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Financial forecasting for the festive season

The festive season is a time for celebrating with loved ones and enjoying a few days – hopefully! – to rest and recover before the new year starts in full swing. But it’s also an opportunity for you to carry out some essential financial planning.

Every Aussie business owner should understand the importance of financial forecasting, and taking care of it over the holidays can make all the difference to your long-term success. So, here’s how to prepare your business for the Christmas season with accurate financial forecasting.

Why financial forecasting matters

The holiday season often translates to fluctuating cash flows. For some industries, like retail, it means much higher profits, whereas for others like manufacturing it might mean a heavily reduced bottom line.

Forecasting helps you anticipate when and how these changes will occur, allowing you to proactively manage your finances ahead of time. It can also guide your decisions about allocating certain resources and teams. This includes figuring out how much inventory to stock, staffing levels and marketing budgets.

Perhaps most importantly, precise financial forecasting can help you identify opportunities maximise your profits. This could involve creating seasonal promotions or tweaking your pricing to get an edge over your competition.

Ready to dive into your financial forecasting responsibilities for the festive season? Here are seven must-dos to make the most of all your hard work.

1. Historical data analysis

To create an accurate financial forecast for the festive season, start by analysing your business’s historical data. Look at previous holiday seasons to identify trends in your performance. Key metrics to consider include:

  • Sales data: Look at sales figures from previous festive seasons. Look for patterns and growth trends.
  • Customer behaviour: Consider how customer behaviours can change during the holidays. Do customers buy more from you, or do they prefer particular products or services?
  • Inventory turnover: See whether inventory levels have changed in past seasons. This can help you avoid overstocking or understocking.
2. Expense projections

You’ll need to project your expenses accurately, especially as the festive seasons often coincides with increased costs:

  • Seasonal staffing: If you hire extra people during the holidays, budget out all the expenses including wages and recruitment costs.
  • Marketing budget: Plan your holiday marketing campaigns and set aside a budget for them. Think about how you can use digital marketing and social media ads, for example, to get that extra edge.
  • Inventory costs: Estimate how much additional inventory you’ll need and calculate how much that will cost.
3. Sales projections

Tomaintain a healthy cash flow during the holidays, you’ll need to analyse and project your cash flow. Some strategies include:

  • Manage accounts receivable: Try to encourage faster payments from customers by offering early-payment discounts or sending friendly follow-ups.
  • Negotiate with suppliers: Speak to your suppliers to see if you can lock in extended payment terms, giving you enough financial slack for inventory.
  • Secure financing: If your cash flow is tight, consider securing business financing to bridge the gaps. Our team of commercial brokers can assist with all sorts of financing solutions tailored to your needs.
5. Scenario planning

Preparing for the unexpected is what makes a good leader great. Think about creating multiple financial scenarios to account for different potential outcomes. What if sales are lower than expected? What if there’s a sudden surge in demand? Having contingency plans in place will help you stay adaptable.

6. Technology

Use technology to your advantage, especially platforms that can streamline your financial forecasting. There’s lots of great software and apps on the market that can help you better manage and analyse relevant business data.

Use technology to your advantage, especially platforms that can streamline your financial forecasting. There’s lots of great software and apps on the market that can help you better manage and analyse relevant business data.

7. Get professional support

For complex financial forecasting or if you simply don’t have the time to manage everything yourself, seek out professional guidance. Financial experts can give you some incredibly valuable insights into your business and even help you build out accurate forecasts.

“Financial forecasting is not just a numbers game – it's a strategic tool that empowers you to navigate the festive season successfully,” says David Crook, Managing Director at Nero Financial. “For Australian business owners, this preparation is essential for managing cash flow, maximising profits and seizing any growth opportunities that arise.”

Our experts are here to support your long-term financial needs by sharing the resources and strategies to help make the most of your business’s holiday season Speak to Nero Financial today or call us on 1300 025 949.