Jane Shelton

Pre- and post-Christmas is a good time to focus on cashflow, and with the RBA meeting tomorrow, also a necessary time to have a plan.

Christmas season = cashflow issues

The US Federal Reserve’s decisions in the next few months on whether to reduce interest rates in the US will have an impact on us in home business because of the flow-through effect on the Australian economy and the Australian sharemarket, which has been bobbing up and down like a yo-yo. 

But what is of more immediate concern to home business is what the Reserve Bank is going to do to us when it meets tomorrow in Sydney.

If you’re funding cashflow shortfalls in your business from your home loan, which is the case for many of us, or out of credit card borrowings (hopefully not the case if you have 19.5% interest rates), you will be particularly interested.

Check out new credit cards where you can get cheap balance transfer rates for the life of the transfer – much better rates, even as low as 3.9%, which is much cheaper than the standard home loan rate of 8.57%.

Besides the normal living expenses and increases – rates, electricity, home loan repayments or rental, water, gas, household living expenses – it may be time to think seriously about your business cashflow requirements for the next three to six month period.

Have a look at your cashflow for the last 12 months. If this time last year you had great sales leading up to Christmas, now is the time to make hay while the sun shines, but beware of the post-Christmas slump and the early January shut down when everyone goes on holidays and all is quiet.

The Christmas season is well and truly here. Overseas, the discount stores have been getting attention. Here it is the premium stores. Personal gifts and family-time items will be particularly popular along with items associated with home renovations and home entertainment electronics.

Think seriously about generating some quick runs through sales leading up to and after Christmas (have a look at SmartCompany bloggists on sales) and make sure your creditors are paying their bills, follow up with phone calls and ask for likely payment release dates and call in the laggards.

Alternatively, see if you can get extended credit from your debtors – an extra 30 days can make a world of difference.

Any small business that has already opened up markets overseas is likely to come under considerable pressure to revise contracts and terms of trade as a consequence of our strong commodity driven dollar.

On the other hand, if you are importing, the main concern will be the coming credit crunch as your financial partners tighten their controls at the same time as consumers may be a little less liberal with their Christmas stockings.

If, like me, you have engagements and parties coming out of your ears in the evenings and are wondering if you can get away with half an hour at the first two before rushing on to the third, you may be contemplating how you’ll have the energy to continue to devote to your home-based business and keep to a schedule of business activities.

Now is not the time to give up on squirreling away dollars and ideas for the future. If the outgoing treasurer was correct that a global tsunami in the credit and financial markets is heading our way (see my previous blog) then we in home business may be in for a rough time if we haven’t thought through our cashflow issues over and beyond the Christmas period.

Dr Jane Shelton not only runs a business from home but is doing business research into people working from home. She is managing director of Marshall Place Associates, Melbourne’s independent think tank, and CEO (honourary) for ‘Life. Be in it.’ International. Shelton has a Doctorate in Business Administration at the Australian Graduate School of Entrepreneurship (AGSE) at Swinburne University of Technology after a Master of Arts in Public Policy at Melbourne University and a Bachelor of Business in banking and finance at Monash University.

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