Small Business Economics
Surviving the Off-Peak Season in a Seasonal Business
Written by Chris Martin for Gaebler Ventures
Seasonal Business is a well traveled route for the beginning entrepreneur, but what do they do during the off season? How does a business keep hibernation from becoming comatose?
A popular niche in the entrepreneurial business world is the seasonal business. Many first-time entrepreneurs start their own companies which provide landscaping, fireworks sales, or Christmas light hanging services.
These are attractive enterprises because the business owners can try on his/her "entrepreneur hat" without making a major capital commitment. Or the business owner may choose to "keep his/her day job" and earn a little extra cash on the side being a part-time entrepreneur.
But seasonal businesses have unique issues that year-round companies do not have to deal with. Much of these concerns involve inconsistent cashflow and sales, since by definition these enterprises are primarily (or only) earning revenue during certain months of the year. The remainder of the year – or the "off-peak" season – can be difficult to survive if the company doesn't plan for it.
Because of these challenges, owners of seasonal businesses must exercise tough fiscal discipline if they want to survive in the long-term. Here are some suggestions on how to weather the off-peak season in your seasonal business:
Make your budget calendar based. Don't just allocate a monthly or annual outlay for your costs if you can avoid it. Try to budget for expenses based on when they will come up during the year. For example, structure your budget so that you have enough money to cover all of the start-of-season costs, and don't spend frivolously right after the season has ended just because you have a bunch of cash lying around.
Secure a credit line. This may not be easy to do as a seasonal business. But if you can obtain a line of credit as an "emergency" source of funds, it might give you the freedom to expand during your busiest periods or address unexpected repairs so you don't suffer a productivity dip during your peak sales months. Then you can pay it down when customers' checks start rolling in.
Reinvest in your business when you can. It's very tempting to spend your end-of-season profits on superfluous gadgets and luxuries as a "reward" for a job well done. But you should shift your focus on preparing for the following season while you actually have money to do so. Consider upgrading equipment, improving your computer hardware or software, or remodeling or repairing your base of operation.
Talk to your suppliers and vendors. See if you can get them to agree on seasonal contracts for their services. After all, you won't need advertising for your Christmas tree farm during the summer months. Also, check to see if your vendors offer extended payment terms or similar arrangements that can help you weather the slow periods.
Consider going multi-seasonal. Even a small income stream during your off-peak season can be enough to keep you afloat until your peak season rolls around. So if your lawnmowing business shuts down when it gets cold, think about offering snowblowing or parking lot de-icing services.
Seasonal businesses are often the "starter kit" for people who wind up becoming successful full-time entrepreneurs. But these types of endeavors take discipline, patience, and even a little faith during the months when your cash register isn't ringing. However, once the peak season arrives, all of the worry and stress of the off-peak season just melts away as your revenue numbers climb.
Chris Martin has been a professional writer for the last seven years. He is interested in franchises and equity acquisition.
Share this article
Additional Resources for Entrepreneurs