Planning for a strong final quarter

In many industries, December rolls around and no one wants to talk business. We’ve mentally checked out of future planning. Instead, we’re frantically wrapping up the work front so that we can boost to the closest body of water for some much-needed R&R.

With this (well-deserved) go-slow often lasting until the end of January, it pays to begin pre-sales activity for January and February now.

• Marketing: How can you begin to engage with your prospects and customers now, to entice them to book or buy in January/February? Connect with your marketing expert and build a plan.
• Sales: What incentives can you put in place to inspire your sales team? Gather your crew to set targets and rewards. Having shared “good, better, best” goals brings a team together, and dining out on the rewards is ace!

With volume potentially down over January/February, your higher-return offerings are the golden nuggets to focus your sales efforts on. Do you know which of your products or services have the highest profit margin, or make you the most money?

At the most simplistic level, you can work out your gross profit margin by subtracting your cost of goods sold (‘COGS’ – how much it costs you to make and deliver your product/ service) from your net sales price (gross revenue minus returns, allowances and discounts). Then, divide this figure by net sales to calculate the gross profit margin as a percentage. Here’s the formula for you:

    Step 1:  X (net sales) – Y (COGS) = Z

    Step 2:  Z / X (net sales) = % gross profit margin

The higher the resulting percentage, the more profitable the product/service.

While these high-level calculations are a great starting point, it pays to dive into more detail to understand all of the pieces in the puzzle. Give us a call if you’d like personalised support with product pricing and profitability.

If January and February aren’t traditional buying months for your customers, think about using this time to focus on your people and processes.

• Team catch ups: Schedule your team’s career progression chats for January. Set the scene by booking these in now and encourage folks to ponder their goals for 2022 over the Christmas break (once they’ve had plenty of time to chill and relax).
• Book training: Is your team required to undertake continuous professional development? Would they benefit from specific or generalised training? Consider making this happen over your quieter months.
• Review leave balances: Ensure your team has taken leave, first and foremost for their wellbeing, but also to reduce the financial liability of having leave sitting on the books unused.
• System enhancements: Could you be operating more efficiently? Are you making the most out of Xero? Are you still approving invoices via email? Book in some time to review your systems and procedures this month. Scope out your requirements now for implementation early in the new year, and set yourself up for a whole lot less admin in 2022.

Now and always, pay close attention to your cashflow forecast. What’s due to come in, when? What needs to go out, when? Here are some tips for managing cashflow over this time:

• Client outreach: It’s a tight time of year, with GST and income tax payments (for many) coinciding with the holiday period. Reach out to your clients and confirm payment schedules, as some will try to use the holiday period as a reason to delay payments.
• Supplier love: See if you can organise delayed payments with any of your suppliers.
• Accounts receivable timing: To ensure you get paid by your clients in January, when do you need to do your billing? You might consider doing your December invoicing run in two parts – the first on December 15 in order to catch the December 20 payment runs, and the second once you’re back in January.
• Round out projects: If you’re doing project work, review your billing schedule and make sure to hit completions times before Christmas to ensure you can send off that December invoice.
• Christmas budget: Know how much money you can safely pull out of your business over the holiday period – and don’t overspend!

The holiday season can mean disruption and delays at the best of times. Here are a few thought-starters to get you planning for as few curve balls as possible.

• Invoice/ payment approvals: If key team members are on leave and you need to make invoice or payroll payments, make sure someone else is authorised and available to take action.
• Order early: If you need materials to produce your goods, be sure to order these early to avoid delays, especially in this Covid environment.
• Plan to put your feet up: As a business owner you need time off. Does this mean arranging a skeleton staff or single team member to be on call or manage things while you’re away? Consider customer service, supplier management and all other business functions. You deserve a solid break – body and mind!