The Impact of Christmas on Small Businesses - and how to survive it!

First Data conducted a survey in recent years and discovered that almost a quarter (23 per cent) of small business owners found the Christmas period difficult, with many admitting they do not enjoy the festivities at all. This is a pretty tragic statistic for the UK - a country with a fundamentally strong economy and a relatively affable culture of time-off in the festive season. So why are business owners not able to apply these benefits to themselves? 

Both product and service industries are affected, albeit in different ways. The retail outlet owner may be banking on a surge in profits to compensate for the drought months on the other side, while the service industry professional will be wondering where the cash will come from when nobody wants their services for a week or more.

So what crucial areas do ALL small business owners experience problems with? What are the fundamental headaches that SMEs face year in year out? And how, if at all, can business owners mitigate them?

What is the impact of Christmas on small businesses and their owners?

First thoughts are that it is a little unfair to blame Christmas. Christmas is one day (okay, two, two and a half) followed swiftly by New Year celebrations. Yet there is a two week period of mass interruption, with the surrounding days subject to questionable productivity. Obvious headaches include staffing, supply chain management and potential premises closures… But what about the less expected disruptions to your cash flow, your sales pipeline, your marketing plan? As a business owner or manager you will have many processes in place that are likely second nature. What do you do if an employee calls in sick? If a supplier does not deliver? What if bad weather closes your premises? 

Ultimately, there are two consequences to the interruption that Christmas closures bring to small businesses across the UK.

Loss of Business

If you’re not open and trading, you’re not bringing in any revenue, simples. The nature of your business will dictate whether you are shut down or super busy. It is quite likely that if you are a retailer raking it in over the holiday period, then you will have a quiet spell following the break. Or you may have miscalculated operations and your costs of sales is so high during the holiday due to crisis management that you make very little profit at all. 

Either way, your cash flow is interrupted and you may find yourself with issues as buyers use any credit available or are late paying up due to closures. Suppliers might be chasing you to get their own accounts settled before the shut-down. Add to this your staff Christmas Bonuses and any gifts for regular clients, and it’s not hard to see why cash flow can be a problem. If your business depends on a certain level of activity at Christmas, your Balance Sheet could be affected if the troughs don’t counter the peaks. 

Research has shown that 21% of business owners (1 in 5!) have had to use personal savings to get through the post-christmas slump. Lost customers can also be an issue if you have to close during the holiday season. Without the right preparation, potential (and existing) clients may be disappointed if they find they need to go elsewhere for an alternative provider. 

Stress

Financial stresses are just the beginning (although sadly often the end). For a small business owner, the anxiety around cashflow is compounded by the juggling act that is staffing. Christmas is not the only bank holiday in the UK. Nor is it the only double, with August Bank holiday and Easter holiday makers causing their own kind of chaos. It is, however, the only double with less than a week before the next one. Even if there were no such thing as Christmas, inconveniently followed by new year, that pattern of days off is an invitation to ask for more and capitalise on your holiday allowance. Add to that temptation the fact that almost EVERYBODY wants to do the same, with parents of school children under even further pressure to get those few precious days off.

Every year, across the UK, around 35 million working age people are vying for the same thing, while employee rights and traditions are debated throughout workplaces. Most companies find that ‘first-come, first-served’ just won’t cut it at Christmas and implement a specific Christmas rota. Others find that they are small enough to juggle things effectively so that everyone gets what they want, or at the very least, what they need. 

A combination of general good cheer and ‘festive mindset’ alongside the stresses and logistics of personal and professional preparation for the Christmas period inevitably impact productivity just when you need it most. 

For business owners who also have their own lives, festivities and families to organise, this can be a living nightmare. How do you squeeze in time for yourself while trying to set a good example for the “1.8 million people in Britain...planning to skip a day of work...so they can buy all their presents”? 

Why is there such an impact on SMEs at Christmas?

At no other time in the year is there such an all-encompassing perfect storm of interruption for everyone. Add to the productivity dip the challenges below and it’s easy to understand why the holiday season has such an impact.

Supply Chain Management & Premises Closures

It is a rare small business that doesn’t need supplies of some sort. For many small business owners, this will be the least of their worries. They’ve stocked up on stationary and the shop down the road is open for milk and tea bags. But if you depend on a supply chain for produce, or a partner or provider for your service offering, you don’t want to find yourself faced with a polite ‘out of office’ email or Christmas shut-down telephone message. You might even be the supplier who falls short of a procurement or tender deadline you weren’t aware of.

