By Meredith Wood
Does your business feel the rush of certain seasons and the slump of others? Around the holidays things couldn’t be more hectic, then comes January and it all feels like it comes to a screeching halt? Without money constantly streaming in, you may have to stretch the funds you brought in during three months of activity to last a year. As a business owner, you can intelligently prepare for the busy season and make the most out of your slow season. Here’s how to manage this ebbs and flows naturally found in any seasonal business.
1. Spend Your Money Carefully
When you have lots of funds sitting around during the busy season it may be all too tempting to spend, spend, spend. Don’t do it! Be conscious of your company’s long term needs, and stay disciplined to not spend more just because you have it on hand. Defer spending and try saving an increase of funds.
2. Manage Your Time Carefully
It’s hard to juggle your time with the fluctuations between busy season and slump. Seasonal businesses can prosper only with a very organized plan. Try not to overbook meetings with clients, extraneous deadlines, or additional projects during the busy times. This will help you avoid stress and burnout. Focus on project deadlines that are most pressing and allow others to wait until after the busy period. Let all of your employees know about rush time expectations including extra workload, increased responsibility, and additional hours expected. Look into new workflow arrangements to handle the increased volume of customer demand. Consider extending your business hours during the busy season and reducing hours during slump time.
3. Plan Ahead
Plan ahead for at least 6 months. You can do this by understanding the cycles in your industry and basing your planning and projections about seasonality on sales data from the past 2-3 years. If your company hasn’t been around that long look at peers and industry sources to get a good idea on how to project what your sales will be.
Look back at how much you sold in past years and what exactly you needed to generate those sales. By looking at your past sale trends, you can forecast the sales potential for the upcoming season. Once you have determined your sales plan you can purchase the right amount of inventory, search for any equipment financing you may need, hire the right number of additional employees, and determine how and when you want to market and incentivize. Whatever you do, try to avoid stocking excess inventory that you will then have to sell on clearance or with heavy markdowns.
4. Use the Slow Time to Strategize
The slump season may be a time to deal with things you have been putting off in the busy season such as administrative or marketing tasks. Use this time to make your team do catch-up work for the company: organize files, deep clean the office, file away paperwork on projects that are closed, etc. Increase employee trainings and brainstorming sessions during this “down” time. Strengthen client relationships by taking the time to meet with them and get their feedback. This can help you develop new ideas to keep your clients happy.
5. Diversify Your Product
Set up alternative revenue streams to cover your bases during the off-season. Branch out during the slow season. Who else can your business reach out to? Brainstorm with your associates as to what untapped market your business may be perfect for. Do your research by reading up on other industries and figuring how you can carve out a niche. For instance, is your business a holiday themed restaurant that loses business in the summer? Consider catering special and corporate events during the down times.
6. Keep a Presence Throughout the Year
Keep your business active throughout the year: stay in touch with your clients and remain visible even during slower periods. Be creative about how you stay in touch with clients — you may be able to get them to be a repeat client. If you offer contracts or subscriptions to clients, consider the difference between a month-to-month contract vs. a long-term contract or subscription. If you incentivize clients to accept the latter, you may be able to still make money during slower months.
7. Make Customer Promotions Countercyclical
According to Stephen Sheinbaum, Founder of Merchant Cash and Capital, you should take advantage of the period when your competitors have low activity. Your target audience may be just as interested in purchasing right before a busy season as at its peak if you offer a promotion before you competitors do.
All in all, entrepreneurs may face challenges due to seasonal fluctuations. The key to staying successful depends on developing skills and smart practices to let your company stay profitable in the off-season. If you build seasonality into the planning process for your business, you will ensure your company’s success.