Summer break a luxury businesses can’t afford?
New Zealand’s long Christmas holiday break, which extends through January, is a costly luxury that this country’s SMB sector can ill afford, says Chris Baker.
New Zealand’s long Christmas holiday break, which extends through most of January, is a costly luxury that this country’s small to medium business sector can ill afford.
Auckland small business mentor and SME coach, Chris Baker, said today that while the advent of summer holidays means beaches and holidays for many, the cash flow crunch that hits SMEs (and the self-employed) throughout New Zealand has a detrimental effect that most small businesses feel for months afterwards.
“I’m not saying people shouldn’t take holidays, but for the whole country to shutdown for our quintessential summer holidays is just ludicrous – and it’s fairly peculiar to New Zealand. Australia and South Africa have a break too, but it’s shorter than ours.”
Baker said that manufacturers and services businesses in particular are always hit by a shorter month in December and negligible sales in January. As a result February cashflow is poor, and March and April are spent scrambling to recover.
“I may sound like the holidays Grinch, but balance goes both ways – particularly when you consider that it takes forever to get going.
“In some ways we’re the architects of our own problem, because we encourage staff to take their long holidays all at once. In reality we should be applying more balance to these things and spacing our breaks so that we can achieve more consistency in the business.
“Coupled to the long holiday, many SMEs still have to pay staff, while clients go away and don’t always pay their invoices on time. Getting paid after December 24th can be challenging, and then Inland Revenue demands GST, provisional tax payments and employer deductions in January.
“It’s way too much pressure and I would venture to suggest this is one reason why so many small businesses collapse in New Zealand – the stress is horrendous,” he said.
Baker said SME’s and even larger companies could begin to reduce the summer break (to spread the holidays more evenly throughout the year), by looking to put extra effort into drumming up business straight after New Year.
Some initiatives could include:
1. Ringing clients to remind them when the business is opening again (direct contact is more effective than email)
2. Sending customers a New Year’s greeting card to again remind them that you’re open for business (include special offers)
3. Most small businesses don’t have many clients, which allows them to take their clients out for a meal during the quiet time in the New Year, where they can discuss getting going with the coming year’s initiatives. Ask them things like:
* What did we do for you last year that was really good?
* What can we improve on?
* What can we do for you in January?
“Get in touch with your clients now in December to promote business in January. It is a good way to get them thinking about the relationship. It is also the right time to share new ideas with them, and tell them about the additional services that you offer.
“One company I worked with was a manufacturer of doors and stairs for builders. About 80 percent of the clients on their database hadn’t used them for more than a couple of years.
“They started calling all the customers on their database and they weren’t even half way through the list before they had generated more than enough business to keep them busy well in to the New Year.
“My advice is don’t just resign yourself to the fact that the holidays are going to hurt. Hit the ground running from early in the New Year,” he said.
November 30, 2015