Has there ever been a more frightening time to be a business owner, small or otherwise? The financial effects of Covid-19 have been wildly unpredictable (and rapid!) on businesses on a global scale. As the upcoming holiday shopping season looms ahead, many business owners are understandably reluctant to make the usual preparations.
This article will share some suggestions to help your business budget for the 2020 holiday season.
Budgeting for Business Owners for the 2020 Holiday Season
The holiday season is always a source of optimism, and holiday budgeting for business owners is more important than ever.
Take heart in knowing that a healthy majority of consumers are still planning on Christmas shopping this year, and want to shop at small businesses. And though this year has been disastrous for many, Covid-19’s effect on small businesses seems to be weakening as states begin to open back up and allow consumers to get back to normal (i.e. spending money). This doesn’t mean business owners should go crazy though; careful consideration of a holiday budget is important to make sure your business enters the new year on solid ground.
So, what are the major components to a holiday budget for small business owners? They are:
Holiday Marketing Budget
Marketing is perhaps the most obvious component to a holiday business budget. Spending is at a major threshold the last quarter of the year due to the holidays. Other businesses are looking to meet their own goals and are eager to buy services or products to help them do so.
What worked last year may not be effective this go around, however. Many consumers are no longer financially able to afford previous luxuries or services. Consider:
- Advertising your Covid-19 regulation adherence; shoppers want to feel safe
- Taking advantage of social media to cheaply (and effectively) market your business
- Offering special sales or promotions to loyal customers
It’s important for business owners to manage their expectations because unexpected downturns may yield lower returns this year compared to last, regardless of your past marketing success.
If your business ever engaged in holiday events, you likely won’t be doing those this year. Safety for you, your staff, and your customer base should come first. If you can manage something Covid-friendly and safe according to your state’s regulations, consumers will likely appreciate your attempt to keep things “normal.”
Budgeting for Inventory, Gifts and Everything Else
Small business owners especially must try to find the right ratio of spending on inventory, staff, equipment, marketing, and other holiday spending such as gifts. Buying too much stock or keeping too many staff members on call could be disastrous for your budget. Unexpected equipment repair or neglecting to include marketing campaigns can lead to the holiday blues.
Making smart decisions based on your own business savvy (you know your business best, after all) and market trends will be the key to making it through the new year. Keep gifts to your staff and business partners thoughtful, useful, and simple; everyone is in the same boat and can’t or shouldn’t expect luxury items.
If your business is retail or works with items for purchase, also consider your return policy. Many owners fail to predict or remember the strain new year returns have on their budgets. Find ways to make sure your customers won’t want to return their items. Or at least factor in a returns fund in your holiday budget.
Thinking Ahead to Your 2021 Business Budget?
Budgeting for business owners is more important than ever. We recently published an eBook filled with tips to help small business owners create a smart savings strategy. You can grab a copy of it here.
Without a proper business contingency plan and stock of emergency funds, many brands have sunk into oblivion. Business owners of all sizes are co
ming to understand that this uncertain market means a shift in thinking of business budgets and expense reports from an annual scale to a quarterly, or perhaps even monthly, basis. Owners must be willing to reassess their business structure and operations, and work with the tide of events with agility and flexibility.
Forbes, perhaps the catch all fountain of knowledge of industry, recommends in these trying times that business owners:
Focus on return on investment (ROI)
Work on building emergency funds
With a swelling stock market but increasingly strapped consumer populace, it’s important for businesses to operate as well as they can with as little as they can. It’s time to put your business on a diet and start working out.
Let’s talk about building up your emergency funds first, because that’s probably the furthest thing from your mind. Like any other stash of savings, the purpose of an emergency fund is to get you through sudden, unexpected disasters, natural or otherwise. Many owners have burned through theirs already this year. But 2020 isn’t over yet.
Emergency funds are important things to consider when budgeting for business owners, especially small business owners because they are especially vulnerable to:
Sudden market changes
The next Covid-19 wave could throw businesses back into shut down. Be prepared.
Keeping Your Business Profitable in 2021
Now what about ROI? Of course, businesses have always cared about this; why should a pandemic be a reason to focus on it especially? There are times when you can experiment with new advertising or marketing methods—this isn’t it. You cannot afford the gamble to test new waters. Stick with what is working but adjust as needed. Remember, budgeting for business owners in this pandemic requires agility but also persistence.
Last, but certainly not least, business owners need to focus on reducing costs. Businesses incur recurring and one time costs constantly and it’s difficult to keep track of them all. Little incremental charges can fall through the cracks. Keep on top of your books and spending. Another great Forbes article recommends stopping up cash pits wherever possible to increase funds by:
- Reduce fixed cost commitments like subscriptions, credit card processing fees, etc.
- Look for tax deductions and available credits; find funding like grants or small business friendly financing
- Remove unnecessary or overly expensive software and other systems
- Keep tasks in house as much as possible to reduce spending
You can take things even further and create a truly lean business by installing cost-saving measures like sustainable energy and management systems.
Small businesses spend $60 billion on energy every year and is a major cost to consider. Every business should audit their energy consumption to find money leaks. Expenses can result from everyday sources like:
- Lighting (bulbs, security)
- Central cooling and heating
- Desktops and monitors
- Signage like exit signs
- Copy machines and printers
- Foodservice equipment
Tapping into sustainability is better for your wallet as well as the environment. Small business owners can easily factor sustainable practices into their budgets to start saving money.
To Sum All This Up…
Budgeting for business owners takes on a new level of importance this holiday season. Keep your business afloat through and past the holidays and new year by making your brand into a lean, mean business machine! Cut costs, focus on ROI, build up your emergency fund, be flexible, and most of all: stay healthy.