If your busiest season of the year is the holidays, now is the time to prepare for the surge in demand. Maximizing the likelihood of strong sales is a very complicated process that involves numerous obstacles. But it’s safe to say the two biggest obstacles are the need for additional business funding and potential changes in demand. The latter makes the former even more difficult because in order to be approved for a small business loan for your cosmetics store, you must have a pretty clear idea as to how much money your desired performance will cost you.
Asking for too little could severely limit your resources while asking for too much could eat away at your profits once the busy season comes to a close. Thankfully, it is now much easier to forecast demand as well as ascertain the right borrowing amount and terms to suit this demand. Here’s how to take advantage of the latest capabilities to prepare for and finance the busy season:
1. Incorporate predictive analytics
In the past, there wasn’t much companies could do to forecast demand aside from estimating inventory based on previous seasons. This sort of educated guessing has since been replaced by predictive analytics, which examines information to systematically forecast future statistics. Over the past decade or so, predictive analytics has worked its way into the small business world, especially retail-oriented companies like cosmetics stores. At this point, any retail business that does not capitalize on recent advancements in data availability are at a serious competitive disadvantage.
You can find out if last year’s busy season reached a sufficient amount of people from your target demographic or generated customers who returned during slower periods. The answers to some of these questions may seem obvious but you’d be surprised as to how hard data can differ personal perception. Data wouldn’t be so highly lauded if retailers could rely on their own recollections to determine which items performed best or were marketed most effectively.
Perhaps the biggest strength of predictive analytics for retail, however, is the ability to enhance inventory management and marketing campaigns. These just happen to be two very popular uses for small business loans. After running predictive analytics, a report might conclude that additional business funding is required to obtain large quantities of certain items or finance more effective, multi-channel marketing techniques.
2. Work with a data-oriented business lender
A merchant cash advance is among the most widely-recommended business funding programs for cosmetics stores. The borrowing amount is based on future debit and credit card transactions. Yes, this yet another thing you can get a solid handle on with the help of predictive analytics. Instead of interest, the fee for a merchant cash advance comes from two percentages: a factor rate and a retrieval rate. The two percentages determine how much you will owe in total and the percentage of daily debit/credit card sales that will go to the business lender.
If you went to a bank or an online business lender, you would have to abide by their terms and repayment structure. There’s little if any room for negotiation, unless you are heavily-capitalized. If you choose a company like United Capital Source, on the other hand, you would likely be able to negotiate terms that are based on the results of the aforementioned analytics report. We never assign fees that would possibly inhibit profits, prevent you from saving money, or simply obstruct cash flow in general.
3. Performance-based marketing campaigns
A major reason small businesses are encouraged to start preparing for the busy season so far ahead of time is the amount of time it takes for marketing campaigns to take effect. Research has shown that it takes approximately four months for a marketing campaign to actually influence a shopper’s spending decisions. This is why retail businesses tend to start building their email lists, advertising on Google, or ramping up their social media game in late August or September.
Much like the business financing industry, an increasing number of digital marketing companies now offer services to accommodate the tumultuous cash flow of seasonal businesses. Instead of asking for the same amount of money every month no matter how their campaigns perform, these digital marketing companies only get paid when their clients make profitable sales. This is the perfect kind of investment to finance with a merchant cash advance, which does not deduct significant payments unless sales volume is on the rise. Your marketing expense and loan payments would be minimal in the months leading into the busy season, allowing you to run your business smoothly and put more money away for holiday-related spending.
One less thing to worry about during the busy season
While some requirements for a strong busy season are difficult to obtain, this is not the case with a merchant cash advance. The approval process is incredibly quick, and if you work with a company like United Capital Source, all of your concerns will be addressed almost immediately. You have enough on your plate for the busy season. But it will surprise you how much less intimidating these tasks will be when you don’t have to worry about paying for them.