Before the Thaw, Don’t Forget Winter’s Cash Freeze

If you found your business starving for cash, projects and sales in early winter, you were definitely not alone. If your product isn’t a Christmas gift item or an annually budgeted item, forget December sales. Typically too, in the beginning of January some businesses hold off buying and worse, pay later than usual. Thankfully, we’re not in that mode now. So before we forget the cash crunch of winter, let’s put a few automatic systems in place to avoid the problem next year. That way, we can be prepared with a cash cushion, a game plan, and some tested tactics to turn winter cash freeze into a flourishing free flow.

Strategies for surviving your next winter cash freeze:

1. Build a cash cushion. Add a few percentage points to your budget plan to set aside for next winter. Put those siphoned funds in a special account away from your normal accounts where you won’t be tempted to use them for every little emergency throughout the year. If by some windfall you don’t need them next winter, there’s always expansion equipment, owner bonuses, or other emergencies waiting in the wings for needed funds. By the way, start today. With my clients, this line item goes right into our pricing strategy. It’s is not easy of course; but managed strategically, you’ll be able to accumulate a sizable dollop of dollars.

2. Spend the year strategically filling the gap with planned work. We created a 10% discount for projects performed in January/February for one of my clients. We added corresponding words to proposals proposed, starting in September. Beginning in October, we called back those few lost bids and reminded them of the discount in case cost was the issue. In addition, we created a mailing campaign commencing late October. The result, their January calendar was nearly booked this year – when there would normally have been layoffs.

3. Push pieces of big projects into January. If your business involves projects that span several weeks, try not to have the projects end right at the end of the year. It will be very hard to fill the calendar starting beginning of January. In my consulting company, my consultants had ‘bench’ time for 3 or 4 weeks whenever their projects ended Dec 31. That’s a lot of overhead payroll! Of course, customer satisfaction and customer needs come first. Our best projects had cleanup, debrief, handoff, and training, after the official technical completion date. Your business is probably different. AND this works best you operate on the Invoice- Early-and-Often program (but that’s a later newsletter topic).

4. Create more up-sell and cross-sell winter project offerings. This is the hardest strategy, but the most cash flow leveling. Winter may be an excellent time for your clients to do deferred office maintenance when their office is empty or at low staff if their businesses are busy other parts of the year. Depending on your business, you could offer equipment tune ups, office spruce up, post Christmas information systems/Internet clean up, and other general work that may have been put off when everyone was really busy the rest of the year. So think about what service you could up-sell as part of a package this year that would coincidentally fill the slow-season coffers while providing a convenient client service.
5. Push back along with everyone else. Put on your own breaks when it comes to paying bills in late December. Determine who can wait to be paid; then pay them later than normal. Defer purchases until late January. Pay the minimum on your credit cards. Yes, you’ll perpetuate the problem; so concentrate on the other choices first.
Merra Lee offers a free Cash Flow Discussion if you want to kick start some ideas into action.

Find profits you didn’t know you were missing. Small business profitability consultant and Financial Advisor, Merra Lee Moffitt, has 15 years business consulting experience and 30 years business finance experience. Having created and built her own 30-person company, she KNOWS how to create profits and solve small business problems. To discuss your profit opportunities, call Merra Lee today at 888-920-2030 or email  © Copyright 2005 Merra Lee Moffitt.