How far does your supply chain extend and how long will a change in service affect your offering? It may be that you’ve satisfied yourself that your handful of preferred suppliers have all coordinated shut-down times… but have you considered their suppliers and how you lay your hands on any potential shortage of limited stock? Those operating within the ‘just in time’ philosophy will have greater concerns if supply chain falters, with temporary workers being faced with no hours if stock doesn’t arrive and employers facing lost production hours and possibly loss of consumables.

Do you own a retail outlet or rent offices? Perhaps you operate a warehouse or production facility. Unless you are one of those rare beasts that has a fully remote working team (like Juggling Octopus Business Support) you will be considering the implication of taking things offline - or offsite - for a while. The duration of your shut down will decide how great an undertaking this is, but a minimal nod to weather conditions, intruders, utilities and cyber-security will be necessary at the very least. 

Marketing Schedules & Sales Pipelines

This didn’t appear in any of the articles we browsed whilst doing some background reading. Yet, at Juggling Octopus, with such a focused approach to our marketing and sales activity, we can’t help but feel the pain when the shut-down and break from the norm interrupts our flow. Don’t misunderstand, we’re not sticklers for routine. We embrace flexibility and we love a bit of change. Those pipelines, however, are a business's lifeblood. Your marketing strategy is the oxygen that keeps that those lifelines flowing fast and free and full. If you have to interrupt the flow by taking a week or two out of your process, what is the effect on your business?

It is not only the general pre-christmas blow out that feeds into post-christmas failure. There is an underlying belief that takings are down or billables are low because everyone has spent their disposable income for the foreseeable future. Yet, that’s not strictly true. The cash has simply changed hands. The key to getting through this period intact is to recognise that buying habits and purchasing power mean something very different just for this little piece of time. Is your product or service in any way giftable? Can it be wrapped? Could it be turned into an experience? Would a Gift Certificate be appropriate? With clever marketing and a little ‘what box?’ thinking, most items and services will be wanted by someone! It may be that you have an awesome little business thriving in the niche world of outdoor toilet cleaning and actually, no, those suggestions are not appropriate. So take a further step back. Could you have a sales calling campaign earlier in the year and offer discounts for January bookings? 

How can a small business owner mitigate the impact of a christmas shut-down?

Plan

• Annual Leave - Get Christmas holiday bookings sorted early in the year. Make sure staff are aware early in the year if they need to take mandatory annual
• Marketing strategy - Use the season and schedule. Make sure you have prepared for the first week or two of January as well as the Christmas holidays
• Supply Chain - look at your supply chain in detail and figure out what stock levels need to be - check stock will last into the first few weeks of January if you have capacity

Communicate

• Employees - discuss well in advance your expectations over the holiday period. How will you manage obvious dips in productivity? How will time off be covered? Do employees need to give any extra notice if they want ad hoc days over Christmas?
• Suppliers - do they have any planned shutdowns? Gaps in their own supply schedule? Ask them about any capacity/stock level issues they may have in the New Year 
• Customers - make sure you have contacted your clients and informed them of any closure plans, alternative contact details if appropriate, any relevant information they may need...and don’t forget a Cheery Festive greeting (even though you may not quite be there yet!)
• Potential clients - don’t lose leads! Make sure you have updated your social media platforms with a pinned post showing Christmas arrangements, update you telephone answering message and email footer. Make sure you have created an appropriate ‘out of office’ reply and put details on your website. If you have an external premises notice board - use it!

Act

• Implement and stick to the plans and policies you’ve made. A decision made, made wrong and learned from is better than no decisions at all!

Evaluate

• When it’s all over, schedule some time for you and any relevant stakeholders to discuss what didn’t work and what to do differently next year
• Ask employees, suppliers and customers for feedback and use it to plan next year’s strategy
• Book your planning session into the diary as early as you can for next Christmas!

Can Christmas ever be enjoyable for a small business owner?

With reports this month that one in five small businesses may be forced to close in the next 12 months if they have a ‘bad’ Christmas, it is crucial that business owners do everything they can to prepare for and manage the holiday season.

The key to enjoying it yourself is all the preparation! If you can take the stress out of the week itself by having your processes and team in place, the Christmas period can become a time for reflection and evaluation, as well as (hopefully!) a break.

Take some time to feel good about what you have achieved this year - and don’t forget to think about ways you can meet your challenges in the New Year. Take a look at the 8 commitments Juggling Octopus has made for the New Year.. can you relate to any of them? 

We did like one last piece of advice from smallbusiness.co.uk - plan your company Christmas party for January. They’ll enjoy it more as they’ll be back to breathing normally. 

Good luck!

Author: Victoria Duggan