If you’re thinking about setting up a seasonal business then you’d better prepare to experience some cash flow highs and lows. We suggest four steps that you can take to ease your journey across the peaks and troughs.
In seasonal business you will experience an On and Off Season. In the On Season it will be all hands to the pumps and a rush of high productivity and great cash flow. In the Off Season you’ll experience the quiet that signals that no cash is coming through the door. Here are some smart business strategies that you can consider to optimise the way that your business copes with seasonal highs and lows.
1. Understand your cash flow
There is no doubt you are going to need to understand the intricacies of your cash flow – in both directions. Get a good handle on when cash comes in and consider building up cash reserves to see you through the quiet times. Consider the financial tools available to see you through when revenue is not coming in, and ensure your business has access to the cash it needs for fixed and variable costs during this period. Build your budget to reflect the seasonality of your business.
2. Explore alternative income
So you have a product or service that only sells at certain times of the year? The equipment or resources used to create that product or service are available all year round: your challenge now is thinking laterally and finding a use for them.
3. Hire seasonal labour
If you only need to employ someone for a limited time then put them on a temporary contract. Seasonal labour provides temporary employees who are hired by your company when you need them, and cease to be a cost to your company when you don’t. But remember that you invest money in training them and though temporary they still have a set of skills for your business to value. Consider ways to encourage good employees to return when you need them again; such as incentives and soft benefits, and not forgetting a great working environment. An off-season dinner could help them to still feel connected with your company while they are away.
4. Don’t switch off in the off season
If your business model doesn’t allow you to completely shut down in your off season, then it offers a great opportunity to prepare for the busy times ahead. You can: review the past season; complete your business planning and strategy work for the season ahead; complete renovation and maintenance work; and consider new products or services. The quiet season is an excellent time to focus on marketing your business for the season ahead, including tasks like website development or updates.
Seasonal businesses experience peaks of activity at certain times of the year. The trick to making a seasonal business successful is making sure that you have access to cash flow all year round. Then you can use your quiet times to optimise money making opportunities with robust planning, maintenance, and resource management. And maybe they won’t seem so quiet after all.