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Managing Seasonal Fluctuations as a Small Business Owner

January 28, 2019 By Susan Paige Leave a Comment

It’s a well known-fact that some businesses struggle to keep afloat when they are “off season”. For instance, an independent cafe on the seafront will do great business when the sun is out and people are exploring the beach. The beach is not so enticing when the weather is stormy and cold, during the winter, so the cafe struggles to find custom.

It can be a struggle for these small business owners to keep going; both professionally and personally. Business bills can build up and so can those at home, if the business is not run as efficiently as possible. The good news is that there are ways to run a seasonal business and still make enough money to earn a comfortable living.

Know when dips will happen

Any owner of an SME who does not understand when there will be fluctuations in sales and profits, is likely to have problems. This is especially likely to happen when low points correspond with times of high cost at home; such as planning for the holiday season.

Any SME owner with a business that is seasonal needs to use data to predict times when profits will be at their highest and lowest points. A mix of historic data for the business and industry advice and data can be used to provide this information. Knowing the cycle of business means that an SME owner can manage the business finances accordingly, making shortfalls less likely.

Make sure business planning is on point

Any SME needs a solid business plan in place, in order to survive and grow. Arguably this is even more important where seasonal fluctuations can lead to financial uncertainty, if they are not managed well. Good business planning for a seasonal business includes:

  • Always looking at least six months ahead.
  • Working out when reserves of cash should be locked away, to support the business during quiet periods.
  • Establishing best use of resources and making sure excess is trimmed when profits are low.

Good business planning is what saves many SMEs from failing, and protects owners from falling into heavy debt.

Find alternative finance options

There are options, when it comes to finding alternative sources of finance. There may be an opportunity to diversify the business during “off-season”. Looking back at the cafe example from earlier, the owner might be able to provide a “winter warmer” take out menu for local residents, so they can still have their meal cooked by someone else without having to venture out.

There are also working capital finance options for SMEs. This financing can be a big help if buying stock or paying wages is difficult. It’s a short term measure that can help ease financial tensions.

Keep in touch with customers

Just because customers do not use the services of a business all year round, this does not mean that they cease to exist. Keeping in touch is important. Back to the example of the cafe. The owner could take the email address of customers and email them favorite recipes during the winter months. This makes it more likely that customers will return in the future. Failing to keep in touch can mean that even peak times are less profitable for the business.

Many SME owners find themselves short of funds at times, especially if their business is seasonal. Good planning, alternative financing and ongoing communication with customers can reduce the chances of this happening.

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