Essex is a tourist hotspot and the summer months often bring a host of commercial opportunities for local businesses. In fact, it is estimated that tourism brings more than £3.1billion to the Essex economy each year. East Anglia is also in the top 10 destinations for holiday bookings this year, according to the latest Sykes Cottages Staycation report.
With this in mind, there are some key things management teams should consider, particularly as we approach a busy period.
We often see businesses suffer due to poor planning. For example, stock requirements may not have been reviewed on a regular basis and as a result the business is showing signs of distress. It’s important to ensure you have robust strategies and review processes in place ahead of busier periods, particularly if you are looking to take advantage of the opportunity increased footfall can bring in driving sales.
It is essential that your business is equipped with a stable strategy which can cope with busier times as well as the quieter months, so that balance sheets remain stable throughout the year.
Before considering wider tactics to drive new business in the summer months – ensure your finances are in order. Cash flow can be one of the biggest challenges faced by companies during the peaks and the troughs, whether it is preparing for the slower months when goods and services sell less, or frontloading stock and increasing staffing levels to respond to increased demand in summer. One simple way to overcome this is to adopt a flexible approach to planning.
Adjusting your budgets for various items to reflect capacity and demand from customers will mean you aren’t wasting resource where it’s not required. For example, identify where you can cut back on utility bills in the summer months when it’s warmer and lighter.
For some businesses, tapping into financial support from banks may be a practical solution to bridging the gap between spending and receiving payments for the product or service provided. Facilities such as asset finance or invoice discounting are well suited to cover the costs of increased levels of stock or paying more staff, before reaping the returns from sales across the season.
However, any company considering taking out a loan, must assess the implications that monthly repayments and any associated interest costs may have on existing budgets and forecasts. This will help you determine whether the support is sustainable, as well as evaluating the value it could add to the business long-term.
When it comes to recruitment, it is likely that businesses operating in the recreational or leisure industries will need to develop seasonal employment plans. Before rolling out a recruitment strategy, review what has and hasn’t worked in previous years to better formulate new plans.
Equally, consider what employment packages you may be able to offer, such as flexible hours, discounted products and subsidised travel, to attract the right kind of talent for the positions.
Use the busy months of the year to your advantage and make the most of the influx of visitors in the area looking to spend money on eating out and commodities.
Knowing your local market and key competitors inside out is key to informing this. From identifying what your peers are doing, whether that’s a new marketing campaign, the launch of a new product or a service, you will be able to respond and set your business apart from the crowd.
Offer your customers something a little different to the norm, such as summer related offers. Scope budgets to identify the degree to which you can subsidise to accommodate these extras, to ensure you don’t run into any shortfalls in the process.
Amid the current economic uncertainty, we’ve seen companies up and down the country go into a stockpiling frenzy. And, with summer fast approaching, some businesses may fall into a trap of doing this to an even greater extent.
As fears of border grid-locks remain, manufacturers in particular are stockpiling at record-breaking levels. For example, Unilever is stockpiling ice-creams and deodorant made in Europe to prepare for possible border gridlocks. But, management teams need to be cautious and pay close attention to cash tied up in inventories to avoid running into financial struggles.
Often, having too much money in stock value without the immediate demand for it can impede opportunities to grow. Equally, the extra stock will need to be stored on site, in warehouses or in manufacturing units. This will drive up the cost of overheads if increased space is required for the storage of goods for longer periods of time.
Management teams should realistically stockpile for the next 3-6 months and should equally have a sales strategy to move the goods to clients or consumers throughout this period.
Businesses should consider seeking guidance from a trusted adviser if they are unsure of the degree to which they should be stockpiling materials or produce. This will help companies across Essex in the coming days, weeks and months ahead.
First published in the Essex Chronicle in May 2019.
It’s important to ensure you have robust strategies and review processes in place ahead of busier periods.Glyn Mummery Restructuring Advisory