For many small businesses, the fourth quarter is the most profitable quarter of the year. Unfortunately, it can also be the most expensive and chaotic. Here’s how businesses should start getting ready for Q4 so it can be more profitable and less stressful.
Plan for the Holiday Shopping Season
One main reason that Q4 is the most profitable quarter is the holiday shopping season. For your business to benefit from the increase in shopping, make sure you stay on top of trends in your industry and have marketing strategies for the biggest shopping days of the year, including Black Friday, Small Business Saturday, and Cyber Monday. By determining your plan now, you’ll have time to order additional inventory or hire seasonal staff if necessary. You should also take your time to determine your marketing strategy across platforms and create compelling ads that generate buzz about your upcoming holiday promotions.
Start Marketing Now
Believe it or not, some people start to plan and shop for Christmas as early as June. To stay ahead of the competition, it’s important to get ahead of the curve and develop your marketing strategy well before the holidays so you aren’t scrambling or playing catch up. As you’ve seen big retailers like Amazon do, you can even make up your own sales holidays like Prime Day well before the holidays to encourage shopping without other companies competing on the same day.
By working on strategies, ads, and email campaigns now, you can get everything approved and even scheduled well ahead of time so you can focus on delivering products and providing excellent customer service as the holidays approach.
Determine Your Holiday Strategy
While it’s important to plan a holiday strategy for increasing sales, it’s also important to understand your internal strategy around the holidays.
How will you handle staffing during the holidays? It’s important to consider the potential need for additional staff if you have a brick-and-mortar business. You will also want to consider that people may want to take time off to prepare for holidays and may even experience seasonal sickness.
Parties & Events
Do you plan on having an office party or staff event before the end of the year? If you do, it’s important to start looking at the calendar now. Not only do calendars get busy, but event spaces start to book out. So if you want the first choice of a date, time, or location for an event, it’s important to start thinking now about what you want and make reservations.
Bonuses & Gifts
Many business owners give bonuses and gifts at the end of the year. It’s important to start considering your budget and profitability numbers now, so you’re prepared for this when the conversation comes around. You can start by considering whether you’ll give out bonuses. You will also want to consider if you will send gifts to your top customers.
Finally, consider if you plan to send out special thank you notes or holiday cards. By starting now, you can start to make plans, assess budgets, and order items early. By planning ahead, you can save money because you won’t have to pay for rush deliveries or deal with scheduling conflicts as everyone gets busier.
Think About Your Cash Flow
Cash flow usually looks very different in Q4 and can cause challenges for some businesses, so it’s important to think about these challenges before they happen. You can start by reviewing your cash flow from Q4 of the prior year and see what you notice.
For example, did you find yourself paying out more because of increased labor hours, as well as an increase in inventory, bonuses, and gifts? In addition, some businesses have high accounts receivable but don’t get paid until the beginning of Q1. Make sure you are aware of potential cash flow problems and plan for those before they become a problem.
Meet with Your Accountant
If your tax year ends on December 31, it’s important to schedule a meeting with your accountant before the end of the year. You can discuss your tax strategy now and decide if it makes sense to invest in inventory or equipment before the end of the year to both take advantage of year-end sales and potentially reduce your tax liability in the upcoming year.
Start Planning for Q1 2024 Now
Because Q4 is personally and professionally busy, it’s important to start planning for Q1 now. Think about your goals for Q1. Assess what went well this year and what you want to improve next year. If you do, you’ll be well-prepared after the holidays, and you won’t have to scramble to make changes in the new year.
The Bottom Line
It’s never too early to prepare for Q4. By planning now, you’ll be prepared to make it a profitable season that’s stress-free for you, your employees, and your customers.