PLAN EF­FEC­TIVELY FOR FES­TIVE SEA­SON

The Sunday Independent - - ECONOMY - BEN BIERMAN Ben Bierman is the man­ag­ing di­rec­tor of Busi­ness Part­ner Lim­ited

DE­PEND­ING on their in­dus­try and core of­fer­ing, busi­nesses tend to ex­pe­ri­ence one of two ex­tremes over the fes­tive sea­son – a fran­tic hus­tle or a stand­still.

With just un­der a month to go un­til December, this means those in in­dus­tries such as hospi­tal­ity or re­tail should be gear­ing up for peak sea­son, while man­u­fac­tur­ers and builders, for ex­am­ple, are likely al­ready be­gin­ning to wind down for the year.

Re­gard­less of which side of the fence a busi­ness falls on, the key to get­ting through the fes­tive sea­son for al­most all en­trepreneurs is sim­ple: plan ac­cord­ingly, with a par­tic­u­lar fo­cus on staffing, cash flow, stock, pro­mo­tions and main­te­nance.

When it comes to staffing, typ­i­cal man­u­fac­tur­ers need to en­sure that their em­ploy­ees take leave over the fes­tive sea­son, as the busi­ness shuts down. Luck­ily for em­ploy­ers, be­cause South African labour law al­lows them to de­ter­mine the most ap­pro­pri­ate time of the year for staff to take leave, this is mostly a straight­for­ward process.

The staffing chal­lenges of retailers and busi­nesses that need to ramp up for the fes­tive sea­son are of a dif­fer­ent or­der al­to­gether. Of­ten, the dif­fer­ence be­tween a good and a bad year hinges on four or five weeks of sales, which in turn may de­pend upon there be­ing enough well­trained sea­sonal staff.

From a cash flow per­spec­tive, the fes­tive sea­son is the most pre­car­i­ous time of the year for man­u­fac­tur­ers and other busi­nesses who all but shut down for the hol­i­days. No new busi­ness will be com­ing in, while leave and bonus pay­ments must be paid out.

Hope­fully the sales from the year would have been ad­e­quate to tide the com­pany over December and Jan­uary, but the knock-on ef­fect of the December shut­down can of­ten have a sneaky way of catch­ing up on a busi­ness in Fe­bru­ary. This is why it is es­sen­tial to do care­ful cash flow fore­casts that project at least six months into the fu­ture so that fi­nance ap­pli­ca­tions can be done well in ad­vance. Retailers tend to be at their busiest when things go ac­cord­ing to plan over the fes­tive sea­son. The chal­lenge to re­tail en­trepreneurs is to ex­er­cise dis­ci­pline by recog­nis­ing that it rep­re­sents a sig­nif­i­cant chunk of the busi­ness’s in­come for the whole year and that it needs to be pre­served in or­der to tide the busi­ness over the quiet months. When it comes to stock­ing, man­u­fac­tur­ers must try to move as much stock out of their ware­houses as pos­si­ble by shut­down, while retailers try to get their hands on as much of the right kind of stock as pos­si­ble for the fes­tive sea­son pro­mo­tions.

Gen­er­ally, th­ese com­ple­men­tary needs of man­u­fac­tur­ers and retailers work well. How­ever, prob­lems may arise for man­u­fac­tur­ers with the lo­gis­tics of get­ting in­creas­ing vol­umes of goods onto the re­tail shelves through in­creas­ingly con­gested traf­fic, es­pe­cially around large shop­ping cen­tres. Dis­tri­bu­tion plan­ning needs to take into ac­count th­ese spe­cial con­di­tions over the fes­tive sea­son.

The pro­mo­tional drive is more rel­e­vant for those gear­ing up for peak sea­son, than those wind­ing down. Retailers, for ex­am­ple, may be plan­ning some­thing for Black Fri­day, which is November 23.

On the other hand, for those wind­ing down, the fes­tive sea­son is the ideal time to clean, ser­vice and main­tain their plant and equip­ment.

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