Top tips for managing your business over summer

While Kiwi retailers brace for a record breaking season of consumer spending, a majority of New Zealand’s service-based SMEs tighten their belts for a much quieter January in comparison. 

MYOB General Manager Carolyn Luey (pictured) says a costly festive season can put a lot of pressure on SME owners, especially those who aren’t well prepared. 

“For staff, the festive season is a great time of year – the potential for a bonus, all-inclusive work functions and paid holidays make for a stress-free and enjoyable end to the year.

“However, the experience can be quite the opposite for business owners. Variable costs like Christmas functions, client gifts, taxes and bonuses along with fixed costs like rent, salaries and insurance, add to a hefty bill.”

She says Christmas planning is essential to ensure the lead-up to Christmas is as stress-free as possible, and can make all the difference to how your business performs over the course of the coming year. 

“Planning is all about setting yourself up for success – and at this time of year it comes down to strict budgeting and knowing the ins and outs of your cash flow.”

MYOB’s top tips for managing your business this summer:

Know your cashflow
If you don’t know the ins and outs of your finances, you can’t plan and estimate future expenses – so this step is really important. This is where online accounting solutions prove to be really valuable. 

Consider your fixed and variable costs and make sound spending choices
You want to ensure you’ve budgeted all December expenses before a shut-down period. Keep track of your fixed costs (rent/mortgage, salaries, insurance payments) and estimate your variable costs (utilities, Christmas gifts and functions), then set enough cash aside to make your payments on time without accumulating interest. 

Re-think how you bill your clients
Consider billing your clients earlier instead of at the end of the month. If you know you’re going to be short on cash, ask your clients if they’d consider making a deposit on work that is set for the New Year, or is still a work-in-progress. Chase late payments too – you want to be in a strong financial position before you commence operations in 2018. 

Comply with your tax requirements
Be aware of what’s claimable and what’s not. In New Zealand, you may be eligible to claim Christmas events and gifts as a business expense. However, keep in mind that not all costs are claimable and some may be subject to fringe benefits tax. If you’re unsure, talk to your accountant or visit the Ministry of Business, Innovation and Employment website for details. 

Public Holidays
If you are operating over Christmas, remember that public holidays aren’t holidays for everyone, and any team members who work Boxing Day or New Year’s Day will need to be paid the appropriate rate – as well as receive time in lieu. This is another expense to consider and should be included in your December/January budget.

Avoid the pains of holiday pay
Managing holiday pay can be a stressful and tedious task, and the smallest of details can have a big impact with negative results. Make sure you have calculated the right amount of leave for each team member and that you’re paying them the right holiday rate. Cloud accounting software like MYOB Essentials can make holiday pay a breeze. 

Keep your staff in the loop 
Like all relationships, communication is key. You want to ensure your staff are well-aware of your plans in advance – particularly if you’re planning to shut-down over Christmas and New Year’s. 

Although there is a lot to consider before Christmas, it’s important to plan ahead of time to save you stress, time and ultimately, money. Remember, you can always ask your accountant for financial advice and schedule a meeting to put together a workable budget. 

Finally, try to enjoy yourself this festive season – you’ve worked hard and deserve to celebrate with family and friends.