Get the most out of your seasonal business!
Managing a seasonal business can feel like riding a roller-coaster. Here are some of our top tips to take control and get the most out of your seasonal business:
Understanding Business Cycles
A well-known challenge that businesses face is navigating seasonal fluctuations in their business or their industry. The key to navigating these fluctuations successfully is to understand your peaks and troughs and then plan for how to manage the seasonal dips. By analysing the trends and data from prior years, you can understand what to expect in the future. No one can prepare for every possible contingency, but with good planning you can ride out the fluctuations with as little disruption to the business as possible.
Using the above analysis, build a plan for how the business will manage the peaks and troughs of the business cycle. Look ahead at least 12 months to plan appropriately. Planning should incorporate projected sales and expenses and will allow you to manage cash flow throughout the year and incorporate a buffer for unexpected or emergency expenses.
Prepare for the Year Ahead
Take advantage of a slow period to complete required maintenance as well as performing marketing and employee training in preparation for your busier periods. This will require careful planning to prepare for the expenditure during the quiet period.
In slower times it is a great opportunity to maintain contact with your customers. Strengthening relationships with repeat customers can help ensure they return to your business. It is also the perfect time to focus on prospective customers in preparation for your peak season.
Launching an alternative product or activity during your quiet period can generate much-needed revenue and strengthen your cash flow position for the period. However, it’s important that this secondary source of revenue doesn’t cause your primary product to be neglected.
Slower periods may be an ideal time to hire staff to ensure they are fully-trained and effective prior to your peak season. Alternatively, review the mix of employees you have throughout the year, would your business be better utilising short term contracts to match your business’ seasonality.
Review the stock required to get through your quiet period by comparing current stock levels against prior years and adjusting as required. You want to ensure you are holding enough stock to meet customer demands without over-allocating resources which may result in a reduced profit margin or hurting your cashflow further in a period that may already be difficult.
Analyse your Funding
Does your finance structure meet your business’ seasonal needs? Make sure your loans and working capital requirements are structured for your business and your financier understands the seasonality of your business. This can help your cashflow during the year and may reduce the cost of your annual finance if it is properly tailored for your business.
Talk to Us!
Seasonality affects nearly every business, with few exceptions. But building seasonality into the business plan will go far in ensuring success. At Accru Melbourne, we can assist you in understanding the key drivers of your business and work with you to successful future for your business.