In my experience, the Christmas period can be a time of increased financial strain on businesses. A number of factors contribute to this, such as the December quarter day when money needs to be found for the next three months rent, a slow down in spending following the build up before Christmas, and all those bills coming in at the start of the new year. If sales before Christmas have not been good enough, the strain in January can prove too much.
It appears that these forces are coming to a head. Various sources predict that sales during the Christmas period in 2011 will be considerably lower than they were for the same period in 2010. For non food retailers, Christmas can account for a large proportion of their annual sales. However at the moment consumers are worried about rising everyday costs such as food and petrol, as well as job security.
If the banks decline to roll over loans for another year, or decide that some of their customers may not be viable and withdraw facilities these can add extra unwanted pressures on already struggling businesses. Just after Christmas, when many businesses will have had the highest takings of the year, is a prime time to pull the plug.
Even if businesses survive the Christmas period, many may well not have sufficient working capital to survive until next Christmas.
Whilst every Christmas, some retailers fail, the additional burdens and possible fall in Christmas sales means that 2012 may well start with an increased number of business failures. Planning ahead and possibly taking advantage of the increased turnover due to Christmas spending could make all the difference. If businesses do start to feel the pressure, seeking early advice can provide them with more options and a better chance of survival. Even businesses on the brink could find this an opportunity. Despite all the pressures, a difficult economy can provide an opportunity to right size a business for long term success.
Although Portland’s offices are closed over the Christmas period, from 23 December 2011 to 3 January 2012, we can always be contacted on our mobiles should you, or any of your clients or contacts need advice over the Christmas period or in the New Year. We know that this can be a stressful time, but if advice is sought early enough there may well be a number of options that will lead to the survival of the business.
Senior Manager (Poole Office)
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