The Pros and Cons of Seasonal Business

In an ever-changing global economy, entrepreneurs are seeking out inventive ways to find competitive success while balancing work with life. Opening a seasonal business is one such strategy. There are 2 types of seasonal businesses: Those that close completely during the “off” season, and those that stay open year round but see the majority of their sales during a particular time of year. So whether you’re operating a coastal surf shop, tour bus company or kid’s holiday facility, here’s a closer look at the pros and cons of operating a seasonal business:

PRO: Innovate while you hibernate
  • Become better: Downtime is the right time to strategize and modernize. So take advantage of quieter periods by investing in professional development, taking an on-line course, attending trade shows or researching competitors.
  • Staffing: Use this time to develop a clear picture of what you expect from your team. Write down staff policies and clarify processes for your managers and co-workers to follow.
  • Upgrade technology and systems: Consider using this time to get your business ready for the next boom. This could take the form of servicing equipment, redoing your point of sale systems or upgrading your infrastructure. A small business loan could enable this endeavour.
  • Plan stock carefully: Ensure you order correctly for the specific period you are navigating. While it may be easier to simply hit repeat on spend with your supplier, this may lead to sitting stock which can play heavily on your bottom line.
PRO: Make meaningful connections
  • Talk to your customers: Quieter periods allow you to develop a social media presence and engage with customers. This can inform next season’s plans. Perhaps your business could kick off an event to network with customers or launch a new product or service.
  • Strategize your next campaign: It is essential to plan your marketing campaigns ahead of time. Use the time to understand your customers, and how you can get them to come to you instead of your competitor.
PRO: You can and (should) rest

If you can anticipate slower periods, you should use them in a significant way. One tactic is breaking routine, getting out of town or even just avoiding traditional office hours. The best part of this is once season rolls round; you will be able to return in full force with much needed energy and vigour.

CON: Financial downturns are inevitable

It can be pretty daunting to live in ever-anticipation of a low season. This means you have small windows in which to turn profits and meet targets. Essentially, you have to constantly prepare for the worst. So mitigate risk:

  • Know your cycles and plan accordingly: Hold back cash flow so it’s available in slower periods.
  • Don’t over trade: Ensure you have just the right amount of staff, only carry the correct amount of stock and don’t be afraid to negotiate with suppliers. Every Rand is a soldier!
  • Ask for help: Work with your accountant to find ways of channelling cash flow.
  • Consider specialized merchant funding: A merchant cash advance is a flexible cash injection that uses your credit card terminal to process repayments. Best of all it works in line with turnover, which is perfect for seasonal businesses as repayments adjust to revenue. This means that in slow periods you pay less, but in better periods you pay off the amount that much quicker.
CON: Stress is high

Seasonal business owners understand that great opportunity comes with greater stress. So it takes a particular kind of entrepreneur to navigate the peaks and valleys of seasonal trading. Further to this, every potential challenge hits your business harder. So anything from bad weather, to sick employees or a taxi strike is going to affect this type of business in bigger ways than another type of business. To mitigate risk make sure you check climate history to adequately prepare for weather in your region. Set up emergency bank accounts and as always, prepare yourself for the best of times and the worst of times.

There is no denying that seasonal businesses are stressful and risky. But with the right determination, business smarts and resilience, they also hold enormous growth potential and opportunity for the steadfast entrepreneurs who bravely take it on.

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