A MANAGER at one of the internet cafés in the central business district of Lusaka, complained to me that business sales in the month of December, has drastically gone down and that the business owner was not pleased with the situation at hand.
This was so because when she looked in the records she discovered that very little revenue was coming in as compared to other months and wondered  how the business was going to raise enough money for salaries and rentals.
Then I asked the manager what he thought was the reason was for recording  reduced revenue as compared to other periods.
He answered that customer traffic has reduced drastically.
I concurred with him and told the manager that during the festive periods, people are not in the working mood because their minds are tuned to festive activities hence the slow business and low revenue.
I further explained to him that similar businesses make heavy losses in the festive season and that is why most business undertakings go for industrial break during this period.
However, my reason for writing this article is to look at how small businesses can mitigate losses during periods like the festive season when trading activities reduce.
It is also important to mention here that other small businesses which deal in products like food and drinks, up their sales and record handsome revenues during the same period.
However, today I want to concentrate on small businesses that record low sales during this period and see how they can mitigate losses resulting from these situations.
This now brings me to the subject of profit retention in any business whether small or large.
Profit in business circles is described as income earned after all business expenses whether direct or indirect are removed.
Accountants and business analysts term this profit as retained earnings especially when they are looking at incorporated businesses.
As you may be aware by now that this column is for small businesses of diverse background and therefore, I try as much as possible to use the universal business language that can be understood by all.
The essence of forming any kind of a business such as a sole trader, partnership or incorporated business is to make profits.
Profits which businesses make are then distributed to business owners as a reward for the formation.
Profits in businesses are made periodically such as daily, weekly, monthly, quarterly or yearly.
Big corporations have the deliberate policy not to distribute its whole profits to its shareholders but to retain some for various reasons such as expanding business or to use in other unforeseen circumstances.
So, equally small businesses just like big enterprises, also make profits for business owners to continue in operation.
Now the question to be asked is; do small businesses retain profits or withdraw all of it from the business?
Retention of business profits creates reservoirs of money from which emergency expenses can be drawn if a business passes through difficulties of loss making just like the above cited example.
Small businesses are known for mismanagement of incomes which in most cases, are withdrawn from the undertaking’s accounts and engaged in unrelated business expenses for personal use.
In situations where the business passes through turbulent situations and fails to pay salaries as well as rentals, it is important that the emergency backup situation is created.
You have observed that in these days of load-shedding, what has transpired is that, most businesses have standby generators in case of a power blackout.
As part of business management and planning, such business thoughts should be crossing the minds of entrepreneurs to ensure that back up plans are formulated.
Serious business entrepreneurs should ensure that hand to mouth habits are graduated into properly planned businesses with vision for growth.
Business budgeting is another useful tool entities should use for an all-round financial planning of how to generate revenue and how that generated revenue can be used.
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