How to manage a seasonal business

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It’s not at all uncommon for businesses to have seasonal fluctuations, but this presents challenges to the business manager or owner.

Understand the cycles

Many entrepreneurs start a business in a sector that interests them, but one they do not necessarily have experience in. If you are new to an industry, you need to research the cycles of that industry.

Some cycles are obvious. Ice cream sells more in the summer, mulled wine more in cold weather. Retail sales peak at Christmas, while paddling pool sales are slow in winter

Other cycles are not as obvious. For example, restaurants often have slow business in January and February after a peak Christmas period. Travel agents are busy in the New Year as people start feeling the winter blues and have an eye on the summer.

Identifying these cycles is the key to financial planning for a seasonal business.

Plan a long time ahead

It helps to plan at least six months ahead. During busy periods, cash reserves need to be built up to cover periods of low cash flow. If this is not done, the alternative may be to increase the bank overdraft or take out a loan during the lean times, but this can involve costly interest payments.

Create alternate income streams

If you know that in certain seasons sales will be low, try to create alternate products or services that are not affected by the same seasonal fluctuations. If your firm publishes calendars, then consider another product in the summer when calendar sales are slow,.

Use promotions

During quiet periods, think about offering promotions and discounts that persuade customers to purchase your products during the low season. A customer may not need that electric blanket until the winter, but if it is offered at a bargain price in the summer, they may buy it.

Staff levels

At busy times, a business will obviously need more staff. Careful planning is required in recruiting and training seasonal workers.

Off-season planning

Times of slow activity can be ideal for sitting down with the managerial team to create long-term plans for the company. This can be a time to switch the focus from running the company day to day, to concentrating on strategies to improve and expand the business.

Using accountancy services

When a business experiences cycles of high and low sales, it helps to use an accounting service that can assist you with cash flow plan that makes sure, at the end of the financial year, the business shows a healthy profit.

Call Sollertia today to discuss how we can help your business.