Are seasonal businesses sustainable? How do seasonal businesses survive? Can a seasonal business stay profitable in the long run?
If you are thinking of starting a side business or planning to take on a venture that is seasonal in nature, these questions are sure to be the first ones to pop up in your mind.
Or maybe you already started the business a few years ago, but are now finding it increasingly hard to maintain profitability throughout the year.
Running your own business can be stressful enough. And it becomes all the more stressful if you are able to earn profits only during a limited part of the year.
You may find yourself checking and rechecking the bank balance several times only to realize that it is emptying at an alarming rate. But this only happens when you don’t know the right way to manage a seasonal business.
Running a seasonal business does not necessarily translate to zero cash flow in the offseason.
Take a look at the following article that discusses the top tips for seasonal businesses to stay profitable in the long run.
Identify the Cycles in Your Industry
You cannot alleviate pain without knowing where it hurts. Similarly, you cannot solve financial problems related to a seasonal business without knowing where they first raise their ugly head.
Understand the exact nature of your business and identify the low and high-performance periods. Analyze your monthly revenue and expenses for at least the past two years to get a fair idea. If you are new to the industry, consult others in your niche. This will help you plan things in advance and take the required measures in due time.
Manage Cash Flow
Whether you keep your doors open during the quiet season or close them altogether, it is essential to look at the bigger picture when it comes to managing cash flow.
Try to get the payments from your customers as soon as possible. For example, if you run a B&B establishment for ski enthusiasts in Vermont, set a sufficiently large amount for advance payment so that you can meet the running expenses without having to loan money from elsewhere.
As for the payments that you have to make to suppliers and vendors, consider negotiating an extended duration. This helps spread out the expenditure on items that you bought before the start of the peak season, but need more time to sell.
Diversify Your Business Offerings
Diversification is one of the most powerful tools in the arsenal of every seasonal business owner. Rethink your business strategy, and see if there are any related goods or services that you can sell along with your existing products to increase the total revenue.
In most cases, seasonal business owners already have the necessary materials required to offer complementary products and services. For instance, if you run a snow removal company, you can easily diversify into lawn care or tree removal services during autumn and spring season.
If you cannot think of ways to leverage the offseason without having to invest a considerable amount of your profits for buying the extra raw materials, there’s no need to despair. Look for cost-effective ways in which you can increase your sales instead. For example, if you run an ice cream stand or a small café in an area that’s a popular tourist destination, you can introduce drinks/ smoothies or offer a wide variety of food items in your café to attract more customers.
This way you can earn a considerable amount of money during the peak season that will see you through the low spell as well.
Seek Customers in Other Locations
Note that the word ‘seasonal’ is relative here. If a business isn’t in season in one place doesn’t mean that is off-season everywhere else also. The demand for your products might have died down in your local region but there might be customers in other areas still looking for the same products.
For instance, an online retailer selling winter clothes in the US can keep the business in full swing even during the summer months. How? It’s quite simple.
The ‘summer’ months in the US and most of the other parts of the world for that matter are actually the peak of the winter season in the land down under, that is, Australia and New Zealand. So, shipping the goods to these countries can ensure that money continues rolling in.
Do some research to find out new avenues for your business activities. You might have to make some initial investments but if done right, increasing your outreach can work wonders for seasonal business to stay profitable all round the year.
Save Money Wherever You Can
This is quite an obvious tip solution as far as overcoming money problems is concerned. Yet still many seasonal business owners miss out on it completely.
There are various ways in which you can save money, especially when customer demand is low. Consider renting the space for the time being and keep the number of staff members to the bare minimum. Try to hire part-timers instead. You can even cut back on office hours to reduce overhead expenses such as electricity bills.
Saving a few dollars here and there might not seem that big of a deal. But once you sum it all up, you’d be surprised to know just how much you can save by following these simple steps.
So, are seasonal businesses sustainable?
The answer is, yes. Not only that but running a seasonal business can be more rewarding than its counterparts. This is because it automatically alternates between periods of high and low activity. So, that gives you plenty of time to plan and prepare for the next peak season, to make the most of the increased demand.
And as far as maintaining a steady income is concerned, you now know the tricks of the trade. Follow these top tips for seasonal businesses to stay profitable in the long run, and rake in money all year long.