Financials and Cash Flow

5 ways to aim for year-round success as a seasonal business

Use five strategies to balance retail sales seasonality and manage cash flow annually.

Published: January 06, 2020

Many businesses experience fluctuations in sales, customer demand, and hiring needs but for seasonal operations this is the very nature of the business. Among small business owners, roughly 45% face seasonality within their business, according to the Wells Fargo/Gallup Small Business Index.

While seasonal-based businesses face unique challenges, there are steps you can take to help manage — and grow — your business. Here are five ways to keep a seasonal business running smoothly throughout the year.

1. Plan cash flow annually

If a retail business brings in the bulk of its sales during one season, it’s important to spread out this influx to maintain a sustainable cash flow. Even if your business closes shop during the slowest months to save on payroll and overhead costs, expenses like estimated taxes still arise.

Using historical data to forecast sales may help pinpoint a business’ most and least profitable timeframes. This may allow you to better account for cash flow and plan for recurring expenses as well as necessities like restocking inventory ahead of the busy season.

To stay on track throughout the year, set financial and business goals, such as streamlining expenses during the leanest months. Consider building up emergency savings or obtaining a line of credit to account for any unexpected expenses and build in a budget line item to account for this.

2. Hire strategically

Whether your busy season lasts a few months or your hiring needs spike during certain times of the year (e.g. accounting firms during tax season), it’s always important to hire with purpose. Take a long-term view when hiring employees by treating them as an asset to the business and giving them opportunities to learn your business and industry. This can help build a strong foundation of employees who are familiar with your business’ daily operations.

Consider hiring seasonal employees who are off-season in their primary job when it matches with your business’ busy season. For example, hiring local teachers or college students during the summer could be a good fit that is mutually beneficial. Also, be aware that it’s a business owner’s responsibility to properly classify workers as part-time, temporary or seasonal. If an employee is classified incorrectly, it could result in potential litigation, back pay and hefty fines. Prior to hiring, familiarize yourself with the Department of Labor’s guidelines and consult with your attorney for additional guidance.

3. Make the pre-season count

As you prepare your business for the next busy season, stocking up on inventory or necessary equipment will become a top priority. Forecast inventory needs based upon the prior year’s sales and use best-selling items as a litmus test for what might be popular in the upcoming season.

The pre-season is also the time to develop any social media or promotional marketing strategies to get the word out about your business. You can focus on any new products and services you have or develop partnerships with neighboring businesses to cross-promote. For example, a restaurateur may partner with a local hotel to offer a discount to guests who visit the restaurant.

4. Take a post-season recap

When the busiest season wraps up, take time to review what went well and what needs to improve. Was there a product you thought would be a hit, but had lukewarm results? Do daily processes or workflows need an adjustment? Get input from employees and review purchasing data and sales results to develop a strong business game plan for next year. Capture this information soon after the busy season so it’s fresh in everyone’s mind.

5. Branch into new markets

The off-season can also be the perfect time to develop inroads to grow business. This includes expanding into surrounding cities or developing products and services that accompany the existing business. For example, a landscaping company may add snow removal services to bring in additional revenue.

Seasonal businesses will face ebbs and flows throughout the year, but with proper planning, you may be able to take advantage of slower seasons to build a strong business year-round.

Now that you’ve considered solutions to seasonality challenges, review these eight tips for cash flow management.