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According to Statista, the average person in the UK will spend between £700 and £1000 on Christmas this year.
And whilst you may be preparing to deck the halls (or spruce up your window display), stock up or plan the office party, you might also be thinking about how you can save during what has become a particularly expensive time of the year.
So, together with our friends at Smart Business, we’ve compiled a list of our top money saving tips for you to take on board this Christmas – from doing your research to finding an insurance policy tailored to your needs.
1. Do your research
If you’re new to the entrepreneurial world, this may be your first festive period at the helm of your budding enterprise. And, like any new business owner, it’s likely that you’re apprehensive about what the season will bring.
It might be that you’ve poured personal savings and family investments into getting your business off the ground.
So, it’s important to research and learn how to save where you can – at least before festive adverts fill our screens, shop windows burst with baubles, and Christmas classics find their way onto our playlists.
Talk to experienced founders about how the winter months affect their firm. You may want to create a survey, or if your shop is on a busy highstreet – visit your neighbours and start a conversation.
Christmas might be a lucrative period for most, but longer opening hours, colder temperatures and other factors can affect outgoings more than other times in the year.
Ask advice on how other entrepreneurs plan ahead, before assessing your own model. Do you need to order more stock? Can your suppliers keep up with what you need? Perhaps you’re feeling the pressure to keep up with the sales trends that other enterprises follow.
Whatever you decide, doing your research ahead of the curve gives you time to create a cashflow plan – so you have a full picture as to how much is coming in and out of the business.
Take the following steps to ensure you’re prepared for anything the holidays throw your way.
2. Decide on your inventory ahead of time
As we approach Christmas, you may find that you need to order more stock than usual to meet the increasing demand of highstreet shoppers.
This can be challenging when trying to save money – but the key is to know the amount of inventory you need in advance, by making data-based decisions.
Let the data do the talking
If you’ve been in business for a number of years, you may have an idea of how much you typically sell during the festive period, but do you gather data to ensure you know almost exactly how much stock you’re going to need?
Take your sales figures from years gone by and assess how much you were able to sell. If you were left with more than you needed, avoid overstocking this year by creating a forecast based on previous Christmas sales.
If this is your first year of trading, knowing how much you’ll need could be more challenging – but that doesn’t mean you can’t utilise the data you do have to help decipher how much to spend on inventory.
Use tools such as Google Analytics to track your sales efforts in previous months, and if you have an online store, check what pages visitors are clicking on to gauge the amount of interest your business will gain over Christmas.
What kind of products will you sell?
It’s also key to consider what you’re selling. For example, if you own a gift shop, consider selling items that can be used all year round, as opposed to only selling festive items.
This means that in the new year, you won’t have masses of Christmas stock to shift. The items you do have could be marked as reduced to boost sales, whilst motivating people to buy festive stock even when the holiday season is over.
Do you have stock insurance?
Founders should also be aware of the increased risk of theft during the festive season, with recent reports by the ONS citing a 25 per cent increase in incidents such as shoplifting in 2023.
In the unfortunate event that you are a victim of theft, ensure your inventory is covered.
Stock insurance is a vital part of any retailer’s policy. Whether your inventory is stolen on the shop floor or in storage, stock insurance can protect you against the financial losses you may face.
Start a quote with Smart Business, created to help business owners compare quotes and find the right cover with their partner Simply Business, one of the UK’s largest business insurance providers.
3. You don’t have to drop your prices
The festive season is filled with promotions and incentives to encourage customers to spend more in the lead up to Christmas. If you’re a small business with little financial wiggle room, you don’t have to join the Black Friday sales and Christmas deals put on by big brands.
In fact, in this forum, UKBF member WaveJumper explains that hopping on the pre-Christmas sales bandwagon is not always a lucrative decision.
“[T]he relative “new” spanner in the works […] is Black Friday. For which I remember many retailers complaining to me that this depleted their offers of reduced merchandise for the January sales. You can only sell stuff once and why discount […] it before your prime selling month?”
Instead, look at what you could do differently to capture the interest of your customers.
For example, if you’re a salon owner, you might run a ‘refer a friend scheme’ for December – where every customer that recommends your business to a friend is able to save a small percentage on their treatment.
Rather than making dramatic price cuts that could backfire and negatively impact your finances, why not focus on marketing?
Create engaging social media posts with popular hashtags like ‘#shoplocal’ or take festive product photographs for your website. You may even want to run a small campaign where customers have to find a festive clue in a string of social media posts to win a small prize.
In this forum discussing the importance of market research, UKBF member Mark T Jones emphasises how finding the right target audience for your small business is key:
“You can send out 10 million brochures and you will get zero response if they aren’t properly targeted and don’t resonate with the recipient. Do the research first, otherwise your marketing budget will get a bottomless pit.”
Nailing your marketing can save a lot of time and money. Leverage free online tools to incentivise your target audience to shop with you, whilst growing your customer base through engaging campaigns that set you apart from the rest.
