Both experiences can be very uncomfortable for entrepreneurs and dangerous for their ventures, but at the same time, both sets of entrepreneurs must learn how to handle the silly season in such a way that they capitalize on it, says Gerrie van Biljon, executive director of BUSINESS/PARTNERS.
In the case of retailers and tourist businesses, who see their businesses spike over the December holidays, capitalising on the frenzy seems pretty obvious. The spending public is flush with end-of-year bonuses, and tourist districts are awash with holiday makers.
But making the most of it is not as easy as it may seem, says Van Biljon. For seasonal businesses the December flood is often not so much a lucky windfall as a crucial time in which the venture must make as much money as possible in order to survive the quieter periods in the rest of the year.
If they don’t get it right, the damage can have a long-term effect, and many things can go wrong as businesses ramp up their operations by as much as four or five times their normal size.
Retailers can run out of stock, which not only hits the sales levels that otherwise could have been achieved, but can damage the reputation of the business. The opposite, when a business over-estimates the seasonal increase and ends up with lots of unsold stock, is also a real risk.
Service orientated businesses are even more vulnerable to reputational damage if they struggle to handle the increase in business. A shop-fitter, for example, may be tempted take on too many orders as his retail clients prepare for the Christmas rush. Typically, he would try to get everything done in time by hiring badly trained extra staff, resulting in botched jobs and angry clients.
Van Biljon says the only way to avoid these problems is to prepare well in time for the high season by making sure there is enough stock, trained staff and infrastructure in place to service the increase in customers and orders. Arranging beforehand with suppliers that they take back unsold stock after the season can lessen the risk substantially for retailers.
Careful planning will also tell the entrepreneur exactly at which point they should start turning business away because of the risks of over-commitment. No business owner likes to say no to new business, and if they are unsure of whether they would be able to handle another contract, they easily err on the side of taking on too much.
Once the planning and resources are in place for the busy season, the only remaining ingredient for making a success of it is hard work on the part of the entrepreneur. “When the pot is hot,” says Van Biljon, “you’ve got to cook. Work ten-, twelve-hour days, and put everything into it. You can rest later.”
Such are the challenges and opportunities faced by those entrepreneurs who experience a busy holiday season, but how can business owners who close down over this period capitalize on it?
For them, the 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, says Van Biljon.
As part of their reflections, business owners should set challenges for themselves for the new year that will help them do even more of what they did well, and less of what they did badly in the past. “It does not have to be grand challenges like a 30% increase in turnover. A range of small, achievable challenges, like a new costing system or production line, can be just the right thing to usher in the new year,” says Van Biljon.
Be sure to draw your staff into your new ideas when they return from their holidays. A formal workshop or series of discussions held in those slow first days of the new year can do wonders to get everyone pulling in the same direction, and help to light the fire of enthusiasm among your staff.
Van Biljon says the quiet time in a business’s calendar is also 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. There are always some gaps in the working knowledge of entrepreneurs who don’t have the luxury of taking time off for professional-development training courses. Spending quiet time reading a book about an area of business they know little of, or studying the latest production methods in their industry, could well turn out to be the best investment you’ve made the whole year.
Van Biljon says 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 next two months, whether they are dead quiet or hectically busy. Those who do, will be so much more able to turn whatever the new year brings into an entrepreneurial opportunity.