Is Your Business Ready for Its Busiest Day?

Busy periods are exciting for any business. More customers, more orders and more sales can mean a significant boost in revenue. But increased demand also comes with increased pressure on your cash flow. Before those sales happen, you may need to spend more on stock, supplies, packaging, staff or other operating costs to make sure you can keep up.

This week’s Tuesday Tip looks at stocking up before the rush, planning for the cash-flow gap and making sure you have the working capital to keep your business moving when demand increases. Because when the customers arrive, the last thing you want is to be caught short on stock or cash.

The Bigger Picture:

For many SMEs, the challenge may be the need to pay suppliers today, while the revenue from those sales only comes in weeks later. If you wait until orders start flooding in to increase your stock, you could find yourself scrambling to fulfil demand - or worse, turning customers away because you simply don't have enough stock available.

Here are four ways to prepare for a busy period:

1. Look at your previous sales - Use last year's figures and recent trends to estimate what demand could look like.

2. Identify your fast-moving stock - Prioritise the products you're most likely to sell rather than tying up cash in slow-moving inventory.

3. Speak to suppliers early - Planning ahead can give you more time to negotiate payment terms or secure the stock you need.

4. Plan for the cash-flow gap - Work out how much you'll need to spend on stock before the revenue from those sales comes in.

Why This Matters:

A busy season shouldn't catch your business off guard. Having the right stock available means you can keep orders moving, serve your customers and maximise the opportunity in front of you. Planning ahead gives your business room to grow when demand picks up, rather than scrambling to keep up once it does.

Real-World Example:

‍Mr Price Group knows that December is a key trading period for retailers, so preparation starts before the festive rush. In 2024, the retailer reported that its inventory was 13.6% higher and that it had strong stock levels going into the December trading period. For a business of any size, the principle is the same: you need to invest in stock before customers spend with you. For SMEs, this can create a cash-flow gap - making it important to plan early for the additional working capital needed to purchase stock and cover other costs before the revenue arrives.

Takeaway:

The key is to plan your cash flow early, so you're financially prepared for the increased costs that come with increased demand.Think beyond the stockroom, make sure your finances are ready for the busy period too.