A personal blog about life, business and money – not to be regarded as Financial Advice
Do you close or take time off over Christmas?
What does that mean for your income?
December is often the busiest time of year for retail. But for many of us with service-based businesses, we close (or at least would LOVE to close for a good couple of weeks!).
Partly because we need or want some time off. Partly because our clients aren’t working either. And partly because…well, why not?!
That’s why we have our own businesses, after all. The freedom to choose when we work.
If you’ve ever tried to move house in December (I have twice), you’ll know that pretty much all solicitors close from Christmas Eve until about the 4th January.
So if you’re not in and moved by about the 17th of December – you’ll need to wait until after the New Year.
Lots of businesses do the same.
We decided to close over the festive period several years ago.
Besides the fact that homebuying grinds to a halt, no-one wants to arrange a pension or discuss their finances in the week between Christmas and New Year. So although I’ll check in a few times on social media – it will be from my sofa, with a tub of Quality Street in the other hand.
And even if you only close for a few days over Christmas, December and January are often quieter times in business, when people have other stuff to spend their money on.
So how are you going to make sure that a) your business has enough money to pay all its ongoing costs; and b) you can still pay yourself and draw out the money you need to live?
Here’s a couple of easy things you can do, to avoid a financial drought. And not end up stressing about anything other than burning the turkey or your mother-in-law coming to stay!
Newsflash. It’s the same day each year…
Christmas is 25th December every year. Not a movable date like Easter or the start of the school holidays.
So you can PLAN for it. In the same way you plan for festive food, drinks and presents.
Make sure that you’ve invoiced (and been paid for) all current work before you enter the festive period and all the ‘out of office’ replies kick in.
If you haven’t already, why not look to move to immediate payment or 7-day invoicing? You are NOT a bank providing interest free loans!
Use this window to email your existing clients with your ‘new terms’ from January. With tax going digital, cashflow is becoming a bigger focus than ever and having to wait 60 days for payment is just not going to work in this market.
Of course, we all need to give our clients time to adjust. So you may decide to implement your new payment terms from the start of the new financial year in April – but email / write to them NOW, to let them know it’s coming (and so you don’t change your mind!).
If you have money coming in from big contracts that insist on longer terms – local councils are notorious for this – then it’s about creating a business model with other smaller, more regularly paying clients to fill in the gaps.
Lots of businesses now offer some sort of ongoing service or retainer, that allows clients to pay monthly by direct debit. From VAs to accountants and even central heating companies – their clients avoid a big bill, and they get to stabilise their cashflow.
Is there part of your business YOU could run this way? Where could you create new residual income streams, to help stabilise your cash flow?
Clear the clutter – and set yourself up for January!
I don’t know about you, but there’s always a heap of non-client work that’s nice to do, but never makes it to the top of my to-do list.
And as business slows down, it’s a great time to plan it in.
Closing down old files. Clearing your inbox. Staff training, paperwork and organising everything on your laptop (especially if time gets wasted, trying to find files or images!).
Dedicated time for strategy planning is also perfect at this time of year.
It sounds simple but it’s lovely to go into the New Year feeling organised, in control and with a plan of action to hit the ground running, when you’re back at your desk in January!
If you do just ONE thing…
If you don’t get paid (or get paid much less) when your business income drops, like over Christmas – it’s incredibly stressful.
A great way to avoid this is to draw a consistent and comfortable amount from your business each month and leave a surplus in your salary account (if you don’t do this already, here’s another blog that will help).
Managing your salary like this means you can build a financial buffer for holiday or sickness. And helps make sure you can still pay yourself at times of the year when business naturally slows down.
And for a more in-depth guide, to help you stay in control when your income is up-and-down – click here for your FREE copy of “4 Ways to Get Off the Financial Rollercoaster”!
Until next time,