How to beat with winter blues

Most businesses, at some stage or another, are likely to experience seasonal fluctuations, which are often related to various seasonal periods and holidays. Some may be more affected than others, for example businesses operating in the retail or tourism industry.

However, according to Nimo Naidoo, project manager of the Sanlam Business Partners Entrepreneur of the Year® competition, while a business may not sell its products or services throughout the year, it doesn’t mean that the business concept isn’t viable, it just means that the business needs to be managed appropriately in order to survive all year round.

She says that while extensive planning and execution is crucial for all entrepreneurs, it is even more so for seasonal business owners.

“A seasonal business is noticeably more difficult to manage than other businesses as they not only experience the challenges that all entrepreneurs and small business owners are faced with, such as red tape compliance, but also specific challenges unique to a seasonal business, such as inconsistent cash flow.”

Naidoo offers the following tips for seasonal business owners to consider in order to survive the quieter months:

  • Save when business is booming: It is no secret that ‘cash is king’ for small businesses and entrepreneurs, and a significant challenge for seasonal businesses can be to successfully manage finances due to the irregular cash flow a seasonal business is likely to experience.

    As the majority of a seasonal business’ income is obtained in a set period, often limited to a few months each year, it is vital that a portion of this income is saved and allocated to the quieter months in order to cover the cash outflows for during these periods. While it might be tempting to spend this additional money earned during the busy months, it is important to keep in mind that the quieter months are just around the corner.

  • Market your business wisely: Increasing marketing efforts in the lead up to, and during, the busy season will assist with increasing a business’ profile and ultimately assist the business in maximising its revenues for the in-season period. Business should however also maintain an active marketing plan during the quieter months in order to keep the business top of mind for customers. An annual marketing plan should be implemented, which will ensure that all possible channels are utilised all year round in order to maximise sales and performance.
  • Choose your staff carefully: Seasonal businesses need to strike a balance between maximising profits during their high season while also operating with skeletal staff during the off-season. Fixed-term or temporary employees provide cost-effective solutions for seasonal businesses as it isn’t always feasible to keep full time employees due to the nature of the business. It is however important to allocate enough time before the peak season to recruit the correct people for the job.
  • Manage your business effectively year round: The quieter months for a seasonal business shouldn’t be thought of as a holiday, but as a time to conduct further market research to establish how the business can improve its products and services, and ultimately increase revenues during its peak season.

Businesses should also prepare for the upcoming season by ascertaining the expected demand. This will assist when placing orders, as unsold stock and produce for a seasonal business could be costly, and should this not be sold or utilised during season, the product runs the risk of expiring or becoming out-dated before the next peak season.