It can be quite complicated as a seasonal business. No matter how well you plan the year, you always seem to be struggling for a while after the profitable season ends. In some ways, cash flow is always an issue, but it’s not impossible to manage. Sure, it will require some effort and organization on your part, but it’s nothing a dedicated business owner can’t handle.

There are a number of seasonal businesses, from farming to tourism and all the way to event planning. Although the nature of these operations is different, the cash flow management will be similar due to its seasonality. This is what you have to do.

Know your seasons

You may think that this is basic knowledge for any seasonal business owner. However, in most cases, business owners horribly overestimate their peak season. In addition, they underestimate the costs of operation in the off-season. When you know the exact times of your season, you can draw accurate conclusions that differentiate fact from fiction.

If you’re running a new business, you’ll need to start taking detailed notes from the first year. Do some research based on other seasonal companies, but if you’re established, it’s time to pull the records. Once you determine your company’s peak revenue and expense periods, and vice versa, you can plan a forecasting strategy.

forecast your business

By forecasting your cash flow throughout the year, you can assess how much funds you have, in response to costs. You need to analyze your records to form a plan regarding spending and sales, and how much cash flow you can retain after the peak season.

You need to form an analysis of sales and expense forecasts based on the factors that drive it. This includes product lines, channels, and units. Then you need to check if your assessment matches the accounting records.

When you’re forecasting cash flow for your business, make sure you manage any references to sales on account, inventory management, asset replacements, and debt repayments, which are sensitive to cash flow. When you keep track of all these things together, you won’t have to think about why unknown costs keep showing up despite your best efforts.

Maintain Forecasts with Concentration and Money

Recording forecasts once is not enough and never will be. The market and the economy can change in a second, so you should not stop checking and reviewing the changes. This theory of development ensures that you know what is happening, so that you can adopt a new strategy next time.

Know the expected expenses

In a company, there are always some recurring expenses that remain fairly constant over time. You need to take these into account so that you can accurately forecast expenses during off-peak seasons. These costs include the price of utilities and rent, but some will not come to mind. To know them, you must enter the account books.

In the end, you’ll get a somewhat expected figure for how much you’ll have to pay in quarterly taxes and business insurance premiums. You should add them to your forecast because planning for them will come in handy during off-peak seasons.

address changes

Sometimes it’s enough to just know when your business becomes vulnerable. Even if you can’t handle things yourself, you can still ask for help. Instead of worrying about the terrors the offseason can bring to your business, think about what you can do to calmly face the inevitable. Sure, you’ll run out of capital no matter how well you manage cash flow, so what does one do? You take a loan.

Think of it this way, taking out an emergency loan just a few days before your employees are due to pay their payroll will be much different than applying for a bridging loan months before the off-season begins. For starters, you’ll get a good interest rate and develop a good relationship with the bank.

One misconception is that well-run seasonal businesses should not need to borrow to generate off-season cash flow, but this is not true. It is much more feasible for a seasonal business to anticipate additional costs in advance and take out a special loan as it sees fit. Investors and bankers will respond positively to good planning and anticipation, so don’t forget to tell them about the seasonality of your business.

Restructure some expenses

As a seasonal business, you’ll need to pull a few strings here and there to make sure you get through the rest of the year until you return to peak season. One of the things you can do is structure certain expenses to match the income you have in the current season.

For example, if you make handicrafts and deal with material suppliers, you can make an agreement with them to require larger payments in peak season and smaller payments in the off-season.

empty your shelves

In today’s world of consumers, many people don’t shop during the season. This could be due to several reasons; they are trying to avoid the crowd or just don’t want to pay the higher price. They are waiting for an off-season sale to stock up and as a good business owner you need to provide them.

Clear out any leftover inventory from the peak season by selling products at a fair discount. This will help you generate additional income, as well as a pool of clients in the off-season. Not to mention, it will also reduce item storage expenses.

Enhance your line of expertise

This is the final piece of advice any seasonal business can get and it has more to do with becoming a multi-season business. Experts suggest that seasonal companies expand their line of work by offering different services during the low season.

For example, roofing companies take jobs like snow removal during the winter. Your company can do something similar and increase cash flow for the rest of the year.

Conclusion

These are some of the solutions that a seasonal business can adopt to improve its cash flow during the low seasons of the year. Now, there’s no reason to do everything simultaneously. However, consistency is key. By slowly working toward a successful off-season period, seasonal businesses can improve strategies and boost peak-season practices.