Survival tips for seasonal businesses
Around two in three firms rely on seasonal trade and, as if running a business wasn’t hard enough, it’s even more difficult to manage firms like these. Seasonal businesses face challenges the year round – to cope with demand during peak periods and stay afloat for the rest of the year, and to access finance when they are considered ‘too risky’ by many lenders.
Many of Ashley’s customers are seasonal businesses. Here are some tips on how to survive the peaks and troughs:
Benchmark your performance – comparing your income patterns against others in the industry, and against previous years, will give you greater insight into the fluctuations in demand and help you distinguish between seasonal patterns and underlying changes, including symptoms of growth or decline.
Forward planning is key – consider how you can scale up and down most efficiently. What is the most cost-effective way to meet demand during the high season? How will you source additional manpower, and cover the cost of buying stock? How can you minimise costs out of season? Cashflow is particularly important – produce regular forecasts and try to pay for as much as possible during busy periods.
Make the most of off-peak – use it to carry out training, research and forward planning. Do regular promotions and keep in touch with customers. Could you put your assets to another use during this period, or develop a new line of activity without losing focus on the core business?
Choose the right type of finance – seasonal businesses need to keep off-peak commitments to a minimum as fixed expenses such as loan repayments can put the business at risk. A number of finance providers offer packages specially designed for those with fluctuating trade. Ashley’s Business Cash Advance, for example, offers loans of up to £100,000, with repayments in line with the pace of trade – the company repays a small fixed percentage each time a customer pays on credit or debit card until the loan is repaid.
Planning ahead, keeping control of cashflow, minimising off-peak commitments and maximising income are the key to year-round success when running a seasonal business.