How to Get Your Business Financially Ready for the Holidays in 5 Steps

Having worked with small businesses for more than a decade, one thing is clear to me: holidays can be a big deal for entrepreneurs. For retailers, they’re the craziest and busiest time of the year. This year’s holiday season promises to be a big one. Holiday sales this year are expected to jump 5 percent to roughly $721 billion, according to the National Retail Federation. Naturally, retailers are hoping to boost their share of the holiday sales pie, but preparing for the influx of shoppers is always a challenge.

It’s getting down to the wire for businesses to make the typical preparations like hiring seasonal help, stocking up on inventory, making sure web and app properties are optimized, and keeping up with payroll (time-and-a-half and end-of-year bonuses, too), just to name just a few. These elements are key to a successful holiday season for retailers. However, these preparations require quick and convenient access to capital that many retailers don’t have.

Luckily there's still time to plan. Retailers should first identify how much capital they’ll need to move forward with their holiday preparations. Therefore, before you start hearing Christmas carols on the radio and are overwhelmed by the smells of peppermint, you can accurately determine how much working capital you’ll need for a successful holiday season by following these five steps:

Step No. 1: Think ahead and have a plan.

Different kinds of expenses chip away at a retailer’s working capital during the holiday season, including temporary changes you may make to your typical operations.

With this in mind, it's critical that you plan for those incidental expenses ahead of time to avoid cash flow problems. Here are a few questions to ask yourself:

• Are you going to extend your business hours?
• How are you going to promote your business?
• Are you going to offer sales or discounts?
• Will you need to hire temporary holiday staff?
• Do you plan to give your employees an EOY gift or bonus?

Considering these details ahead of the holiday rush will help you avoid challenges and setbacks that could hurt your business finances.

Step No. 2: Stock up on resources.

It’s the scenario many retailers dread: running low on inventory during a time of high demand. Customer loyalty doesn’t count for much during the holidays, so if you don’t have the item shoppers are looking for when they need it, they’ll go elsewhere. Make sure you have the inventory available to meet your anticipated demand. You’ll be thankful you invested in more inventory when the holiday revenue starts rolling in.

You should also make sure you have enough staff to support the increase in traffic to your business. Furthermore, be prepared for the unexpected like when employees fall ill or they need to deal with family emergencies. The holidays are also a popular vacation time. Make sure you have enough people to cover all your shifts and then some.

Step No. 3: Weather the storm.

Walking in a winter wonderland may be what the holidays are about to many, but for retailers, winter also means storms. The possibilities for a weather-related setback or even disaster are nearly endless: inventory can end up damaged by flooding, employees may call out due to transportation issues, parking lots or walkways could be blocked by snow preventing customers from physically getting into your store, etc.

If you’re in an area where winter storms can get nasty, develop a strategy for all possible scenarios. Ask yourself, where will you send inventory so it’s not lost? Which of your employees have the most challenging commutes? What services will you employ to remove the snow? Of course, you need easy access to cash to execute your plan, which is why as a business owner you need to be financially prepared to weather any storm.

Step No. 4: Get your finances in order.

I come from a family of business owners and one of the greatest lessons I learned is this: A strong business is one that’s constantly prepared for the unexpected, especially crises and emergencies.

This is certainly true during the holidays. One of the best ways to achieve this is to have your finances in a solid place before the holiday rush begins. Make sure everything is accounted for, and then plan for at least a few unexpected expenses to sneak up on you through the end of the year.

Here’s one lesson I learned from my mother, a small business owner: Always have at least one month’s worth of capital at the ready at all times. If this isn’t possible, another option for retailers is to gain access to a significant line of credit, which offers the flexibility of borrowing capital at will.

Step No. 5: Get into the holiday spirit.

Now that you’ve planned for the coming weeks, it's time to get into the holiday spirit. Have fun knowing you’re prepared for whatever the holidays throw at you. Customers are seeking out holiday cheer during this time, so make your business inviting for those eager to spread the joy.

For brick-and-mortar businesses, decorate your store, put out some cookies, and make shopping at your store a fun experience. Customers tend to remember this attention to detail, and if they have a positive experience they're more likely to return to your store after the holidays are over.

This may be the craziest time of year for retailers, but those that financially plan ahead will be able to enjoy the season more knowing they’re prepared for whatever comes their way. Moreover, businesses that have the working capital to take on the challenges that the holidays bring will likely have a more successful season overall, and it will show when the revenue rolls in come January.

Stuart Blake grew up in a family of small businesses owners in New Jersey. As vice president of sales and customer success at BlueVine, a leading provider of working capital financing to small and medium-sized businesses, he's driven to help small businesses grow and flourish.