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SME Financial Accountants

Want to cut unnecessary costs, optimise the most profitable parts of the business, and increase your overall return on investment? Let’s talk about how we can work together to support your ongoing business profitability.

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Planning how to navigate seasonal dips in income for 2021

Cashflow Management

In any normal year, seasonal dips in income can be highly challenging when you’re a small business. But, fortunately, SME Financial has some proactive ways to predict, plan for and overcome these dips in revenue.

The key to dealing with seasonal dips is to know when they’re most likely to occur, and to have measures in place to spread your income and revenue pipeline over the course of the year.

Understanding seasonality in your sector

If your business is seasonal such as pool supplies, or a ski gear specialist, you’ll be used to the peaks and troughs, but many ‘non-seasonal’ businesses experience times during the financial year where sales and revenue peak – and, on the flipside, where sales and revenue experience a pronounced dip.

When income is low at certain times of the year, it makes for challenging times.

So, what are the key ways to plan for this kind of seasonality?

  • Forecast your seasonality – it’s vital to know WHEN you’re most likely to experience any seasonal dips. Looking at benchmarking reports for your industry is one way to predict the seasonality in your niche or sector. But you can also use your own accounting data to great effect. Look back through your profit & loss reports and spot where the peaks and troughs have occurred over preceding years.
  • Charge a premium in peak time – one straightforward approach is to apply premium pricing for your products/services during the busy season. By increasing your pricing, you boost your overall revenue, giving you more working capital to see you through the leaner months when sales and income are at their lowest.
  • Offer additional peak-time services – offering added extras and other additional service lines during peak time is another way to maximise the season. In the months where customers are most engaged, look to upsell these premium services and offer more value. Satisfied clients will be more inclined to pay for added extras, giving you an increased revenue stream from the same number of customers.
  • Target other markets – exploring other related markets is another useful tactic. When you’re experiencing downtime, look for other ways to monetise your existing assets, products or services. For example, if you’re a hotel where sales peak in summertime, offer discounted conference space in the winter months to boost revenue.
  • Diversify your products/services – if one product/service has a known seasonal dip, look at adding an additional product or service to offset this downtime. For example, a a ski resort could promote bike-riding or hiking breaks during the warmer summer months to keep revenue constant. Likewise a pool maintenance firm could establish an outdoor fireplace business for the colder months.
  • Have a regional e-commerce strategy – If you’re dependent on a small local market, broadening your marketing and e-commerce strategies can help to attract a wider customer base – and bolster sales. Paid advertising through Facebook, LinkedIn or Twitter can easily target new geographical markets, bringing in new customers and giving your revenue a much-needed uplift during seasonal troughs.

Talk to us about planning for seasonality

If your business is struggling with seasonal dips, and the resulting impact on cashflow, come and talk to us. We’ll help you identify the timing of your seasonal downtime, and come up with a clear strategy for stabilizing your income across the year.

Get in touch with us today and talk to one of our experienced business advisors.

Considering Buying a Business? 7 Top Tips to consider

Top tips for buying a business

Wondering how to go about buying a business? Taking over an existing business can be a great way to get go out on your own as a business owner, or to grow your profits if you are already running a business successfully.

Established businesses have put in the groundwork of the business set up, so you can get up and running on day one without a lengthy formation process.

7 Things You’ll Need to consider

  1. Why is the business for sale? – It’s important to understand the motivation for the sale, whether strategic or whether an emergency sale. There may also be hidden reasons for the sale which your research can uncover.
  2. Research – Do more than you think you need to! Market research, investigation, learning and questioning about the potential business, the locale, the industry, the customers, the suppliers, the competitors, the market and the nature of the goods or services being sold will ensure you don’t rush into a decision just because it looks like a good deal.
  3. Due diligence – You’ll need to see detailed financial records, contracts, licenses, supplier agreements, lists of equipment, assets and inventory, lists of liabilities, loans and debts, and all employee records before making your decision. We can help review this – we’ve seen every type of record imaginable over the years.
  4. A good business growth plan – That covers one year, two to three years and possibly five years as well. This will help you to look at the longer-term and big picture, assess the potential of the business and give a realistic picture of what you are committing to.
  5. Independent advice – one of our core services is business advisory and we often work with other industry experts like a business broker or lawyer. You might think a business looks like a great potential, but objective observers may pick up issues or queries that you have not.
  6. Finance – Whether it’s your own funds, a business loan or short term finance options, you will need to work with your advisors and refer to the business plan to assess how much you will really need for the initial purchase, transition period, and future investment.
  7. Commitment to the work – Being prepared for responsibility required to run a business. Running a business does require certain skills, as well as time, energy and money. You need to be clear about your reasons for going into business and to be sure you are up for the challenge!

When considering a business, SME Financial can help you to analyse the financial reports, activity statements, tax returns and sales and purchases records to give you an independent overview of the financial performance and potential of the business.

We can assist in understanding the financial performance and benchmarks of a business you are considering buying, so that you make the best decision possible!