Seasonality represents a complex challenge to business owners. To succeed, you must develop smart practices and skills that will allow you to weather the slow periods throughout the year. For one thing, you’ll have to deal with demand dips and supply problems. It’s impossible to be 100% prepared for every contingency, but these seven tips will help you strengthen your seasonal business.
1. Understand Your Cycles
If you are just starting a business, you might experience an initial period or rapid growth. Sometimes, it can be easy to confuse rapid expansion with a normal seasonal fluctuation that you are catching as it waxes. This might mistakenly lead you to conclude that the current demand will continue indefinitely. Instead, you should research seasonal sales data for your industry and location over the last three years or so. You can check with industry sources and competitors who’ve been around for a while.
2. Increase Your Planning Skills
You should be planning ahead for at least six months in advance. Understand terms like the off season(complete lulls) and the shoulder season (slow periods). Stash away money during the strong periods to get the business through the quiet months. Also, pare down cash-absorbing items like staffing and inventory during the off season. Use your quiet time to prepare for the next busy season.
3. Expand Income Streams
The classic example is a pool company. During the summer, it sells or builds backyard pools. Then when winter rolls around, it switches to selling pool tables. That’s pretty clever. Perhaps you can think of countercyclical products and services you might offer during the off season. Say, ice cream in the summer and hot drinks in the winter. Just don’t lose sight of your primary business.
4. Advertise When Competitors Are Quiet
Maybe your competitors go quiet during the off season. That’s your cue to offer promotions and advertising campaigns that build awareness and attract new customers. Time it to coincide with the last few weeks of the quiet period. Customers will be more ready to buy if you prime the pump at the right time.
5. Maintain Visibility
The off period is a great time to boost your profile. Perhaps you can sponsor a charitable event, run a raffle or perform some civic duty that garners favorable press. Use your social media accounts throughout the year and use them wisely. That means, giving customers and prospects a reason to pay attention. Perhaps it’s a handy eBook with incredibly useful information, or access to select promotions. Your goal is to convert the occasional customer into a repeat one.
6. Be Upfront About Layoffs
In some cases, seasonal layoffs are inevitable. However, you can soften the blow by being upfront about it and offering furloughed employees something of value to get them through the quiet time. For instance, you might offer to continue their employee health insurance for the few months they are not there. Keep your staff informed about things that affect them, such as minimum wage laws and new regulations.
7. Work with an Enlightened Funding Partner
Establish a relationship with a business lender who understands the seasonal nature of your company. You might plan to borrow during the off season to fund capital investments that are best made when business is slow. You can use loan proceeds to even out your cash flows, perhaps allowing you to purchase inventory when its cheap.
IOU Financial makes it easy to obtain small business loans of up to $500,000 with flexible terms, such as daily or weekly payments, no upfront costs, fixed loan payments and affordable rates. We make business lending simplified, so include us in your annual planning. We are standing by to help!