4. Negotiate your shipping and supplier costs
Every business owner knows that the price of your product can depend on manufacturers rates, marketing costs and much more. So it’s important you’re able to take home as much as you can when pricing your products.
Some retailers might save money by negotiating lower rates when buying from suppliers in bulk ahead of the festivities – but have you considered negotiating your shipping costs?
If you send a lot more products to customers during November and December, ask your carrier if you can reduce the cost of shipping due to the frequency of business you’re providing them.
You could also look to reduce the overall cost of shipping an item by investigating alternative packaging such as lightweight sustainable packing peanuts, for example.
Protect yourself in busy periods
No matter how you choose to save the pennies – it’s important you’re covered in the event of an unexpected claim. Though you may have carefully prepared your product prior to sending it out with a courier, you can’t guarantee what happens once the item is out of your hands.
That’s why Product Liability Cover is key. Though couriers should have their own insurance, Product Liability Cover is there if your business supplies a customer product that’s been damaged or lost in transit.
Public Liability Insurance is also there in the event that a claim is brought against you by a third party – for example, if a courier trips on a loose step when carrying your orders to the delivery van.
Explore more with Smart Business who will help find a plan tailored to you by comparing quotes from their insurance partner, Simply Business.
5. Save on staff costs
Over Christmas, you may find you need more staff on hand than you do any other time of year. If this is the case, create a festive forecast well ahead of time.
Hire temporary staff
Start by assessing your finances – who do you have on the payroll? When can they work over the holidays?
If you employ students and part-time workers, they may have plans to head home for the holidays. So, instead of employing more staff and juggling multiple contracts, why not employ casual Christmas staff on zero-hours contracts?
This ensures they are paid minimum wage at the very least (keeping costs low) and you have a short-term contract so you’re under no obligation to keep them on into the new year.
Put employee wellbeing first
If you’re building a small company from the ground up, the people you employ will be important to you. After all, they could be what keeps the business going ‘front-of-house’ whilst you’re juggling things behind the scenes.
For this reason, you may feel the pressure to throw a lavish Christmas party and provide festive gifts to show your appreciation – but this doesn’t have to be the case.
Prioritising employee wellbeing doesn’t mean you have to spend funds on extravagant team days or parties. Instead, why not start a secret santa and have the Christmas party at your business location?
You can boost team building by encouraging everyone to collaborate and decorate the office, bring their own festive dish and add to the festive playlist! When you’re an SME, money can be tight, but it shouldn’t prevent your team from getting into the festive spirit.
Employers’ Liability Insurance is another way you could save money over the festive period. It’s the only compulsory business insurance policy required in the UK, and could provide protection if an employee makes a claim against you in the event that they become ill or are injured whilst working for you.
If you’re bringing on more staff to help with Christmas, start a quote with Smart Business, working together with Simply Business to help you compare quotes, and find the right cover against the increased risk of an accident occurring in a busier work environment.
6. Monitor progress and be flexible
Saving money is all about planning ahead, but you need to be able to adapt when things aren’t working.
If you’re finding that a particular product is not selling as well as it should be – look at alternatives. Does your marketing plan need a new perspective? Hiring a freelancer to give your print or digital advertising a refresh could be the answer in this case, where paying a one-time lump sum could save you committing to paying a full-time marketing team.
Once the holiday season is over, seize the opportunity to analyse the data from this year’s sales and look at ways you could improve next year.
7. Financial forecasting
Financial forecasting is key during the frosty months. You need to budget ahead of time and understand your expenses.
For example, are there areas you could cut costs in during the summer that means you can afford the cost of heating your shop or studio space in the winter?
Alternatively, you may choose to spend a little more in summer and have better insulation installed to winter-proof the building your business operates in – saving on energy usage in the long-run. If this is a leap you’re willing to take, investigate Building Insurance with Smart Business before making significant changes to the structure of your enterprise!
8. Send a gift to future you
When you’re staying on top of spending whilst keeping staff, customers and suppliers happy – you’re usually last on the Christmas list.
But it’s important to consider your own wellbeing during what can be a stressful time for many founders. You don’t have to treat yourself to a luxurious holiday or an expensive gift (although both sound good to us!) – instead, give yourself the gift of time and security.
When you’ve spent months or even years building your brand, ensuring you have the correct business insurance can fall to the bottom of the agenda. It might seem like an extra expense or time you simply can’t afford, but it’s important to consider the implications of not having the right cover when you’re faced with an unexpected claim.
When you’re running a small business, finding ways to save is essential. That’s why we created Smart Business: to help see if you could save time and money for your business.
Send a gift to future you this festive season by browsing business insurance before comparing quotes with their insurance partner, Simply Business. Find peace of mind with a plan tailored to your needs and prevent unexpected claims from putting your business at risk. Compare. Decide. Job done. Start your quote today.
This article was written in partnership with Smart Business.
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