Tips on surviving and thriving for seasonal businesses
Updated: Feb 28, 2019
One of the reasons seasonal businesses end up going out of business is that during the off seasons managing the money gets out of hand. If bulk of the business revenue comes in only part of the year, the key component to stay successful is to be well prepared for the off season. Below are some tips on how to keep your seasonal business thriving each year.
Whether you are in the business of selling products or services, you must look at the margins carefully and make sure the return on investment will outweigh the expenses that incur all year long. Profitability for year-around businesses may be simpler to calculate because the month over month revenues and expenses are much more predictable and consistent. For a seasonal business however, you must consider that if the profits are not able to support the expenses of the off-season, then it’s time to adjust the prices. For products, it may be that you start buying more in bulk to cut the cost of goods sold or buy the inventory during times when demands are especially low for bargain prices. For services, you may either charge more by delivering higher quality value to your customers or reduce the quality to work more efficiently and meet the larger audience your business desperately needs.
Cash flow management
Many seasonal businesses heavily rely on certain months or quarters that will prepare them for the off-seasons. If these key moments of the year bring in enormous amount of revenue, cash flow during the off-season won’t be an issue. However, there will be times when these forecasts could be off and when that happens, money management will be key in order to survive another year. When this happens, don’t panic… but I wouldn’t also wait until you are smack in the middle of the off season either. You must act quickly, and the first action will require you to sit down and look at the books. Looking ahead into the foreseeable future and creating a budget that will get your business over the hump should be the first thing. If the numbers simply don’t work, it’s time to start cutting costs for the off-season. When cutting costs doesn’t do enough to sustain the business, then it’s time to look for business loans that will keep you afloat until the next booming months. If you have had a long relationship with a bank or a credit union then I would start there, but if that fails there are many alternative business lenders across the nation that are willing to help in such situations. These lenders deal with seasonal business all year long, so they are more than enough familiar with your needs. When you have decided to use an alternative business lender, the sooner you get an approval for a loan the better. Especially with unsecured loans, the lenders will make their decision based on the recent business health such as the revenue and cash flow. So, the longer you wait into the off-season, lower chance you will have in getting an attractive offer.
Off season planning & investing
Execution is the hands down the most important part of being successful in any type of businesses. However, the flawless execution doesn’t come without carefully planning and investing beforehand. For seasonal businesses, this time frame lies in the off-season. Saving every penny from the boom season to prepare for the off-season is smart but holding abundant amount of capital to actually invest during that slower time will bring your business to the next level. With the right ideas and planning, a big investment before the boom season next year will set your business up for success. Proper planning and investments should always prioritize increasing the gross revenue while keeping the expenses down.
Keep in contact with customers
For many seasonal businesses, sending out flyers for advertising to new customers right before the boom season is common. But for what many forget is that customer loyalty from existing customers doesn’t come free, it takes a lot of time, extra effort and additional investments. Between the seasons, keeping in contact with your customers should be a priority. Whether the business is only off-season for just a few months or several months, you should always try to keep your business in the minds of your customers much before the season starts. That can be as simple as sending out yearly calendars, magnets, pens, flyers or even just business cards.