This is the final article in our 3-part series on how small businesses can prepare for the festival season. In this article we look at how to plan production and act on these plans.
The period from October to December is the biggest shopping season for Indian households with preparations to spend heavily on shopping ranging from simple purchases for the home to personal indulgences, utility buying, festival ornaments, lights, presents and much more!. Many online retailers adapt their offerings and battle it out over the lengthy sale period to get ahead of their competitors. Most consumer durables firms are expected to achieve a 10-40% increase in sales from the previous year during the coming festive season.
To analyse how much you should produce you have to analyse your historical sales data to get a solid understanding of demand. Predictions from institutional buyers, distributors, etc. help in giving a fair idea of production levels for the festival boom.
Keeping a tab on seasonal performance of products, latest trends, new arrivals, frequency of purchases and buyer behaviour help you plan your stock ahead of time as well as ensure efficient warehousing. It is important to understand the buying patterns of customers and classify customers based on buying patterns.
There are different approaches of demand estimation that businesses follow, such as moving averages, weighted moving averages, exponential smoothing, single exponential smoothing, smoothing constant and regression analysis. During festivals, people in India are ready to spend and entrepreneurs like you need to prepare in advance to meet the surge in sales during the festival season. It is important to ensure that you have enough stock.
So, do you have the required factory capacity to face this surge? Do you require additional labour to meet the capacity? Service industries such as food delivery, flowers, cake & sweets delivery and courier services may need to gear up with extra labour and a lot more planning to ensure timely delivery of items.
If you are not planning to hire extra labour, it will be very tricky to handle everything by yourself. As an entrepreneur, you don't have any extra time and you can't do everything. Every minute is crammed to capacity. Every day is scheduled to the hilt. Every moment has something-usually a lot of some things screaming for your attention.
How do you overcome this incredible challenge?
The solution is easy. Either, do less, or do more; confusing, isn’t it?
How can you do less? Outsource more.
How can you do more? Hire capacity and labour for the short term.
When planned well, outsourcing plays a vital role in ensuring productivity is high. It comes with a myriad of financial benefits such as cost reduction, increased cash flow, cheaper labour at lower asset cost, lower fixed cost. Before you choose just any company to outsource your manufacturing and fabrication needs to, it is important to take the time to select the right company for the job. Look for a company that is credible and experienced in their field, with a management style and business philosophy similar to your own. Also, focus on the right solution for your product, not the lowest price.
Importing products for sale is another way to be prepared for bulk sale orders during the festive season. The importing process can be extremely complex and confusing. Expected gains can often be erased by long transit times, rising or fluctuating delivery costs, regulatory fees, and unexpected delays
Be aware of transit times: Wherever you are importing from, understanding how long it takes to get your container home is integral to your planning. When you look at transit times, it is important to remember that there are processes at either end of the journey. Allow extra time in both countries for things like customs, delivery to and from ports, loading and unloading, etc.
Be aware of the Custom processes: Before importing commercial goods into India, you will need to identify if it can be done legally. Many import regulations only apply to goods imported for commercial (business or resale) purposes. Certain goods are not allowed to be imported at all. Different countries have different prohibited products. You should also find out whether the goods you intend to import are subject to any permits, restrictions or regulations by the Indian government. It is the importer’s responsibility for ensuring that the goods comply with all rules and regulations.
While engaging contract labour, businesses need to exercise caution and understand the laws that govern their relationship with contract labour. The most important distinction between contract labour & employees is that they do not have the legal status of employees. “Contract labour” can be distinguished from “direct labour” in terms of employment relationship with the principal establishment and the method of wage payment. Without a clear mutual understanding of this relationship, there could be confusion and disputes. While hiring contract labour, make sure you are clear about the terms and conditions and document it properly. You should also conduct due diligence on the contractor that is providing the labour to your business.
While most people look forward to the festive season as a time to relax and unwind, many entrepreneurs look forward to the excitement and stress of ramping up production, getting goods to market and overcoming competition to generate good sales. It is important for entrepreneurs to plan in advance so that they too can spend time with family during the season without lots of last minute crises to deal with. After all, family time is important too.
Here’s wishing a happy and successful festive season to all entrepreneurs, from the billionloans family.