Most seasonal businesses operate during certain periods of the calendar year to take advantage of what will hopefully prove to be a robust burst of activity. For example, a ski rental store will have its active period during the summer, while a charter fishing boat will be limited to the summer months. Other seasonal businesses may be open year-round, such as a tax preparation service or pool supply store, but with a bulk of the business coming in during certain months of the year.
Granted, seasonal trends in small business will vary depending on geographic location, so if your business focuses on pool maintenance, your season will be much longer in southern California than it would be in Long Island, New York. But regardless of location, there are many challenges that a seasonal business must navigate through, including keeping supply chains open during the busy season, having adequate staffing, balancing periods of high and low demand and managing and even pivoting the business on the off-season.
Some may even argue that having a seasonal business requires more attention and planning than a year-round business. Managing the anticipated windfall and ensuring that a business survives through the lean months is a concern for many small businesses. Lucky for you, we have some useful advice to share from entrepreneurs and professionals who run their own businesses and have assisted seasonal business owners with advice on how to operate during both the busy and quiet months.
Adjust Staffing Levels or Keep Staff Busy
Seasonal factors will dictate how you will interact with your suppliers, manage your inventory and payroll and staff your business. Bill Balderaz, president of Futurety, a small business focused on data analytics and marketing, notes that he books almost half of his revenue in the months of November and December. During that time, he acknowledges that “team members are often working long hours and juggling deadlines with holiday demands but not working as many hours during other times of the year.”
Bill uses the off-season to get new team members onboarded and trained, so that when it’s time to shift into high gear, his team is ready. “We tend to hire in the first quarter to get new team members trained and ready for our busy season. In slower months we focus on professional development.” In addition to staffing up, Bill also has his team "working on internal projects, creating content and working on a lot of team building." But to make up for long hours of work during the busy season, Bill also allows for more flexibility during the off-season by offering early leave on Fridays during the summer.
Lauren LeMunyan operates Spitfire Coach, a company that helps businesses plan and strategize for success and meet their goals. Like Bill, Lauren agrees that it is important to keep the staff productive and motivated during slow periods. She also advises that business owners be transparent and honest with their staff. “Ask for ideas. Listen. Try new ideas. Your team is a major asset that can help you see new opportunities and uncover blind spots that may be holding your company back.”
Plan Ahead with Forecasting
Arthur Iinuma, president and co-founder at ISBX, a technology consulting company, suggests that small businesses should do a trend analysis, which will help forecast seasonal demanded and anticipated surges. Arthur explains that “the information should be used to plan ahead so that they can stagger the delivery of their inventory and adjust staffing levels.” The plan is to “maximize sales during periods of high demand to tide them over during periods of low or no demand.” Arthur also advises that “work should be outsourced during peak periods instead of hiring new staff.”
Use Your Network
Small business owners should also explore their network of support. Learn from other business owners and see how they are navigating the seasonal trends. Join a small business organization or see how they manage seasonal trends or shifts in the market. When it comes to how a small business should handle high demand, low demand or even no demand, Lauren’s advice is to build a pool of support. “Create a database that you can tap to bring in on high demand — virtual assistants and remote workers or friends and family in this space. During low demand, tap into your network and ask from ideas where there may be stones unturned."
She also recommends that when demand is low or non-existent, this is your time to plan and strategize. “Reflect, ask hard questions, build inventory and anticipate the future needs of your customer base.”
Look into a Business Line of Credit
Small business owners rely on capital in order to have the inventory in place to support a seasonal opening or a ramp up of business. Sometimes, the funding required to meet the obligations of a business is either not available or insufficient during high-demand periods. Jeffrey Zhou, CEO of Fig Loans, finds that a business line of credit is a great asset to have when it comes to dealing with the pressures and demands of seasonality.
Jeffrey also highlights the differences between a line of credit and a loan, pointing out that credit can be continuously paid off and borrowed during the term. "It's kind of like a credit card: you pay interest on the credit you've used, and you can pay it off and have that amount to use all over again." He also highlights that “a line of credit is crucial for small businesses to deal with seasonality because it gives you access to capital for urgent or day to day expenses that might otherwise be a struggle during leaner, less busy months.”
Lauren from Spitfire Coach says that a "line of credit should be used with the anticipation of incoming revenue within 3–5 months. Calculate the interest rate and compare it to what you anticipate bringing in. Does it make sense to take the line of credit or reduce expenses? Make sure you borrow more than you need. You don't have to use the line of credit, but the peace of mind you'll have by having access when you need it will pay off when you're building toward your next season."
Consider Expanding Your Offerings
It’s great when a business is running on all cylinders and making money during the season, but what happens once the snow disappears or the vacationers leave the beach? What happens when the party is over and everybody goes home? Truth is, periods of low or no demand can be disheartening to staffers and affect the bottom line of the company. But according to small business owners and advisers that have experienced the ebb and flow of seasonal business, this can be avoided by diversifying products and breathing a new breath of life into a business, ensuring a revenue stream even during quieter seasons.
The approach that Bill Balderaz from Futurety has taken is to create demand for his business throughout the year. "This year we are working to level out our revenue by introducing less seasonal services. We've launched a real estate division, developed software and built a training program, all to help even out seasonality."
For small businesses, seasonal trends tend to be a juggling act with many balls in the air. Whether it's staffing, inventory or having sufficient capital in place, business owners work hard during high-demand months to maximize on sales so they can survive the slow months. Ultimately, for many businesses, it's not just about navigating seasonality and operating off of a feast or famine model, but building the business and working towards growth.