Facing seasonality as a small business can pose challenges, such as having to embrace a strong reliance on the busy season to survive the slow seasons. With limited resources to turn to when cash flow runs dry, small businesses have a high risk of calling it quits due to the slower times of the year. Everest Business Funding is a trusted financial partner for small businesses that understands the difficulties that come from seasonality and offers these helpful strategies for organizations to take advantage of to avoid the fatal pits of slow seasons:
Strategy #1: Forecast the Slow Season
New business owners who have yet to research their industry extensively could find the first years of business stressful due to the unanticipated slow seasons. If an organization is caught off guard by a slow season, finances and budgets can be thrown off course. This specific scenario is devastating for businesses that have spent a large number of upfront costs to open the business without forecasting slow seasons.
To mitigate the impact of slow seasons, new business owners should consider implementing a few strategies. One strategy could be diversifying their revenue streams by offering a range of products or services. This can help to offset any losses during slow seasons. Another strategy could be to focus on building relationships with customers and establishing a strong brand presence in the community. This can help to generate repeat business and create a loyal customer base that can sustain the business during slow seasons. Additionally, new business owners should make an effort to keep their overhead costs as low as possible, so they have more financial flexibility during slow seasons. Finally, it is important for new business owners to carefully plan and budget for slow seasons by forecasting and setting aside funds in advance. This can help to cushion the impact of slow seasons on the business’s finances.
Businesses can predict the upcoming year’s slow seasons by noting when sales were good and when sales were slow during the previous year. A trend analysis is also another proactive move to help forecast seasonal demands.
Strategy #2: Stretch Cash Flow
The nature of seasonality is the fluctuation of cash flow over the year, so making ends meet can seem stressful during the slow seasons. Business owners who learn how to spread their cash flow over the year creatively on both the invoicing and expense side of the business set their organization up for long-term success. Cutting unnecessary costs such as monthly subscriptions down to only the months when the business truly needs them can help tremendously.
One way to spread cash flow more evenly throughout the year is to offer flexible payment options for customers, such as allowing them to pay in installments or offering discounts for prepayment. This can help to smooth out the impact of slow seasons on the business’s cash flow. Another strategy is to negotiate better payment terms with suppliers and vendors, such as extending payment deadlines or seeking discounts for bulk purchases. This can help to free up more cash in the short term, which can be especially important during slow seasons. In addition to cutting unnecessary costs, business owners can also consider seeking additional sources of financing, such as loans or grants, to help bridge the gap during slow seasons. Finally, it can be helpful for business owners to diversify their customer base and seek out new markets, as this can help to reduce reliance on any one particular customer or industry and make the business more resilient to slow seasons.
Strategy #3: Hire Seasonal Employees
Slow seasons can make it tough for business owners to pay the same amount of people year-round. Rather than stretching to keep the same number of staff on board for the entire year, small businesses should consider staff numbers based on the season. A good way to beat seasonality and payroll stress is to decrease the number of employees to just the essential slow season help. That way, when sales start to boom during the holidays, small business owners can hire seasonal workers based on the cash flow. Once a business has the hang of an industry’s seasons, job offers can be more specific about what period of time help will be needed.
Strategy #4: Consider a Business Line of Credit
In the world of business, it is always a good idea to have a backup financial plan. Opening a business line of credit for emergencies to keep the company afloat when low sales are a great way to relieve seasonality-induced stress.
Strategy #5 Diversify Business
A way to generate revenue during the slow times is to diversify the business or find additional means of income. For companies that have a brick-and-mortar space, partnering with local artists to host evening art classes and receiving a percentage cut for providing the area for the class can be a great way to diversify a business during a slow season.
About Everest Business Funding
Everest Business Funding provides alternative finance options and revenue-based funding to small business owners. They serve a diverse pool of businesses, from healthcare to retail, to help them obtain working capital to grow, buy inventory, launch marketing campaigns, or hire staff. Everest Business Funding’s clients are treated with respect and receive high-quality guidance and service from its professionals.
