At part 1 of our “Christmas in July” webinar series, I gave it to you straight: “Don’t be a victim of your own success.” Yes, it sounds like a luxury problem, but we’ve seen it take down many an e-commerce business. The scenario goes something like this: Sales are booming, orders are coming in, and then the holiday season hits. Suddenly inventory disappears and there’s no way to keep up. This leads to unfulfilled orders which lead to bad customer reviews on Amazon or eBay. Bad reviews cause a drop in the rankings, and all of a sudden that flood of orders somes to a dead stop. It’s very important to scale your business to meet the holiday demand, otherwise things can go sideways fast. Here are a few ways to properly prep your books for holiday sales:
Say goodbye to 2014
In order to really kick butt in sales over the holidays, it’s important to close out your books from the previous year and file your taxes. Throughout the year you’re collecting sales tax which you ultimately owe to your taxing agency. To find out what this is, run a sales tax liability report in your accounting software. Or if you’re using a plug-in like Avalara or something in your shopping cart, just run that report and make sure that you pay your agency. Make sure your “balance sheet” and “profit and loss statement” are completed so that you understand your “net income.”
Assess your resources
The cash you have in your bank account isn’t the only leverage that you have to help run your business for the holidays. Here are some ideas:
- Make sure your receivables are in check, which means making sure everyone who owes you money has paid you. Sometimes it’s easy to lose track of these funds, but now is the time to start collecting on all outstanding accounts receivable. This extra revenue can be helpful in placing your big holiday orders.
- Payables are the other side of that same coin. Now is the time to make sure you’re up to date on your payments to your vendors so you’re in the best negotiating position going into the holiday season. Re-negotiating your contracts with your vendors can be a real game-changer. Who knows? Maybe you can get them to extend from net 30 out to net 45 or even net 90. This will help stretch out your cash a bit more to purchase more items and have more consistency in what you’re selling throughout the holiday season. Also, because of long shipping schedules, summer is often the best time to place holiday orders from international vendors, so it’s very important to get these terms in order as soon as possible.
Learn from the past
It’s critical to make a plan about what and how much you’re going to sell based on past information. If you can, have a look at data from the past three or four years. See what your most profitable and popular items were from those years. And no, these two things are not always the same; they are based on margin and packaging and shipping and the back-end work that it takes to fulfill those items. Sometimes your most popular item is just a loss leader that gets buyers to your web site. The goal is to use your most popular item to expose buyers to your most profitable item. To find out what that is, run an “item profitability” report in QuickBooks, which is located in a subcategory called “jobs, time, and mileage” in your reporting menu. Just select the date range for past years’ holiday selling season, and it will tell you how much you actually paid for each item and how much revenue you brought in during that date range.
Once you learn what is popular and what is profitable, see how best to market, position, and advertise these items. Maybe you can reposition where those products are in your web site to increase your total sales, like bundling your most profitable item with your most popular item or bringing more visibility to your most profitable item on social media or Google AdWords. Be creative.
Hire some elves
Looking at the volume increase you’ll have during the holiday season can tell you if you need to hire a seasonal worker to help fulfill those orders. The last thing you want is for orders to go unfulfilled. If your past volume of sales is X% more than what you normally do (and your current staff is maxed out), you’re going to want to hire X% more staff. So do yourself a favor and hire those extra workers, but get them far enough in advance to train them on your products and your workflows.
If you’re getting ready to sell big, data entry will likely be an issue. And a crucial part of understanding your financials is getting that raw data into your company file, but manually inputting all that data can be such a huge time suck. Using a product like Webgility eCC to bring that data into your company file automatically frees you up to focus on the things that are really important to your business, like marketing, sales, and management. eCC works with the biggest shopping carts and marketplaces and it works with the most popular accounting systems. If your business is multi-channel, being able to have the correct inventory levels listed on each sales channel will prevent you from overselling. eCC also has a shipping module which can help you streamline your process of printing out shipping labels and print out packing slips in bulk to speed up the process. Um, how else do you think Santa delivers all those presents? We don’t like to drop names, but he’s our biggest client.