketing campaign, while a line of credit can be drawn down to smooth out unexpected cash flow bumps.



Stephen Sheinbaum is the founder of Bizfi, the premier fintech company combining aggregation, funding and a participation marketplace on a single platform for small businesses. Founded in 2005, Bizfi and its family of companies have provided more than $1.9 billion in financing to more than 33,000 small businesses in a wide variety of industries across the United States.