Many successful businesses are not busy all year round. Seasonal companies will have most of their sales occur at peak times, seeing them through the entire twelve months. Examples of seasonal industries include horticulture, vacation accommodation, hospitality and activity providers, sports like skiing and home care like lawn mowing services.
This feast-and-famine cycle can be tough on new business owners inexperienced with managing cash flow to get through the peaks of troughs of sales. Plus, the chaos of too much business and the boredom of too little requires the right mindset, good systems and staff keen to work hard and long hours during peak periods.
Here are three tips for managing your seasonal business during these ebbs and flows:
Capitalize on the boom period
Seasonal businesses know when they’re going to be busy, and therefore they can plan for it. Everything starts with planning to optimize the opportunity to make as many sales as possible or, as the saying goes: make hay while the sun shines. In many cases, the boom can be anticipated. Perhaps it is certain months of the year. Maybe it is at certain times of the day.
Invest in tech systems to capture data and manage inventory. While there is a high level of predictability of demand to ensure you have what you need to achieve optimum sales, it’s not absolute. For instance, sudden weather changes might cause a rise in demand for your product or customer demand may wain due to a change in their needs or a new product release. If you grow strawberries, there will always be a healthy demand for them during summer. However, if you sell tours in a specific country and a weather event, demand will drop.
Ideally, you have a contingency plan for events that impact your sales activity during peak periods. It’s not usual to put all your eggs in one basket. As the saying goes, today, most business owners spread the risk and also may operate two seasonal offerings, for example, skiing vacations in winter and fishing trips in summer. Expert operations management is vital to keep costs down, revenue up, and staff content.
Use cloud computing and SaaS services to keep costs down. Information is power, so make sure your business focuses on good data to get good data out.
Stay productive during the lulls
Just as it’s essential to recognize the boom periods, it’s equally important to acknowledge the slow times. If you’re not ready for it, you’ll feel depressed and start thinking gloomy thoughts about getting into some other type of business. After the elation of high sales and long hours of intense productivity, perhaps even record numbers, it can be disheartening to watch the numbers plummet and the staff trying to look busy dusting clean shelves.
The way to manage the lulls economically is to have enough capital saved up from the boom and to begin to lower your overheads.
When first hiring staff, you should make them aware that there will be times when there will be no work for them, and you will have to cut down their hours. The rise and fall in your business also affect your staff as they will need to budget their money if they are paid on an hourly basis.
Similarly, you should have worked out agreements with your suppliers to buy what you need when your business can use it. Ideally, you can buy low and sell high with non-perishable goods if you’re operating an eatery in a tourist hot spot. Plus, while there have been supply-chain challenges since the pandemic, you can manage your shipping more effectively with a logistics platform.
Use the slow period to do productive things—like planning for the future, staff training, product innovation, minor renovations, and major clean-ups.
Synchronize your cash flow
Besides the drastic mood shifts you might experience when things are going well and then not going well at all, you also have to keep a firm grip on your money management. Project monthly, quarterly, and yearly goals that match the seasons of your business. You don’t want to have too much money going out during the slow periods on unnecessary overheads.
“Seasonality affects nearly every business, with few exceptions,” observes Stephen Sheinbaum in Entrepreneur. “But building seasonality into the business plan will go far in ensuring success.”
All businesses can learn a thing or two from family-run businesses – many are also seasonal.