Making hay while sun shines


Deborah Edwards, from Harlands Accountants, offers some planning advice to seasonal businesses

Because of the emphasis on tourism, many businesses in Cornwall generate the lion’s share of their income between April and October, either slowing down in the winter or using it as a time for repair, recuperation and relaxation (if that’s possible).

So how can business owners maximise this season’s opportunities and store enough away for the quiet season?

Plan thoroughly: work out how much you need to cover your running costs now and over the winter. It’s important that you know what these are and that the selling price is correct. What is your breakeven point? Get it on paper or Excel.

Consider cash flow timings: especially where you have costs spread over the year, such as business rates, loans and VAT bills, which may fall after the season has finished. If you are self employed, January’s tax bill may include a payment on account and could be higher than you expect.

Treat your drawings as a cost: your business has to service your own private financial needs otherwise you should question why you are in business at all. Set targets for the season: identify opportunities to make additional sales or keep costs to a minimum and follow them through. But bear in mind that some sales are better off not having and cutting costs can jeopardise quality – margin is what matters! Remember to let your staff know what is expected of them to achieve these objectives.

Keep good records: always check your performance against the plan. Learn to identify early where income is low or costs are high and respond quickly. It’s too late looking back in November and wondering where you went wrong.

Cut down on waste: do you need so many staff? Are you holding too much stock? In a restaurant environment are you controlling portion sizes and is each dish on the menu correctly costed? Consider having flexible staff contracts and avoid fixed costs where possible. To keep on top of this it might be worth having an accountant look at this on a monthly basis.

Know that ‘Cash is King’: make sure that your customers pay you on time and bad debts are non-existent. Don’t be afraid to take deposits and remember that profit doesn’t always equal cash in the bank.

Have a winter ‘Plan B’: despite the advice of having a three month savings pot, very few do and you may need a temporary overdraft. Bank managers are more likely to listen if you approach them before the event armed with relevant information such as the monthly accounts already mentioned. HMRC’s business payment support service may allow you to spread tax liabilities.

Look to next year: what can you do to make next year better? Plan again. Is there merit in staying open over the winter or are you in need of a long, hard earned rest?

Professional advice: an accountant or business advisor can help you with all these points giving you more accurate forecasting and professional looking data to present to banks and other stakeholders.

Enjoy the winter: Life is for living!