How SMEs can make the most of a difficult season

December and January tend to be challenging months for small and medium enterprises (SMEs) in South Africa and in certain cases, can even make or break a business.

Depending on the industry in which these businesses operate, they may find themselves either lacking enough work to cover costs during the period, or struggling to keep up with the demands of the so-called silly season and potentially drowning from the workload.

While both experiences can be challenging for entrepreneurs and their ventures, it is critical that entrepreneurs put measures in place to navigate – and even benefit – from the months of extremes.

In the case of retailers and tourist businesses, whose businesses spike over the December holidays, capitalising on the frenzy seems obvious given heightened spending habits due to end-of-year bonuses, and tourism districts being awash with holiday makers.

But taking advantage of the season is not as easy as it may seem.

For seasonal businesses, the December rush is often not so much a lucky windfall.

Instead, it is a crucial time in which the venture must make as much money as possible in order to survive the quieter periods during the rest of the year.

The damage of not planning sufficiently for this busy period can have long-term effects on the business.

For example, retailers that run out of stock will not only miss out on potential sales, but the business’ reputation can also be damaged thereby impacting future sales.

Whereas if a business over-estimates the seasonal increase, an oversupply of stock can be just as damaging on cash flow.

Similar risks are present also in service orientated businesses, which are even more vulnerable to reputational damage if they struggle to handle the increase in demand.

To avoid such miscalculations, careful planning is required around three key areas, namely stock, trained staff and infrastructure to service customers and orders.

Careful planning will also enable the entrepreneur to know when they should start turning business away to avoid over-commitment.

In terms of the business owners taking a break this festive season due to slower demand, they can still capitalise over this time.

This quiet time is a crucial period of reflection, revisiting their business model, contemplating new products and services, evaluating their own performance over the last year, re-establishing bonds with family and friends, and recharging their batteries.

During this period business owners should also set new challenges and goals for their business for the year ahead.

It does not have to be grand challenges, such as a 30% increase in turnover, but rather a range of small, achievable challenges, such as a new costing system or production line.

Business owners should be sure to draw their staff into new ideas when they return from their holidays.

A formal workshop or series of discussions can do wonders to light the fire of enthusiasm among staff members for the new year.

The quiet time in a business's calendar is an excellent opportunity for an entrepreneur's self-improvement.

Business owners have to be all-rounders who need to know the basics of everything from finance to staff motivation, and investing time on their own personal development can yield the best return on investment.

All the signs point to a difficult year ahead, which makes it even more important for every entrepreneur to get the most out of the festive season, whether they are quiet or hectically busy.

Those who do, will be able to turn whatever the new year brings into an entrepreneurial opportunity.

*Gerrie van Biljon is executive director of BUSINESS/PARTNERS 

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