Running a seasonal business presents unique advantages as well as challenges. One of the biggest struggles you may face as a seasonal-business owner is managing finances. With the bulk of your income only coming during part of the year, you’ll need to implement a sound strategy to keep your business afloat during the leaner times.
Make a year-round budget
Even if your business is primarily active for only a few months out of the year, costs don’t stop. Operating a business requires making a budget that should include elements that you’ll pay on throughout the year.
Samantha Novick, writing for the Groupon blog aimed at merchants, boils these steady costs into five categories: Rent or lease payments, insurance, debt, utilities, and payroll. With these factors in mind, as well as your quarterly or biannual estimated tax costs, you should be able to establish a working budget that’ll keep you buoyant for the entire year.
Of course, the elements of your budget will depend on your fixed costs. If you don’t lease a physical storefront throughout the year, you won’t have the same overhead as a business that does. This could allow you more flexibility throughout the year to save, invest, or find avenues to grow your business.
Track and forecast cash flow
Writing for Entrepreneur, Head of Global Human Capital Solutions at Aon, Lisa Stevens, recommends creating a spreadsheet for tracking cash flow. A rolling 12-month spreadsheet that you continuously update helps you stay within your projected budget and monitor how money moves in and out of your business.
Forecasting can also be a more involved process that pays off in the long run. William Lieberman, a member of the Forbes Finance Council, suggests investing in software that will crunch numbers for you. You can also do leg work on your own and look at trends across your industry, which Forbes Finance Council member Andrew Lyon suggests can help you tap into new products and services that will give your business the boost it needs.
Become a business for all seasons
If your business has a clearly defined peak season, you can use the revenue you make in that time to expand your horizons and diversify your business. Having multiple streams of revenue to carry you throughout the year makes maintaining in the off-season not just manageable, but even profitable.
Maggie Aland suggests some examples for off-season revenue sources in the U.S. Department of Commerce’s Minority Business Development Agency blog. If, for example, you run a landscaping company, you can use your expertise in property maintenance and machinery and offer services to individuals and businesses during the winter.
Even businesses with extreme off-seasons can find ways to generate income during lean months. Several haunted attractions across the United States use their permanent locations for other non-season-restricted entertainment like escape rooms and laser tag, allowing them to pull in profits well beyond the Halloween season.
Getting into a seasonal business can be tough if you’re not aware of the differences from enterprises that are more consistent 12 months out of the year. Consult the advice of peers who run businesses with pronounced peak seasons and learn how they manage the slow times. Use that information to your advantage and craft a plan that puts you on the path to success.