How to prepare your small business for Christmas

The 2024 winter holiday shopping season is predicted to bring an astonishing £96 billion in sales to UK shops. That presents a significant opportunity for small businesses looking to capture a portion of this revenue boost.

However, with increased sales comes increased competition, workload, and pressure on your operations. The Christmas period can also place a strain on working capital, here’s why.

How the Christmas season can impact your working capital

The Christmas period can create an imbalance between your income and expenses. Planning for Christmas usually involves onboarding temporary staff, purchasing new inventory, and running marketing campaigns. And all of those things cost money.

However, while you may need to pay for those costs today, you’re unlikely to receive the funds to replenish your bank accounts straight away. This can result in cash flow difficulties as you may find that much of your money is tied up in inventory and expenses and you are less liquid.

That makes carefully planning for the Christmas period absolutely essential.

How to prepare for Christmas

Here are some ways to prepare your business for a solid Christmas.

Plan early

Preparing for Christmas starts much earlier in the year. Ideally, you should have a solid plan in place by early November. But if it’s past November and you’re still not sure what the plan is, don’t worry! It’s possible to prepare all the way up to the week before Christmas. In fact, 40% of sales that occur during the Christmas shopping season happen in the week between 15 December and 24 December, so it’s never too late to hang those decorations.

Create a budget

Consider carefully how much the Christmas period will cost you and compare that to your current cash reserves. Can you afford the additional staff, inventory, and marketing? If not, scale back your plans or look into further funding, like a working capital loan.

Look back so you can look ahead

What worked well last year? What are your competitors doing? What have they done previously and how does their marketing today compare to their marketing in the past?

How much stock did you sell during last year’s Christmas season? Were there any specific items that sold with greater success? Were there any items that you struggled to sell?

Did customers ask for returns a lot in the New Year, causing a plunge in your profit margins? Were there any common complaints from customers? Were you under, or over, staffed?

Did the website crash due to being bombarded by visitors? Were any promotions or sales you offered successful, or did they just eat into your profits?

These are all good questions to ask yourself when preparing for Christmas as a small business.  

Stock up

The last thing you want is to have heavy foot traffic in the week before Christmas, but not enough stock to go around. Consider stocking up in the month before Christmas, so you’re prepared for the increased shopping demands.

But not too much

Inventory can also go the other way. Use data from previous years to ensure you don’t purchase too much inventory and overextend yourself financially. 

Consider a working capital loan 

Sometimes, businesses will use a working capital loan to help fund inventory during the seasonal shopping period. They then repay the loan once Christmas is over and they have sold the stock.

Watch for trends

Use social listening tools (or just go on social media and scroll through the shopping hashtags) to find out what’s trending this year. This could help you tap into a successful inventory strategy, or, it could help you avert a mistake. If everyone is anti-pens and pro-notebooks this year, that’s something you’ll want to know.

Triple check your operational capabilities

You don’t want to have to shut down because you simply don’t have the staff to function, or, because your website can’t handle the increased traffic. Double check your website’s abilities with your hosting provider and pay extra attention to any shift rotas this month, factoring in possible illnesses.

Tips and tricks for a successful Christmas

Here are some tips, tricks, and considerations if you are looking for ways to ensure your business benefits from the Christmas period.

‘Tis the season

It’s the season of joy, which means…your business should be spreading joy in the form of decorations and seasonal cheer. Give your storefront a winter boost by draping holly, hanging mistletoe, or go big with a Rudolph statue. Don’t forget your website and social media are a sort of storefront too, so be sure to give them an attractive boost to capture more attention.

Plan a marketing campaign

Christmas provides an excellent excuse to plan an exciting marketing campaign. Send out a winter season newsletter, post a short video sharing your company story to social media, or take to the streets with an experiential campaign.

Have a clear returns policy

Gift giving can be overwhelming. A clear, flexible returns policy can provide customers with the confidence they need to make a purchase, without worrying about their loved ones receiving a gift they don’t like or need.

Find business finance with Funding Options by Tide

Fund your great Christmas plans with business finance. We help connect eligible borrowers to our network of over 120 lenders offering between £1,000 and £20M. The finance solutions we help facilitate include, but are not limited to:

• Asset finance

• Bridging loans

• Company credit cards

• Commercial mortgages

• Unsecured business loans

• Revolving credit facilities

• Merchant cash advances

Find out more about each one by clicking the relevant link above. 

Or, if you’re ready to take the leap, click the link below to tell us a little bit about your business and your needs, and we’ll see if we can help you find a match. Don’t worry, this initial enquiry won’t cost you anything or affect your credit score.

Find business finance.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.