Research conducted by Direct Line for Business, the results of which were recently released, highlighting the fluctuations that small businesses face.
It was revealed that no fewer than 1.6 million of the UK’s small businesses double their revenue in a single month – however, as good as this sounds, there are downsides too; with some months of the year also seeing income halved.
An important takeaway from this research is the need to understand the fluctuation in finances that can take place from one month to the next. So what are the best ways for businesses to handle this?
As many as 26% of small businesses state that their revenue fluctuates quite wildly from month to month, so it’s extremely important to be flexible. Accept this situation, but do not settle for it – or the tide will never turn.
Of course, there is a need to maximize those good months, but it’s also important to recognize that the poor months can make a big difference to your business. Put together extra plans for those down periods to ensure that you are able to ride them out a little more smoothly.
- Monitor staffing levels
When you are in the months where your business is thriving; the kind of month where supply and demand intensifies and the revenue reaches huge levels, there may well be the need to take on extra staff to cope with the amount of work that needs doing. 23% of small businesses have had to employ more staff due to the rate of expansion, but there does need to be a period of reflection when doing so.
There will be those months where the workload is not quite so high, so if you have taken on extra staff on longer contracts they will need to be paid despite revenue decreasing. Short-term growth can be positive, but it needs to be balanced against the long-term vision for the overall good of the business.
The one thing to come out of the research was the rate of growth in small businesses. Even in the UK, there are now 2.7 million operating, as well as a further 2.4 million micro businesses (firms which employ ten employees or less).
That means your business is likely to face plenty of competition, which is something else that needs to be factored in when making plans for dealing with the tougher months. You need to stay ahead of your rivals, but to do so cost-effectively. This is where your market research and competition analysis needs to come to the fore and be put to best use.
- Regular assessment
The world in which we live in is an ever-changing one – and even more so in the current business climate – so you should never think that you have cracked it, even when business is booming and all your targets are being hit.
You have to continually be looking to improve even when things are going well. As highlighted above, the competition is so fierce these days that getting ahead is only the first part of a successful business. Staying ahead is a whole different game, and this requires constantly evolving technology, the need to develop new and better ideas, and the ability to generate new revenue while all this is going ahead. Being active digitally and maximizing the social media effect can all be good ways of staying ahead of the game. Do not allow complacency to set in.