Managing cash flow and adequate financial planning are important in any business, and every business has seasonal peaks and low periods. Seasonal businesses that do most of their business during one season need to take extra care when creating a business plan that will carry them through the low season.
Seasonal businesses can be extremely hectic and budgeting your time to do everything that needs to be done can be challenging. One of the best ways to tackle this problem is by defining your peak season must-haves and what tasks you can and should put off until the off-season.
You need to make the most of the short window during peak season to generate the income that will sustain your business through the off-season. Once peak season is over, you can then focus on the next year and plan for the future. With that challenge in mind, here are some handy small business tips that you can use to manage your seasonal business effectively and ensure it is in a position to capitalise on its busy period every year.
1. Become the seasonal employer of choice
A quality team is crucial to the success of a seasonal small business. How can you overcome the challenges of managing seasonal workers? How can you keep great, experienced employees coming back every year?
Start by creating a welcoming and fun work environment. Surround yourself with people you can trust and have a good work ethic. Keep in touch with them during the off-season and let them know that they have a job with you next season if they want it.
2. Invest in strategic marketing
While your business will be very busy during peak season, don’t use that as an excuse to skimp on marketing. Your operational off-season can be used to plan, conceive, and create your advertising and marketing campaign for the next year. Determine what worked last year and what didn’t – and adjust your marketing activities accordingly.
Send regular updates via email to your customers during the off-season, reminding them that you are still available and willing to help them again, and also maintain a regular presence on social media year-round. Pre-season discounts can be offered to encourage customers to make bookings early, which can help generate cash flow and reduce your off-season.
3. Cash flow management and the importance of cash in business
Due to the nature of seasonal businesses, cash flow and how you manage your cash flow is more critical than ever. Cash flow can be the difference between having a successful season, and your business struggling through the upcoming year and things potentially going awry.
As the owner of a seasonal business, you will benefit from doing all you can to diligently manage your cash flow throughout the year – both during seasonal peaks and low periods. Although you will face some cash flow challenges that non-seasonal businesses don’t have to deal with, there are ways to manage these. These may include:
- performing year-round cash flow projections, and routinely updating them;
- creating and maintaining a cash buffer;
- pursuing alternative streams of income; and
- having a back-up financial plan that you can rely on if you experience cash flow issues.
4. Create new products and services
You can use the off-season as a time to reflect on and create new products or services for your business. This will enable you to build on your existing successes and delight your customers in new and imaginative ways.
5. Perform maintenance
The off-season is generally the best time to perform any equipment maintenance work that you haven’t had time to get to during peak season. The added bonus here is that you can feel confident entering peak season that all your equipment is in good working order. This will also reduce the risk of expensive breakdowns during peak season that can stop work for extended periods during the busiest time for your business – when every minute and hour of every day matters in terms of revenue.
6. Work on your business during the off-season
If you know that you have a low season, you know you will have less work to do, and less money coming in. While a vacation may be on your mind, you may instead use the time to strengthen your business. Build a financial plan, work on developing new products or services that might help your business generate income during the low season, or take classes to increase your business management skills.
7. Budget for the future
Running a seasonal business means that you already know that some of the time you will have more money coming in, while other times there will be less revenue coming in. Budget wisely and always plan for the future by looking at either your own financial history, or by researching your competitors. Understand your fixed and variable costs and know when you can cut back on your variable costs. Make a financial forecast, budget your spending accordingly, and save enough to cover your expenses during the off-season.
8. Build alternative income streams
Although it might seem like a diversion from your core business, setting up an additional revenue source or two to counteract the lows of the off-season can be a great move for seasonal business owners. Just don’t let the time and attention you put into your alternative income stream overtake your focus on your primary business.
9. Maintain your credit
Regardless of how much planning you do, there will always be a chance that you may need to take out a small business loan to get through the off-season. If you do decide to borrow money, make sure that you pay your bills on time, keep open lines of credit, and avoid accruing a large amount of debt, especially during your high season when you will need to invest in your business to maximise its returns.
If it comes down to it, and a business loan seems like the best option to cover low periods of cash flow, discuss your options with a financial planner, and know what your loan is for. Make sure your loan fits your financial plan, that you will be able to pay it off in the high season, and that you stick to a budget or use accounting software to help you track and manage your spending in real time.
10. Forge strong relationships with your suppliers
If you are trying to reduce your expenses and save money on business-critical purchases, a good strategy is identifying the suppliers that your business works well with and is on great terms with. Pay your invoices on time and ask them about potential preferred pricing discounts for buying in bulk. You may also negotiate the terms of your payments with suppliers. Rather than paying a lump sum upfront, you may be able to negotiate alternative payment terms that work better for your business. It’s also worth asking your suppliers for a payment plan that best suits your business.
11. Simplify your invoicing process
Make sure that your invoicing process includes a partial payment up front and avoid dispatching your products until you have received payment from customers. Try to avoid giving out free products or services by planning ahead.
12. Incentivise on-time payments
Similar to building relationships with suppliers, if you have loyal customers you may offer them rewards for things like paying their invoices on time or early, loyal purchases, or buying in bulk. Maintaining your loyal and most important customers is just as critical to your business finances as is saving money on your own expenses.
13. Be creative about staying in touch year-round
While you are operating a seasonal business, it’s important to maintain visibility throughout the whole calendar year. Even if regular clients aren’t contacting you during the off-season, they might still be open to hearing from you. Be creative about finding ways to stay in touch with them all year round. This can be a great way to turn one-time customers into loyal repeat clients.
Business insurance made easy with BizCover
At BizCover, we help seasonal business owners make purchasing business insurance quick, easy, paperwork-free and drama-free. Our innovative online platform enables seasonal business owners to compare competitive business insurance quotes from leading insurers in an instant, purchase their business insurance in 10 minutes, and get on with their day.
To learn all about business insurance for your seasonal business visit the BizCover website now or call our friendly team on 1300 920 867.
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
© 2022 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769
ABN 68 127 707 975; AFSL 501769
