September 3, 2021
It’s hard to believe we are already thinking about Q4 2021. Wasn’t it just yesterday that we were counting the minutes until the ball dropped on 2020? Planning for Q4 sales—especially holiday—may seem trickier than ever, with supply chain disruptions, the pandemic threatening holiday traditions as well as a true return for food service, and new variants affecting our lives in multiple ways once again.
We can expect e-commerce to be big—last year, e-commerce sales experienced an incredible gain of 47.2% during the traditional holiday season, according to the Mastercard SpendingPulse—so it’s vital to have an immersive, convenient and frictionless online and mobile presence if you don’t already. And when it comes to spending, eMarketer predicts U.S. holiday retail sales in 2021 will increase 2.7% to $1.093 trillion, while the season’s e-commerce sales will rise 11.3% to $206.88 billion.
So, while we’ve all learned anything can happen, it’s time to plan for Q4 to the best of your ability. Here are three things you can do right now to make sure you are ready for whatever Q4 2021 brings.
Get it moving
You likely have inventory that has been slow to move or prior season stock that is sticking around. Now is the time to move it. And yes, it may mean discounting it. It’s worth it to convert that product into cash. As they say, cash is king, and it will help ensure you have enough cash to purchase what you need to fulfill demand during the holiday season.
Reflect and project
It’s time to close your books year-to-date so you can reforecast for Q4 using an accurate starting point. What should be included? First, reflect on last season and don’t just assume optimistically that sales will be higher. Second, run a 13-week cash flow and include a sensitivity analysis with your forecast to reflect reduced volume as well as increased shipping costs if you need to airship goods to get them here on time for the holidays. Supply chain issues are real and not going away any time soon, so better to build them in than be surprised. Third, project now for Q1 with realistic return rate forecasted so, again, you aren’t surprised post-holiday.
Talk to your suppliers to understand their capabilities. Hopefully, you have a great relationship and solid history with suppliers so that you can negotiate more favorable terms. The holiday rush is not a time to try out a new supplier; you may get an early holiday surprise this way! Always test new suppliers slowly in the off-season and without immediate deadlines looming. And never put all your eggs in one basket.
I mentioned this in my last article, but it bears repeating when it comes to planning for Q4. Tell your lender if you need a temporary increase on your line of credit or flexibility on structure to unlock more capital to meet the demands of the holidays. When you approach them be prepared to show them your needs as well as how and when you will come back within your line or into the previously approved structure. They should work with you to come up with a plan to get you through this seasonal need.
Like the rest of the last 18 months, holiday 2021 will be unlike any past season. However, there are things that you can—and should—do to prepare financially right now.
Jennifer Palmer is CEO of Gerber Finance, the leading Asset Based Lender for fast-growing brands, with a specialty in natural products through its Naturally Gerber division.
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