Preparing for changing or seasonal customer demand
Running a small business where demand for the product or service can change according to the season, consumer spending, or even the weather, can be difficult. Fluctuating demand can pose a whole host of issues for small businesses such as resource management, cash flow and supply chain issues.
For those in businesses targeting the consumer, consumer confidence has been generally on the rise, although talk of potential interest rate rises and factors such as inflation causing higher living costs can affect spending. However, according to figures, consumer spending is at an all-time high.
So, how can a small business ensure it is geared up to capitalise on opportunities as they arise, without having a team of people like coiled springs waiting for the demand?
Cash is king – cash flow is the single most important factor in any business and in fact can often mean the difference between success and failure. Keeping on top of invoicing, chasing overdue payments and ensuring correct procedures are followed in relation to billing – to avoid any delays due to issues such as the lack of an authorised purchase order number – will help keep the flow steady.
Avoid risk – when working with new suppliers or customers, it’s advisable to carry out some basic financial checks on them to ensure there are no underlying issues that could threaten the stability of the business by working with them. There are lots of services out there to provide this, but choosing those that offer the most comprehensive checks and a real-time element to continually monitor for any issues that may be about to occur, is wise. Forewarned is forearmed and an early alert to a potential problem can help avert disaster.
Look for flexibility – whether it’s flexibility on staff arrangements, perhaps outsourcing or using freelance help where needed to avoid paying permanent staff in quieter times, or flexibility in business services or software packages that allow the altering of use according to peak times, this will afford the scalability required in businesses that operate in peak and non-peak markets. Many warehouse and logistics operations now offer flexible terms to cater for fluctuating demand.
Pick up the pattern – look to previous years to help establish as reliable a pattern as possible that will help with business planning. Planning ahead is key – and although what happened in previous years won’t necessarily be a true indicator of what might lie ahead, the advances in customer insight tools makes it easier to monitor customer response and sentiment, which can aid in the forward planning process.
Agility is key for small businesses so combining this with some diligent forward planning and monitoring of cash flow will enable businesses to make the most of available opportunities whilst minimising risk.