Managing the highs and lows of a seasonal business
In a perfect world, customer demand would be evenly spaced throughout the year – planning would easy, cashflow would be predictable and resourcing wouldn't be a problem. But we all know there is no such thing as a perfect world (or there is, and no one has told us!).
In reality, almost all businesses experience fluctuations. For some, these are small peaks and troughs felt throughout the year; for others, it is more a case of feast or famine.
Those who experience the latter are known collectively as seasonal businesses. They offer products or services that are primarily used during a specific time of the year. Some seasonal businesses close during the off-season, for example ski-fields and fruit stalls, whereas others ride out the dip in customer demand (or supply) and stay open year-round.
Seasonality is experienced to varying degrees by businesses. True seasonal businesses experience the highs and lows most keenly; however, almost all businesses fluctuate throughout the year, so the principles for managing those fluctuations apply to all.
The key to success lies in developing skills and smart practices that will allow your business to remain profitable during off-seasons and maximise profits during the busy seasons.
The best thing about seasonality is that, to some extent, it is predictable, which means you can plan for it - and plan you should.
Here are some tips to help manage a seasonal business:
Understand the cycles in your business or industry. If you understand them, then you can maximise on the opportunities they bring.
Make sure you have enough stock for your busy season and ensure your suppliers are available should you need top ups.
Do you have enough staff and are they up to speed? If you have rosters, prepare them in advance and have back-up plans to avoid last minute staffing issues.
Make the most of your time during the off-season. This is when you should do your major stock takes, strategic planning, budget setting, renovations and staff training.
Don't forget about marketing during the off-season. You still need to keep your profile up and stay in touch with your customers.
Consider new products or services to build alternative income streams or boost demand during the off-season - for example, some ski and snowboard importers provide a summer line of beach and surf products for their off-season.
Seasonality can have a big effect on turnover and costs. Run a detailed cash flow forecast to avoid any nasty surprises.
Be flexible with pricing - consider lowering prices when demand is low and raise prices when demand is hot.
If your business experiences highs and lows, planning will help you to not just survive the lows but thrive in the highs.
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