October 11, 2022 By Max Freedman

Seasonal companies are generally those that carry products with consumer demand during certain parts of the year. Even small businesses that aren’t explicitly seasonal may experience seasonal fluctuations in revenue. To help maintain your company's financial health, planning for and navigating seasonality are important. Here are 11 ways to help do that.

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What is seasonality in business?

Seasonality generally refers to predictable business patterns that occur over a one-year period. Businesses affected by seasonality often experience peaks and valleys in consumer demand and revenue at the same time each year. Understanding these patterns may help business owners make more informed financial decisions and capitalize on the peak season.

Examples of seasonality

You can typically see seasonal changes in consumer behavior several times throughout the year. For example, let’s say your business sells school supplies. You’re likely to see higher sales of pencils, calculators, and notebooks after the summer months when kids go back to school. You can generally reasonably expect this jump to occur at the same time every year.

Similarly, demand for many goods - and services - often increases during the holiday season between Thanksgiving and Christmas. Toys, games, and electronics sales typically see the sharpest boost. Customers will likely still want those products during the rest of the year, but not at the same rate.

11 ways to navigate business seasonality

Many businesses will likely experience seasonality in some form. Here are a few tips to handle seasonal fluctuations:

1. Know your business’ seasonal cycle

Understanding your business cycle may help you develop strategies for your busy period, while preparing for your slower season. When those periods fall usually depends on the product you sell. Consider taking a look at your sales reports and note when your sales rise and fall.

2. Bring on seasonal workers

Utilizing seasonal employees is generally a great way to manage the extra business during busy periods. These employees are typically temporary – during slower periods, many small businesses will revert to their standard workforce. When things get busier, consider hiring seasonal employees – and be clear with job candidates that the work is temporary – to help maximize efficiency and profit.

3. Update your inventory

If your main product is seasonal, consider adding another product to sell during slow periods to help keep your business profitable year-round. Offering discounts or putting off-season items on clearance may also help your business keep a steady flow of profits.

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4. Cut expenses where you can

Your slow season might not be the time to make big purchases and expand your business. After all, large projects and inventory purchases are typically easier to afford during peak seasons. Instead, during your slow season, look at your balance sheet and income statements and consider cutting any unnecessary expenses.

5. Save up funds for your slow season

Consider using your busy period as an opportunity to save for when demand dwindles. That way, if your equipment breaks down or your storefront needs emergency repairs, it likely won’t be a make-or-break scenario, even if you are in a period of off-peak revenues. Creating that cash cushion for unexpected expenses during your busy season is generally prudent, since you may not know when you might need it.

6. Chart previous years to understand seasonality

Seasonal changes tend to occur every year at the same time, assuming you continue to carry the same products. But if your products do change, your seasonality might as well, throwing off your financial expectations. Consider keeping detailed charts of your year-to-year sales in an effort to help you track your business’s seasonality and respond to new or growing trends.

7. Perform a seasonal adjustment

A seasonal adjustment generally measures your business's yearly sales with seasonal demand excluded. It may give you a clearer picture of revenue changes year-to-year, while helping to highlight consumer trends that seasonal purchasing often overshadows.

A seasonally adjusted chart may be effective for long-term financial planning. Looking at seasonality, on the other hand, may be able to help you create good short-term strategies for slow and peak seasons.

8. Bring in new customers

Typically the best way to handle a lull in business is bringing in new customers! Spending money on a seasonal marketing campaign may also be a great way to do so. If you can grow your business during your typically slow season, your cash flow may be more consistent throughout the year.

9. Offer easier ways to pay

When customers are able to purchase something with ease, they’re typically more likely to purchase it months before they need it. This may be helpful as you anticipate a slowdown in demand. Consider calling your bank and asking them about implementing easier payment methods, such as Google® Pay, Apple® Pay, or Venmo®.

10. Find new sources of income

A slow season may be a good opportunity to explore alternative income sources. Some examples might include hosting events, creating new products and services, or forming a strategic partnership with another business. If done well, you may be able to increase your market share in new sectors and expand your offerings.

11. Boost your cash flow through small business funding opportunities

There are generally plenty of financing options to support your business until the next busy season. Short-term loans may be appropriate since their smaller loan amounts and shorter repayment periods might line up with your business cycle. Business credit cards may also be helpful for making slow-period purchases that you’ll likely pay for during your busy season.

Handle the slow season with SmartBiz

Finding a suitable loan for your small business can be a time-consuming process. SmartBiz® offers great financing options to help ease your business through the slow season. You may quickly, easily apply for SBA loans, bank term loans, and custom financing options such as business credit cards and invoice financing. Check to see whether you pre-qualify* for funding to help boost your cash flow year-round.

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