No one has the constitution for more negativity given the year we’ve all had. The best way to keep your business on track in the wake of a global pandemic is to get informed on the risks you face – what your potential threats are. Knowing is half the battle because you can have a plan B at the ready and take extra care not to fall victim to common mistakes. These are the top five reasons businesses fail during the holiday period.
- Lack of cash and bountiful spending
Business booming? Great! Don’t get ahead of yourself and acquire new expenses. It might seem sensible and safe to increase your spending, even marginally, but it’s easy to overshoot your budget (especially in December) Before you know it, you don’t have enough money left in the bank to pay your December BAS, which is due in February. This setback puts you behind your financial target and will result in a struggle to pay subsequent BAS’s. Before you know what’s happened, your tax debt spirals out of control and business becomes almost impossible.
- Business is quiet
Whether you’re failing to generate sufficient leads or are quiet because you have chosen to close for the holiday period, a lack of incoming cash is a major problem. If the sales you have generated aren’t enough to sustain the business and cover your personal expenses over the holiday period, the entire business can topple over. As tempting as it might be to take a break and as much as you might want to, take the time to analyse your finances first. Find ways that will enable you to automate certain functions within the business minimising your workload if you need a break but can’t afford one.
- Change of heart
It’s not uncommon for business owners to come to the realisation that they don’t want to continue in their current line of work after having some time off. Sometimes, a break spurs on new ideas and inspiration, especially if you’re looking for a creative outlet. Dreading the start of a new year at work, building your business and serving your customers, is a sure sign that it is time to pursue new opportunities.
- The loss of key staff members
The end of the year always sees some staff turnover in every industry. People seek out new ventures with the start of a new year. When a key employee decides to leave the business for another opportunity, the company can recover if a suitable replacement is found. However, often, these key staff members take clients with them. This leaves the business in a devastating position and you, the owner, struggling to service a dwindling client base as intellectual property has also left the business.
- Disasters and unplanned emergencies
Disasters happen in Australia, especially over the Christmas period. Storms and fires ravage the country this time of year which happens to be when businesses are most vulnerable with workers and CEOS seeking a break. Many of the businesses that suffer major damage don’t survive, according to Access Corp, the global statistic sits at around 40%, which means almost half of businesses don’t reopen after they are hit with a disaster.
Asking for help can save your business
Steering clear of disaster starts by identifying your own business’ weak points and evaluating how a holiday shutdown might further your vulnerability. Working with an accountant can help you to formulate an action plan and measure its efficacy in steering your business towards your goals and overcoming your obstacles.
This post was written by Sonia Gibson, Director at Accounting Heart Chartered Accountants. Sonia has always loved solving puzzles and empowering people to help themselves. Accounting Heart brings these two passions of hers – her head and heart – together. While figures might send you batty, to Sonia they tell the unique story of your business. It’s her role to translate that story into one you’ll understand so you can then write it your own way.