James Mason from accountants Fifth Element talks straight about business

Christmas Retail Therapy – Part 2

Black Friday – who cares?
We should, and here’s why
The day after Thanksgiving Day in the United States is often referred to as ‘Black Friday’. Officially, it’s the first day of their Christmas shopping season and, traditionally, the day when retailers come out of their overdrafts and go into the ‘black’. Whether this is totally true or not doesn’t really matter; what is important is that we understand the issues surrounding retail patterns and learn how to use them to our advantage.

Embrace Christmas

Staffing
Where appropriate, give key members of staff something extra. From a tax perspective, you can give a ‘trivial’ gift up to the value
of £50 and you can spend up to £150 per person on a Christmas party. However, the subject of taxation and gifts for employees can be complicated so run your plans by your accountant.

Christmas Spirit
There is no time when the need to have a good atmosphere in your shop is more important. I always think of Scrooge at this point. Do as much as you can to boost the festive spirit. Customers really pick up on a positive vibe. Christmas carols are my personal favourite; just find what works for you.

Bargains & Discounts
Everyone loves a bargain, and this is a good time to start the process of clearing out what you think won’t sell next year. Discount certain product ranges too, so that you become known as the best value
in town for particular items. It’s the ‘cheap bread at the back of the store’ principle, and it works.

End the year right

Stock-taking
In the hospitality trade it is not uncommon for a bar or restaurant to check its stock twice a day. I’m not suggesting that standard retailing needs this much attention but, taking it to the other extreme,
I have known people struggle with undertaking the exercise once a year. Make the effort to always know what stock you’ve got, what cost you what, and what you need to get rid of.

New Year Sale
The end of year sale, or any sale,
is a golden opportunity to capitalise in a number of ways. Don’t do what a lot of retailers do and simply put up a sign and take 50 per cent off everything. That’s not a sale, that’s a discount. Work your stock position to see what you can make out of it. Use all your Visual Merchandising and other skills to maximise margins and volumes.

And finally…
Retailing is brilliant. You buy stuff and sell it for more than you paid. Do enough of it and the collective margin outsizes all the other costs. Before you know it you’re having fun and making some money. However, retailing has possibly never been harder. Sir Philip Green has problems and who would have thought Comet could go bust?! My advice is to stick to the principles and keep an eye on the detail.

Have a great Christmas and, from all of us here at Fifth Element, a very happy and prosperous New Year to you all.

Fifth Element is a local Brighton-based accountancy practice offering expertise in all aspects of Accounts Preparation, VAT, Taxation, CIS, PAYE, Tax Planning, HMRC Issues and Business Development.