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How to manage business spikes

by Intuit Australia

3 min read

While slow periods can be daunting, high-traffic periods can also pose significant challenges. Here’s how to manage business spikes.

Know your market

A thorough understanding of your market, including the key suppliers, distributors, competitors and customers, will help you to manage your business effectively during peak seasons. This level of detail should be included in your business plan, which can serve as an effective guide to your market.

While busy periods, such as Christmas, should come as no surprise to business owners, Gavan Ord, Business Policy Adviser with CPA Australia, says most peak periods can be anticipated by crunching numbers. “Most businesses will instinctively know when their business peaks and slows,” says Ord. “However, analysing sales data and customer flows for different periods of time, such as on an hourly, daily, weekly or monthly basis, will give you a more accurate understanding of when your peaks and troughs are most likely to occur.”

Anticipating busy periods also allows you to be flexible with your staffing arrangements. “This includes reviewing customer flows and having appropriate staff numbers to match them,” says Ord. “Make sure the staff you engage to cover peak periods are qualified for the role and properly trained, including in the service standards you expect.”

Prepare for take-off

Anticipating peaks and troughs comes with experience, so how can you be adequately prepared in the very early days of your business? While it can be hard to estimate demand, it’s important to have a contingency plan in place for when the unexpected happens.

Consider the Click Frenzy launch on 20 November 2012. Heralded as Australia’s biggest online sale event, Click Frenzy received significant media coverage and a huge level of consumer anticipation. Within moments of going live, the site crashed. It couldn’t cope with the high volume of traffic.

If you are planning to use your website for e-commerce, prepare a lightweight version of your site as a backup. The backup version may feature static HTML pages rather than dynamic ones, which can place more demand on your server. You can also stress test and load test your site using applications such as Blitz.

Take stock

Once you have identified the most likely times of peak demand, review your supply chain to ensure it can meet demand and keep your customers happy.

Consider whether your supply chain is agile enough to react and adapt to changes as they happen. For example, if primary suppliers cannot keep up during times of increased demand, have secondary suppliers established within the supply chain to assist during peak periods. Review your supply chain regularly to identify and eliminate unnecessary steps in the process that can cause delays and errors.

Ord also suggests a careful consideration of stock levels for peak periods and recommends negotiating with suppliers for just-in-time delivery, so you have the stock when it’s required. “While it may be tempting to be fully stocked for your peak period,” he adds, “carrying excess stock does come at a cost to your business, such as insurance, storage costs and spoilage.”

Create options

Diversification can also help you to manage peak periods for your business.

“Look for opportunities to expand your business that are consistent with your strategic direction and can be properly funded,” says Ord. “You can mitigate fluctuations in business income by expanding your business into areas that are less impacted by peaks and troughs, or that peak when your existing business is in a trough or can extend your peak season.

“Such expansion can include opening in new geographic locations or expanding your range of product or services to those that are less impacted by fluctuations in demand.”

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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