Wouldn’t it be great if doing business was just a case of a steady flow of sales, with little fluctuation from day to day or month to month? Unfortunately, that’s not the reality for many small firms across the UK. In this article we take a look at some ways to cope.
Seasonality is a fact of life
Lots of kinds of company experience peaks and troughs in sales throughout the year. One of the most obvious examples is the way many retailers’ sales go through the roof around Black Friday and in the run-up to Christmas, but tend to be much steadier over the rest of the year. Other examples include firms involved in the tourist trade and gardeners generally being much busier in the summer than the winter. Taking that to the extreme, many amusement parks are open day and night during the summer months but shut up shop completely come winter.
Plan ahead where possible
Peaks and troughs like this can cause all manner of headaches, like ensuring you’re adequately staffed in busy periods, have enough stock to satisfy demand and are using the right tech to optimise deliveries. Unexpected variations are particularly unpleasant, but the good news is that seasonal trends are much more predictable so it’s possible for you to plan for them in advance.
A good payment system can help
Something that’s absolutely vital is having a payment system in place that can deal with any seasonal surge in demand. A great payment system can help your business breeze through seasonal peaks and troughs, dealing with any glut in orders and keeping your customers happy so they come back to you for more.
Make sure you stress-test
If your business experiences seasonal surges, you should make sure your payment system can cope – you don’t want customers poised to make a purchase experiencing problems when they’re trying to check out and taking their business elsewhere. Depending on the nature of your business you’ll need to stress-test your point-of-sale system to ensure it can handle high volumes of traffic – something that it’s best to do in quieter periods.
Provide your customers with plenty of payment options
Offering multiple ways to pay is a must so your customers can choose the option that suits them best. So as well as offering standard chip and pin card payments, make sure you offer contactless payments too – you can even do that with your phone if you use a service like the NatWest Tap to Pay app. If you’re selling online, offer a range of digital wallet payment options. All this should help boost your conversion rates when you’re experiencing sky-high demand.
New payment options are emerging all the time, and it’s important to keep on top of the latest developments. For example, some providers use Open Banking technology that makes it possible to send your customers a payment link or QR code that they can use to pay you completely securely without entering any of their banking or card details. Offering this kind of option could be a great way to make your business stand out from the crowd.
At the same time, depending on the nature of your business it’s also important to offer your customers the option to pay using cash as that’s what some people still prefer.
Don’t block legitimate purchases
It's also important to bear in mind that your customers may make more purchases than normal in peak season. That means you need to make sure your payment system doesn’t block legitimate purchases as turning away genuine business is the last thing you need. Consider modifying your payment system’s velocity rules during peak period to avoid such an undesirable outcome.
Ways to smooth your cash flow
It’s not easy, but there are ways to keep cash coming in in quieter periods for your business.
One way is to offer your customers the option to pay in instalments such as through buy now, pay later during busy times. That means you’ll still be receiving a predictable source of income at times when it’s difficult to make sales.
Another is to offer a customer rewards programme – in tough economic conditions, a combination of instantly redeemable rewards and discounts can make a big difference to consumers deciding where to take their custom. Another great option at a time when a business’s purpose is increasingly in focus is to give your customers the option to donate to a good cause when they’re checking out. A good payment system can handle both options automatically.
Keep on top of business trends
Some modern payment systems provide extremely useful data and analytics tools to help you track your business activity and predict what’s likely to happen in the coming weeks and months. For example, our payment partner Tyl by NatWest offers the Tyl portal, which enables you to compare your daily sales or turnover over a given period, pinpoint your busiest times, see your average customer spend and identify returning customers.
With this kind of information to hand you’re well placed to tailor your offerings, promotions and payment options to match your customers’ preferences at different times of the year. It can also help with inventory management so that you avoid having too much stock in quiet times and running out of popular products when demand is high. And it can also be useful in cash flow forecasting. For example, if you know your revenues are likely to plunge in February, you can make plans by cutting costs or arranging short-term financing to get you through what’s likely to be a difficult month.
Additional fees may apply for data usage or app downloads. Tyl eligibility criteria, terms, conditions and fees apply.