How to Get Your Small Business Finances in Order Ahead of Black Friday Cyber Monday

How to Get Your Small Business Finances in Order Ahead of Black Friday Cyber Monday

How to get your small business finances in order ahead of the Black Friday Cyber Monday rush this year.

If you’re living in the blissful calm before the storm of the holiday season, it’s the perfect time to tidy up your small business finances—because when you’re knee-deep in order fulfillment, it’ll be the last thing on your mind. And yes, you should prepare for a busy season, with eMarketer forecasting 16.6% growth in ecommerce sales over the 2017 holiday season.

A little planning goes a long way when it comes to your business’ money matters. Take the time now to set yourself up for success come Black Friday Cyber Monday and the holidays so you’re prepared for all it brings.

Here are some great ways to stay ahead of the curve this holiday season.

Pay Those Bills

Expenses are a reality in any business and should be managed efficiently. But when you’re a do-it-all small business owner, it’s easy to let a stack of bills pile up. Unfortunately, this makes for a less-than-ideal cashflow situation.

Xero and Shopify can help you manage your small business finances this holiday season.

When we say cashflow, we’re referring to the money that comes into your business as revenue and gets paid out in expenses. It’s a key metric for measuring the financial health of your business.

Many business owners simply login to their online banking when they want to know how much money they have, but that figure doesn’t account for the stack of bills on your desk. By paying bills right away (or at least accounting for them as they arrive) you’ll have a more accurate view of your money than your bank balance can give you.

Get a System for Your Expenses

You’ve got to get through the holidays first, but right after that you’ll be thinking about the next big financial event for small business owners: tax season. Make that process easier for yourself by setting up a system to track expenses and receipts now, instead of when your desk is littered with invoices and receipts in a few months.

If you’re using accounting software like Xero, the best thing you can do is get the app and make sure to snap a photo of receipts as soon as you get them—that way, you’ll always have an organized record of the purchase, even if it wasn’t a digital one.

Your accountant will thank you when you’re not missing receipts, and you’ll be setting yourself up for a lower tax bill when you can claim all of your expenses at tax time.

Recoup Outstanding Invoices

If any part of your business runs on invoices, you probably know that it takes a reminder or two before you get paid. The calm before the holiday season can be a good time to send some final reminders before even more invoices are issued—or to set up automatic invoice reminders in your accounting software so you never have to send those slightly awkward “you owe me money” emails again.

Like unpaid bills, outstanding invoices also influence your cashflow. Let’s say you have $1,000 in your bank account but owe $200 in bills and have $500 in outstanding invoices. Some basic math ($1,000-$200+$500) tells us your business actually has $1,300 to its name.

Put your outstanding expenses and invoices to bed before the busy season starts and go into the holiday season with a clear view of your cashflow.

Forecast Sales and Increase Your Inventory

Another way to prep for the holiday season is to forecast your sales and plan accordingly. If your business has gone through the holiday season before, you can look at your records, and compare it to your growth to anticipate how much your sales are likely to increase. You can even get granular and look at sales history for specific inventory items—there’s a good chance some sell better than others.

Forecasting sales and inventory using Xero to manage your small business finances

Many businesses experience seasonal fluctuations, especially around the holidays. To help forecast your sales, first put down your guaranteed revenue. For example, if you sell subscriptions or have any long-term contracts, include those immediately. If your business has many first-time customers, it will be more challenging to forecast your sales.

Try to be as accurate as possible. Look at your previous sales and check if there’s been a consistent trend of growth.

Look at your conversion percentages from non-holiday periods (use Google Analytics and set up conversions and goals) and guess how much your traffic might increase during the holidays. You can use this to help forecast your holiday sales by looking at your expected traffic and expected conversions.

As a general rule of thumb, be conservative when it comes to forecasting sales.

As a general rule of thumb, be conservative when it comes to forecasting sales. Once you determine the items that are your big sellers during the holidays, you can adjust your inventory. After all, nothing is worse than missed sales due to low inventory.

Bring Your Tools

If you’re going into your first holiday season or don’t have records from previous years, then you should implement the necessary financial tools to start tracking your sales. Here’s a list of some types of software most retailers can benefit from:

Manage Your Money (And Your Business) On The Go

Apps can do more than just help you keep track of your receipts during BFCM—they can help you run your business from your phone, so you’ll never waste another minute standing in line at the post office or waiting to check out at Costco again.

Xero’s online quotes help you get jobs more quickly, which then speeds your invoicing – ultimately improving your cashflow. You can conveniently create an online quote from anywhere, whether you’re onsite with a wholesale partner, or helping a customer with a custom order. Then, when it’s time, you can quickly and easily convert the quote to an invoice – and your customers can respond with equal speed and ease. This means that you get paid faster. In fact, businesses get paid almost 80% faster using Xero's online invoices and payments.*

And when you open Shopify on your phone, you’ll have access to your entire store. You’ll be able to keep an eye on orders, update product information, add new products, see customer and order information, and do everything you’d normally do at your computer.

Shopify helps you manage your small business finances on the go

We’re all for unplugging and getting some rest during the holiday season, and being able to check items off your to-do list while you’d otherwise be scrolling through Instagram will help you do exactly that.

Consolidate Your Back-Office and Involve Your Accountant

The beauty of online software is that two completely different systems can connect and share data. When someone buys an item from your store, a point-of-sale system can let your inventory system know, and your payment system can update your financial records in your accounting system. Once the software is implemented and connected, the sharing of data happens in the background while you run your business.

You can loop your accountant in by setting them up with accounts on the relevant software—so if your point-of-sale system and online store all sync the financial details into one accounting software like Xero, you can give your accountant easy access there.

Know Your Margins

As you head into BFCM, as tempting as it can be to try to keep up with what other stores are offering—free shipping! BOGO! Deep discounts! 50% off!—you need to keep your own business’ financial realities in mind.

Going into the holiday season, take a look at your small business' finances. What are your total costs? This includes everything from materials, to marketing expenses, to the cost of the software you use to run your business. Compare those total costs to your total sales revenue, and you’ll have an idea of your profit margin.

Make sure that when you’re making decisions about the promotions you can run this BFCM, you keep your margins in mind.

Make sure that when you’re making decisions about the sales you can offer and the promotions you can run this BFCM, you keep that margin in mind so that your business actually does stay in the black this Black Friday.

Embrace the Holiday Spirit

As joyous as the holiday season is, it can also be stressful and overwhelming whether you’re shopping or selling—or more likely, both. Make sure to plan your business owner experience as well as you plan your customer experience, and get as many administrative tasks off of your plate as you can before the holidays hit.

Keep doing what you’re doing and you’ll reap the benefits of the holiday season.

*US data comparing organizations using online invoices with Stripe payment service to offline invoices between 2016-01-01 and 2016-03-31.


Embrace the Holiday Spirit

About The Author

Iris Yau is a down to earth kind of gal, boba milk tea lover and marketing guru at Xero. Xero is beautiful online accounting software for small businesses. Sign in any time, anywhere, from any device. You can link your ​Shopify account to Xero in ​the Shopify​ App ​Store.

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