Maximise profits this Christmas
- Business News
The Australian Retailers Association has predicted a huge spend in the stores this Christmas, anticipating an 11.3% increase on pre-pandemic figures.
$58.8 billion is predicted in Christmas sales across Australia – and small businesses across the country need to take their share of the profits.
According to Roy Morgan CEO Michele Levine, this year’s forecasting shows a country on the move, proving good news for Australian businesses.
“No one believed that spending this coming Christmas could match the highs of last year, but as the population emerges from the most punishing crisis in a hundred years, shoppers are looking to reward themselves and their families,” she said.
“The sales aren’t all going to be in store, however. The COVID 5-year digital acceleration means many more Australians are shopping online, so this Christmas we will see much more of a mix between in-store and online shopping.”
Christmas to come early for small business retailers
A strong Christmas sales season for any small business can shape the 12 months that follows. As a result, it is crucial the profits are also reaching their full potential.
Here are the top three tips on ensuring your small business capitalises on this year’s Christmas spend.
1. Know your data
Knowing how your business traded throughout previous Christmas seasons will give owners a good understanding of how they are placed for this retail period.
Talk to your accountant and find out key data that will set the tone for a successful – and profitable – plan for this year’s season. Find out:
- What sold well (and what did not)
- Stock levels compared to profit margins
- Profit and loss reports across November, December and January
- Profit margins
Using this data will guide you in a plan of action that is both sustainable and profitable for your small business.
2. Stock levels
Too much stock? …
Stock can present as the biggest challenge to small business owners over this retail period. While warehouses often require bulk ordering, small businesses can be left with an overly large amount of unsold stock. This eats massively into the profit margin.
After Christmas sales do not always pose the highest return on investment. So, when discounting left-over stock base it on a pricing strategy that doesn’t trade profit margins for a quick sale.
… Or not enough?
On the flip side, not enough stock can see your business over promising and under delivering to their customers.
This is especially evident for E-Commerce businesses where drop-shipping and delivery times are blown out. This results in high customer refunds, damaging the brand and future sales.
Use previous data to guide this year’s ordering. If you are an online business, set deliverable expectations for your customers.
Whether you’re a retailer or in the hospitality industry, keeping customer satisfaction on a high throughout the festive season protects the future profits of the business during this period.
Under or over-staffing is one the major headaches for business owners over Christmas, so it is vital a staffing plan is in place well before the silly season arrives.
With your accountant discuss past wage costs compared to profits to see how much of the bottom line has been eaten away with too many Christmas casuals joining the team.
Not enough team members can also be a problem, costing customer satisfaction and an inability to meet stock deliverables in time for the big December day.
Together with your accountant, look at previous year’s data for your business to create a staff plan that allows for both maximum profits and maximum operations.
Find out more
To learn more about maximising the profits for your business this Christmas, book your obligation free chat with the team at Elevate Accounting HERE.