The holiday season can be a glorious time of the year. A time to spend time with our loved ones, take some time off, and give back to others. But as all of us know, it can be an expensive time of year, especially for businesses that seek to show customer and employee appreciation and capitalize on selling opportunities.
So how can you prepare for the added costs without draining your business finances?
Start with a plan. Determine your goals and opportunities this holiday season and create a budget. Here are some things to consider when you create that plan:
- Peak-selling opportunities. For retail businesses, the holiday season provides an incredible opportunity to build sales. It's important to understand the costs involved with selling during the holiday season. For example, will you extend your hours and require additional staff? Factor in those costs to your budget.
- Inventory management. Another factor to consider is the inventory you'll need on hand for holiday selling. Having too little can put you at risk of not meeting customer demand. And having too much can put a serious drain on your cash flow. To help plan your inventory, look at your sales over the past few years to uncover trends, and analyze any changes in the marketplace that could impact your sales.
- Holiday gifts. The holiday season is the perfect time to show appreciation to your customers and employees. If you want to send gifts of thanks, figure out how much you can afford to spend and then research affordable gift options.
- Holiday events. In the past, you may have held a holiday party for your employees, but with increasing costs and challenges from the pandemic that may not be possible. Take a look at some lower cost alternatives, such as a virtual party or socially distanced pizza party.
- Charitable giving. There's no better time to give than during the holiday season. Determine how much you can afford and then prioritize the causes and organizations that are most important to you.
- Tax benefits. Many expenses associated with the holidays are tax deductible, so make sure to keep good records and talk to your tax advisor about ways to capitalize on deductions.
As we all know, the holiday season comes and goes fast. Creating a detailed plan and budget now will help you make the most of the opportunities available during the holidays without draining your cash flow throughout the year.