Seasonal business owners are all too familiar with having to navigate through the fluctuations of the business throughout the year. This can be a very stressful task for any business owner (especially during the slower times) but it does not have to be. Below are some tips that can help small business owners combat seasonality and maintain profitability throughout the year.
Identify Business Cycles: It is important to first analyze the businesses seasonal trends and determine when your business has its busy months and when the slower months begin. Knowing this will help you plan and prepare for both the busier periods and the slower times of the year.
Cash Flow Management/Forecasting: Managing cash flow can be very challenging if you generate the majority of your revenue in only a couple months of the year. This is where having an ability to forecast cash flow becomes a critical skill that can help get you through the rest of the year. The process of forecasting involves analyzing the company’s historical financial data and comparing it year over year and based
on those yearly trends, allows projections to be built out over the next several months or years. Analyzing this data can help identify when you need to be careful with cash flow and it can also help you to understand and see how your business typically performs at any point throughout the year. Having this knowledge can help you plan and budget for the entire year. In regard to managing cash flow, it is also crucial to refrain from making large purchases during the slower months and to store away enough cash from the busier months to help the company to stay afloat during the slower months.
Break Up Large Expenditures
If at all possible, for any larger or long-term expenses that need to be made, it is recommended to determine ways to make those payments in more affordable increments. That way those expenses will not eat up as much of your cash flow during the slower times. Also consider contacting vendors you work with to negotiate payment schedules that will be beneficial to the business while you navigate through the company’s fluctuations in cash flow.
Focus on Long Term Planning
During the slower months of the year is a great time to plan for the future and to make operational adjustments. It is important to understand your clients’ needs and figure out what they want/need in order to best serve them moving forward. Also pay attention to what the competition is doing and figure out ways to potentially do something different that makes the company stand out from your competitors (which could potentially draw in more customers).
Expand service offerings: Offering alternative products or services to complement your business during the slower months of the year will not only allow you to maintain a steady stream of income, but you may also be able to keep your best staff around (in the event there are typically layoffs during the slower months) as they would likely be needed to help execute the newly added alternative services. The slower months are also a good time to cross train employees in other areas, thus, making those employees more valuable and to provide the company as a whole with the ability to operate more efficiently (and potentially without having to hire more help).
For example, if you are a landscaping company in the Midwest, your busy season is likely in the summer months. In order to combat that, in the winter months, you can offer snow removal services or sell related products such as shovels, ice melter, boots, sleds, jackets, brushes, or even snow blowers or snowmobiles.
Seasonal businesses could also benefit by offering services ahead of the busy season or continuing to offer certain services a little later into the year. If most of your products or services sell better in the summer, you could consider offering spring discounts in the months leading up to summer or offer fall discounts in the months after summer has ended.
Launch an off-season marketing campaign/keep in touch with clients:
Your marketing campaign could include launching a social media presence which can be beneficial, as having a company page on Facebook, Twitter, LinkedIn, Instagram allows you to post reviews, offer discounts, share what you’re up to throughout the year and keep your audience interested. In addition, sending email blasts, offering off-season discounts, developing or updating your website, gathering customer reviews, and creating content that will remind your customers who you are is very beneficial as well. That way you remain in your customers’ minds when the busy season rolls around again. If you do decide to offer additional products/services during the offseason, it is critical to get the word out to clients via social media, email blasts, distribution of flyers/mailers or even via a phone call that you are now offering those additional services.
It is also key to keep in touch with your existing customers throughout the year. This could be done through a quick email, letter or phone call or even text message thanking them for their business and checking if they are in need of any additional services (while also mentioning you are looking forward to seeing them soon (as in during the busier season). If your existing customers are happy with the work you have done for them, that could potentially result in receiving new customers through word-of-mouth referrals from existing customers.
Secure additional financing: Another way to combat seasonal cash flow issues is through developing a relationship with a lending source, such as Penhurst Capital, and securing additional working capital through them. Having this relationship with a lender can be beneficial as you navigate through the slow months as they can help you secure the much needed funds to help your business stay afloat. Funds can not only be used to help alleviate cash flow needs during slower months, but it can also be used to launch a new product line, hire new employees, make improvements to the operating facility or purchasing equipment or inventory, among many others. Penhurst specializes in helping small businesses obtain term loans, cash advances, lines of credit or even equipment financing solutions with funds being distributed as quickly as 24-48 hours from applying.
The changing of seasons can be a stressful time for seasonal businesses, but it does not have to be. With the appropriate planning and making the necessary adjustments throughout the year, your small business can seamlessly beat the strains of seasonality.
