The holiday season is a pivotal time for many businesses, particularly those in retail, hospitality, and the surrounding industries that serve them. As the Christmas rush approaches, companies must ensure they have the necessary funding to meet increased demand, stock up on inventory and provide top-notch service to customers. In a world that is seeing interest rates going up, the cost of living spiralling and difficulties caused by red tape around Brexit, businesses are having to make brave and bold choices to ensure that they have the funding they need to make the best use of the opportunities that come just once a year. 

I wanted to use my column this month as a guide to preparing for Christmas: if there’s anything you’re not doing, hopefully you’ll be glad you read to the end!

Assess your funding requirements

Before diving into preparations, it’s crucial to assess your business’s funding requirements. Determine the amount of capital needed for increased inventory, staff hiring, marketing campaigns, and any other seasonal expenses.
Example: A retail clothing store which specialises in party clothing or festive apparel (I’m thinking of ugly sweaters) must project its inventory requirements, hiring needs, and marketing expenses to cater to the Christmas shopping frenzy.

Explore traditional financing options

Traditional financing methods like bank loans, lines of credit, or business credit cards are viable options. However, securing these funds can take time, so it’s crucial to initiate the process early.

Example: Hotels often do good business in the run up to Christmas, as well as on the day itself if they offer space for celebrations, parties and meals. Such a business may apply for a line of credit to ensure they have the necessary funds for renovations, additional staff, and promotional activities leading up to Christmas.

Consider alternative financing

Alternative financing options, such as merchant cash advances, crowdfunding or invoice financing, can provide quicker access to capital. At Swoop, customers often come to us when they have exhausted other lines of enquiry, which leaves them short of time as well as cash. Act early and evaluate which option aligns with your business needs and timeline.

Example: A specialty bakery might use a merchant cash advance to buy equipment and ingredients needed to launch a new line of holiday-themed treats. This can then be paid back as a fixed percentage of income -a welcome respite from big bills in a post-Christmas slump.

Optimise cash flow

Focus on improving your cash flow by reducing outstanding invoices, negotiating better terms with suppliers, and managing expenses efficiently. This can free up working capital for the holiday season. At Swoop we’ve found that we can make substantial savings for customers through changing bank accounts and foreign exchange providers.

Example: A toy store could negotiate extended payment terms with its suppliers, allowing them to allocate more resources to stocking popular Christmas toys.

Explore seasonal financing products

Some financial institutions offer seasonal financing products designed specifically to meet holiday business needs. These may come with flexible repayment terms and competitive rates.

Example: A Christmas tree farm might utilise a seasonal business loan to cover the costs of growing and harvesting trees, ensuring they have an ample supply for customers.

Implement cost-effective marketing

Efficient marketing can drive sales without breaking the bank. Utilise digital marketing strategies, social media promotions, and email campaigns to attract customers and boost revenue.

Example: An online gift shop could run targeted Facebook ads and email marketing campaigns to reach a wider audience during the holiday season.

Plan for contingencies

Prepare for unforeseen circumstances by having a contingency plan in place. This might involve having access to a business credit card with a high limit or establishing a financial buffer.

Example: A restaurant could ensure it has access to a credit card or small business loan for emergency repairs or staff shortages during peak holiday dining times.

The Christmas period can be a lucrative but challenging time for businesses in retail, hospitality, and various other sectors. Properly preparing for your funding needs in advance is crucial for ensuring a successful holiday season. By assessing your requirements, exploring financing options, optimising cash flow, and planning for contingencies, your business can thrive during the Christmas rush and provide memorable experiences to customers, just like the examples mentioned above. Remember the key word is: preparation. It can be very difficult to get off the back foot, so make sure you’re one step ahead of calls on your capital if you wish to maximise your profits this year.