This article is Part 1 of a four-part series on how to manage the challenges of a seasonal business.
Running a seasonal business presents many challenges, from hiring and managing seasonal workers to marketing and planning for growth. But perhaps the most important hurdle a seasonal business owner must overcome is managing cash flow. When your company’s revenues and expenses vary widely from one season to the next, maintaining adequate working capital to handle operations, service your debt and take care of your accounts payable can be a difficult balancing act.
Fortunately, there are a few simple steps you can take to manage all aspects of your seasonal business better. In the rest of this four-part series, we’ll share tips and real-life strategies from successful owners of seasonal businesses that you can incorporate into your operations.
Extend your season
One way to better manage your seasonal business is by extending your season. Instead of scrimping and saving to cut costs in the off-season, you can reduce the roller-coaster effects of cash flow fluctuations by bringing in more revenue all year long (or at least, for more of the year). There are several methods for extending your season; depending on your goals, financial resources and capabilities, you can use one or all of them.
- Expand your product line
- Expand your geographic market
- Expand your demographic market
In Part 2 of this series, you’ll get ideas for extending your season and boosting your revenues. You’ll also learn how Outdoor Living Today, a manufacturer of backyard kits including raised beds, gazebos, and outdoor sheds, successfully expanded its season far beyond its core months of April, May, and June by adding new products and expanding geographically.
Conquer cash flow problems
More than any other type of business, it’s vital for a seasonal business owner to have a good handle on the company’s cash flow. In Part 3 of this series, we’ll take a look at the most common cash flow challenges that seasonal businesses face, and the potential problems that can hamstring your business if cash flow isn’t managed properly.
We’ll also examine the most popular approaches that businesses use to manage seasonal cash flow issues, such as factoring, lines of credit, asset-based loans and supply chain financing, and look at the pros and cons of each method. For example, Blossom Hill Apricots, a family-owned fruit distributor and grower that has been in business for 90 years, discovered its ideal solution to seasonal cash flow needs is accelerating customer payments.
Choose the right seasonal staffing model
Of course, cash flow isn’t the only challenge for owners of seasonal businesses. Staffing for a seasonal business is complex. You’ve got to quickly find workers for the busy season, often competing with others in your industry for the same limited labor pool. Once you’ve found seasonal employees, you have to train them and integrate them into your permanent team.
If you don’t handle the hiring process properly or if you fail to maintain enough working capital, you might have to lay off permanent employees when the busy season ends—something no business owner ever wants to do. And whether your business’s revenues are soaring or shrinking, you’ve got to make payroll no matter what.
In Part 4 of this series, we’ll review some of the most popular staffing solutions that seasonal business owners use, such as hiring temporary employees or using staffing agencies. We’ll also discuss ways business owners can meet the special financial requirements of seasonal staffing, such as by accelerating payments to get the working capital they need.
Success is always in season
Running and growing a seasonal business requires careful planning, agile management, and financial savvy. Keep reading our series to discover smart strategies that will make your seasonal business a success all year long.
Read Part 2 of the series, How to extend your season