Time to get your business ready for Christmas?
Written by Mark Williams
With Halloween and Bonfire Night over and the supermarkets full of mince pies and other calorific goodies, the festive season is fast approaching. The UK’s retail heavyweights are set to launch a record-breaking £6.8bn festive advertising spree, no doubt coming to a TV screen near you very soon.
The very thought of Christmas can send some business owners into full panic mode. Many are under pressure to maximise sales to give their cash flow a welcome Christmas present. Not all business close over Christmas and New Year, of course while others simply seek to finish off and get ready for the new year, before team members take some well-earned time off.
Christmas can be a busy, stressful time, especially for retail and hospitality businesses. But no matter what business you run, with sound planning and decisive action you can make it a wonderful Christmas time (even if you’re a “bah humbug” type). So, which key areas should you focus on and which tasks might you need to tick off?
Customers
Obviously, you need to tell them when you’ll be open and closed, and Mid-November is about right for this, with a gentle reminder or two in the weeks leading up to Christmas. Put up signs in your premises and in your windows.
Sending Christmas cards to customers can be another good way to tell customers when you’ll be closed. Your business can claim this as a tax-deductible expense, as long as the cards clearly advertise your business (a simple “Merry Xmas from Us” won’t do). Also include details of your Christmas days/hours on your website, while emailing key customers can also work well (you can also tell them about any sales or seasonal offers).
Presents
You may want to give your most-valued customers a Christmas present. If so, and you want to claim it as an expense for tax purposes, it must not cost more than £50 and must clearly be promotional (ie feature your name, logo and sales messages). Food and drink items aren’t tax deductible (neither are vouchers for these).
You can take a client out for a Christmas meal, and where legitimate, include it as entertainment in your business accounts, but it will be classed as a cost, not an allowable expense for tax purposes. And you cannot reclaim the VAT on such costs, if your business is VAT registered.
Employees
If you’re closing, give your people plenty of notice of the exact dates and times. Do it in writing. If you’re staying open, some employees might want time off, so, find out who and when, so you’re not left short-staffed. You might need to recruit temporary staff to deal with additional seasonal demand. This shouldn’t be rushed, while temporary staff will need training (something else to consider).
Many businesses give staff Christmas bonuses. Paid through your PAYE system, bonuses are taxable (visit government website Gov.uk to learn more). Low-value non-cash gifts, such as a turkey or box of chocolates, need not be reported and no National Insurance is payable on them. It’s a different matter for vouchers, which have a cash value. If in any doubt, seek advice from your accountant.
Christmas Do
If you still haven’t organised your staff night out – you’re leaving it late – which might limit your options. You can claim up to £150 per employee for a Christmas night out, providing it’s available to all. Visit GOV.UK for more on claiming for employee social functions and parties. Gently remind your people of what conduct is unacceptable on staff nights out (Acas offers reliable advice on how to avoid common Christmas party pitfalls).
Suppliers
Obviously, you must have enough stock or materials to maximise your sales if they’re likely to spike this Christmas, which means increasing your order volumes. If you’re staying open and can’t stock up in advance, make sure that your suppliers are staying open. If not, research some alternatives. Ask your key suppliers when they’re open over the holidays. Tell them when you’ll be closed, and don’t forget to also cancel lower-value supplies such as milk, newspapers, etc.
Deliveries
Your customers won’t be filled with festive cheer and may ask for their money back if they don’t receive their purchases in time, so plan your deliveries, as Christmas can bring postal delays. Also let your customers know about your order deadlines, so they get what they want in good time. If you make your own deliveries, you may need help if your sales increase significantly.
Cashflow
Having to buy more products or materials or having a higher wage bill because of Christmas creates cashflow implications. You need to be sure that you can cover your outgoings. Speak to your bank about available solutions. Identifying any cash flow issues in the months ahead can allow you to find solutions and stay out of serious trouble. Also chase any unpaid invoices early enough and request payment before any Christmas shutdown.
Premises
Christmas is a time to deck the halls with holly and decorate your premises in other ways. Fortunately, you can claim tax relief for a new Christmas tree and decorations, if you have premises (not if your business is home based). If you’re going to be closed for Christmas, test your premises security (eg windows, doors, locks, alarm, security lights, etc). Also carefully consider how to safeguard your IT and store your data safely. Christmas is also the season to be careful.
Mark Williams is a freelance editorial consultant, editor, journalist and SME content specialist with more than 25 years’ experience. He has written for The Guardian, numerous leading brands and award-winning magazines and websites. Visit www.markiwilliams.com