PLAN EFFECTIVELY FOR FESTIVE SEASON
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.
Ben Bierman is the managing director of Business Partner Limited