Member Article

How Small Businesses Can Get Through Christmas

By Ruth Chamberlain, co-founder, Investly

Christmas can be an incredibly challenging time for small businesses. Tight deadlines, staff holidays, early payroll and supplier chaos can cause major issues that can take significant time for SMEs to recover from.

So how can small businesses best equip themselves to survive over Christmas?

Seasonal marketing

Firstly, it might seem obvious, but seasonal marketing is vital to success during Christmas. Even if you supply to large stores or supermarkets who take care of promotions for you, creating more demand for your products could help secure you larger orders. UK customers were predicted to spend £77.6bn last Christmas period (source: Vouchercodes.co.uk), with ever increasing online sales, the figure is set to keep rising in 2018.

Don’t limit your thinking to the Christmas period for this. Ask yourself: what can you do in the quieter times of the year to boost cash flow? Can you develop another product line or offer special promotions? Planning a few ideas around this can go a long way.

Renegotiate long term contracts

A common issue amongst small business owners is the delay in receiving Christmas invoice payments from retailers. According to the Asset Based Finance Association, the average UK SME waits 72 days for their money. Lengthy payment terms can cripple a small business and relationships with suppliers can be damaged as you struggle to meet your payment terms.

Whilst you’re still waiting on payment, your business can suffer from stagnation, lacking resources for innovation or reinvestment. The worst case can be that you find yourself having to turn away orders as you don’t have the funds to fulfill them.

Explore invoice financing

Small businesses in a strong cash position or in a less competitive market space can enjoy the benefit and freedom of negotiating more satisfying payment terms. Invoice financing is a low-risk, low-cost solution to empower small businesses to survive and thrive over difficult trading periods such as Christmas.

Joshua Wade, director of British natural skin care brand Skin & Tonic and Investly customer shares his experience last Christmas:

“Christmas was coming and was the busiest time we’d had. October and November were particularly busy from the retailer side. A large retailer placed order for a delivery in January which was unexpected and stretched us. We needed to order more and staff needed to be paid before Christmas rather than the end of the month. With expenses like rent, materials and early staff payment, we looked at invoice finance. It was a race against time. Once onboard, the invoice was financed in minutes and transferred to our account and we paid our staff. Materials were then ordered for the unexpected delivery. Sorted.” Relieving season cash flow pressure with invoice financing gave Skin & Tonic the buffer they needed to keep afloat at Christmas.

Ruth Chamberlain joined Investly in 2014 as Co-Founder. Last year Investly launched in the UK, after its success in Estonia. Ruth has spent most of her career working with media owners with a specific focus in the areas of Research and Development. Ruth was part of the founding team that created OnTrees, the personal finance management tool. Ruth is currently responsible for growing Investly in the UK and developing the platform as stage one winner of the Nesta Open Up challenge to maximise the exciting potential of Open Banking.

This was posted in Bdaily's Members' News section by Ruth Chamberlain .