Keeping a business in full bloom and maintaining a healthy cash flow throughout the year is a mammoth challenge in this 21st-century world. And when you are an entrepreneur holding the reins of a seasonal business, you must be well prepared to weather the fluctuations in business and overcome the lull season successfully. One of the main reasons why seasonal businesses take a beating during the offseason is they do not forecast the challenges that may come hurtling down their smoothly-paved profitable route. They revel in the good times without thinking about the difficult circumstances that may befall in the later part of the year.
They say “Make hay while the sun shines”. Seasonal business owners need to understand the implication of this adage so that they can remain profitable during the off-seasons and slowdowns. It means that the entrepreneur should cash in as much as possible during the peak season and at the same time chart a route map for the contingencies ahead to stay on the safer side. Here is a lowdown of some of the strategies you should follow for a season-proof business.
1.Anticipate the business: It takes extreme diligence, farsightedness as well as solid experience to figure out where your business is heading. The deluge of cash flow may dry into a trickle during the offseason. So it is important to track the market fluctuation, the lull in demand and offset any negativity that may harm your business. Hire some part-time employees to get maximum traction ‘while the sun shines’.
2.Control and minimize off-season expenses: It is fine to leverage the cash flow during the busy season and look to indulge in some other money-spinning strategies. However, before that, you have to prepare a proper budget for the off-season so that you can save money for investment during peak times. Controlling your expenses require immense discipline. Many businesses reduce business hours and lay off their staff to minimize their expenses. They fix terms with suppliers during the offseason when revenue is low and business is slow. Inventory management during the peak and lull season need to be done so that you don’t end up with excess inventory or no inventory on your shelves.
3.Keep an eye on the cash flow: This is one of the most important strategies to keep your e-commerce business afloat. Set monthly, quarterly and yearly cash flow projections to keep a tab on the expenses and revenue. Prepare a solid cash flow statement for your business which will give you a good idea of your past income and expenses for an upcoming couple of years.
4.Build a cushion: Though this is tough to do in the initial years of your business, but starting to set aside a part of the profits or capital will do you more good than you can think of. If you make this a habit, you can have enough money at your disposal to pay five to six months of expenses.
It is no secret that seasonal fluctuations affect every business. Having a proper contingency plan can help you weather the storms that can affect your business. Conducting thorough cash flow analysis, having proper financing options and forecast will keep your business poised and secure for the coming years.