Tips on how small businesses can plan for seasonal sales activity
Seasonal sales volume is normal with any type or size of business. As a small business owner, financial planning is the best way to ensure your cash flow can keep your operations running smoothly during non-cyclical fluctuations. Here are a few things to consider to help keep your small business cash flow plentiful.
- Pay particular attention to inventory and staffing levels. Maintaining adequate inventory to meet sales volume can be a challenge; however, if you look at past sales performance, you will begin to see cyclical patterns which can help you plan more effectively.
- Look at ways you can cut costs to keep your small business cash flow steady during dips in sales activity. For example, would it practical to lease instead of purchasing a new piece of equipment? A lease offers lower payments and better tax advantages. Also, would it make sense to purchase used vs. new equipment? Again, savings on payments and taxes come into play.
- Pay attention to your profit and loss statement to see where you stand with your small business cash flow. This will help you determine if a major purchase can be made in the current tax year or not. Again, you will want to consult with a tax advisor for guidance.
- Contact your tax advisor as early as possible before your fiscal year comes to a close. He/she can provide guidance on deductions for your small business financial planning for the current tax year, or assist with larger tax planning over a longer term.
There are also alternative financing options available to assist business owners with their small business financial planning, such as a line of credit. This form of credit is a great way to cover operational expenses to offset ebbs and flows in sales activity. It can also be used to pay employees until payment is received for goods and/or services sold, completed projects, etc. Our commercial loan officers at Franklin Savings Bank recommend that small business owners have a sound financial plan in place along with a balance sheet, income statement and cash flow analysis when they are ready to set up an appointment to discuss a line of credit. Remember, planning early is also very important especially if you want to apply for a line of credit before your fiscal year comes to a close!
Small business financial planning is essential to helping business owners effectively plan for seasonal sales activity. Cash flow keeps businesses running smoothing and is critical to operating a small business.
Ready to get to work on your small business financial plan? Schedule an appointment to meet with a business banking professional today.