Proper planning for a slow offseason is vital
Do you run a seasonal small business? This can be challenging because it means that there are periods of the year that slow down but you will still have major operating costs to cover, such as rent/mortgage, insurance, tax and salaries just to name a few. Businesses that are seasonal need to focus on seasonal cash-flow management strategies which will help them to survive throughout the year and make the most of their busy periods.
One of the best strategies is to create a strict budget for your business that addresses seasonality. This can eliminate the cash flow issues that seasonality can bring and ensure that all costs are accounted for. It is stated that around half of all small businesses experience some seasonality and the ones that thrive know how to manage these fluctuations.
Up Front Payments
You do not want to be chasing payments when you run a seasonal business so you need to make sure that customers are paying up front and not contributing to any cash flow issues.
It is also important that you do not have inventory sitting around collecting dust at the end of the season as this is essentially wasted money. Any excess inventory should be either marked down and sold or sold back to the supplier for credit against next season’s orders.
Controlling costs can also be effective for managing during the offseason. There are many effective ways to reduce costs, such as downsizing, using temp staff/outsourcing and switching to alternative energy which can deliver big savings in the long run.
Of course, another good way to survive is to find ways to increase your income. You might find that there are other ways to make money during the offseason by focusing on the wants and needs of your target customer or by finding alternative uses for your business assets during this time.
Productive Use of Offseason
While you may not attract business during certain periods of the year, this does not mean that you should be sitting around twiddling your thumbs. You need to use this time effectively to maximize profits during your busy period. This means that you can spend this time advertising and marketing, making improvements to the products/services, reviewing the season just gone, analyzing the competition, getting early bookings, assessing your customer needs and maintaining contact with your customers.
Many seasonal businesses also find it beneficial to speak to transaction advisory specialists like RSM who can help companies to maximize returns and avoid cash flow issues during the offseason. Getting professional help will ensure that your business thrives and can handle the inevitable ups and downs that arise with seasonality.
Seasonality can be tough on a small business but when you use intelligent seasonal cash flow management strategies it will help you to survive during the offseason and thrive during your busy periods.