Most companies experience seasonal surges and dips in revenue. For example, online retailers may enjoy higher sales during the holiday season than they experience in August. However, some businesses really focus on seasonal items, so they collect most of their revenue during a certain set of weeks during the year. Some examples of seasonal businesses include Halloween costume stores, Christmas tree farms, and even swim shops.
4 Tips to Manage Seasonal Companies
During the off-peak season, these companies may not take in much revenue. So, while some of these companies may do very well overall, they face challenges when they need to manage operating costs during slow parts of the year. Employees still need to get paid, products need to get manufactured or stocked, and other fixed expenses must get handled. Consider these tips to help your seasonal business prosper during the on-season and the off-season.
1. Understand Your Industry’s Seasonal Cycles
You can only be ready for seasonal cycles if you prepare for them. People who own successful Christmas tree farms probably don’t expect to sell a lot of trees in January. This means they plan for a drop in revenue and therefore manage operating expenses with this in mind. These low-revenue periods might be the time when seasonal companies make repairs, plan for production, or even schedule vacations.
If your company is fairly new, you should probably consider industry-wide data for other companies in your industry as it can be difficult to plot trends when you have little to no actual information about your own business.
2. Consider Off-Season Revenue Sources
Most businesses can find ways to earn some revenue when demand for their main products ebbs. For example, Christmas tree farms might also add a nursery for plants and trees that consumers are likely to buy in the spring and summer seasons. Costume shops may try to appeal to consumers who want costumes for parties, other holidays, or entertainment venues. Swim shops may carry some items that people buy for winter sports or for hot tubs and indoor pools.
Even though these additional activities might not generate the highest revenues, they can still generate some income. This income can help pay the rent and retain valuable employees. In time, you may find that these alternative revenue sources become valuable parts of your company. Just remain wary of diverting too much attention away from your main business.
3. Consider Financing During Off-Peak Operations
If your company only plans to focus on revenue generation during peak periods, you still probably need to produce or procure inventory, plan for the peak season, and manage other operations during the slow times. For example, you surely don’t want to have to lay off all of your experienced employees because they may not happen to be available when you really need them. Even if you need to rely on some temporary employees, your growing company will surely benefit from retaining key people.
Since you will obviously need to make purchases before the demand is highest, you might need to secure funding to react to inventory needs. Many seasonal businesses rely upon financing to help them manage cash flow. You might consider a funding option like an online lender because you can use information from your payment processor or even business checking account to establish your revenues during the peak season. If you can repay these loans within six to twelve months, you can time the repayment to coincide with your best revenue months.
4. Get Creative About Maintaining Contact with Customers
The best way to ensure that your peak season will generate plenty of revenue is to make sure that your customers keep you in mind. Today’s consumers are often fickle, and most companies have plenty of competition. You might use mailing lists, social networks, and even a company blog to make sure that customers remember your brand.
You did all of that work during the peak season to satisfy your customers, and you don’t want to lose that traction during non-peak times of year. Part of your planning for slow periods should include how to make sure you are not forgotten.
Seasonal Businesses Can Be Great Businesses
If your company gets regarded as the go-to place to purchase seasonal items, you have a great advantage over competitors that only dabble in what you do. Once you understand how to predict and manage your own revenue cycle, you will understand how to weather the slow times and, ultimately, grow your online business.
Originally posted on October 18, 2016 @ 11:21 pm