7 Tips for Managing a Seasonal Business
By Paul Sarlas, Founder/CEO at Savvy IQ
One well-known challenge that any entrepreneur might face is navigating seasonal fluctuations in the businesses or industry. The key to doing so successfully involves developing skills and smart practices that will allow the company to remain profitable during off-seasons and periodic slowdowns.
No one can prepare for every possible contingency, but consider these seven tips for developing and sustaining a season-proof business. Here are seven tips to consider:
1. Understand the cycles in your industry.
Rapid growth of a company is not unusual for business owner who's new to an industry. And that can disguise a normal seasonal fluctuation, leading the entrepreneur to expect the healthy sales will continue.
Base projections about seasonality on sales data from at least two or three years. If the business hasn't been around that long, check with peers and industry sources.
2. Fortify planning skills.
"Measure twice, cut once" is an old adage that still rings true, especially for a new business.
Look ahead at least six months to plan appropriately. To carry the business through slower periods (the shoulder season) and complete lulls (the off-season), consider stocking away cash reserves during the busy months.
Look hard at every element, from inventory to staffing, to avoid tying up cash unnecessarily during quiet months. And don't forget to take advantage of slow stretches to prepare for the peak season.
3. Build alternative income streams.
Although it might seem like a diversion from the core business, set up additional revenue sources to counteract the off-season. Just don't let attention to the alternative stream overtake a focus on the primary business.
4. Customer promotions need to be countercyclical.
Don't overlook the opportunity to take advantage of times when competitors may be in quiet mode. Target audiences are often just as accessible before a busy season as during its peak.
5. Be creative about staying in touch.
Set apart a business by making a point of maintaining visibility throughout the year.
Even if regular clients aren't much in contact during the off-season, they might still be around. Be creative about finding ways to stay in touch with them all year round. It's a great way to turn one-time customers into repeat clients.
6. Manage the impact of seasonality on staff.
Hiring employees, including manager-level talent, is a critical factor for success. In some cases, there's simply no getting around the seasonality factor and short-term contracts are unavoidable.
Just be sure to manage expectations of seasonal workers. Be clear about the length of the job and keep abreast of important issues like full-time and temporary regulations and developments surrounding the minimum wage.
7. Select a clued-in funding partner.
Make it a priority to cultivate a relationship with a funding partner with a firm grasp of the industry and its seasonal nature. A funder with experience dealing with similar businesses can help facilitate what's needed for anticipated expansion, hiring and other capital investments.
Seasonality affects nearly every business, with few exceptions. But building seasonality into the business plan will go far in ensuring success.