The Truth About Ramping Up (or Winding Down) Your Seasonal Small Business

The Truth About Ramping Up (or Winding Down) Your Seasonal Small Business

Seasons change and with them so do the cash flows of many small businesses.

The “small business” designation is not one-size-fits-all. If you’re the local mom & pop hardware store, your spring and summer peak season is very different than the boutique retailer down the block who thrives during the holiday.

Ensuring your business has the proper cash flow and operational resources at hand, no matter the season, requires planning and constant investigation into the total financial health of your business. No matter how obvious, sometimes signals like foot traffic and weather are often overlooked when it comes to planning for working capital needs.

Here are three things seasonal business owners can do to prepare for every season.

1. Make the Most of Your Downtime

For seasonal businesses, it’s important to take advantage of quiet periods and use the time to plan and improve the way you operate. Speaking to Matt Phare, founder of Snow Trainers, he uses their downtime to buckle down on their marketing.

Snow Trainers is a ski and snowboard instructor training company with locations in New Zealand, Japan, and the U.S. and surprisingly, things are quiet at each of their locations during their respective winters. It’s the time leading up that’s filled with phone calls and emails from customers and lots of preparation for the upcoming season. They’ve learned to take advantage of the slowdown while their customers are out on the slopes.

“Once the courses at our New Zealand location start in July, that’s when we can start focusing on marketing for our Northern Hemisphere locations,” Phare explains.

“We’re all web based and all our marketing is through web channels. Twice a year we touch base with our SEO company. We look at the three different markets we work in and the countries our students come from and we also optimize our website for those different countries twice a year.”

Further helpful advice for how to use time during slower periods wisely:

  • Review advertising on social media channels like Facebook, and analyze which ads are working and which aren’t. Phare also re-targets these ads, which for Snow Trainers means targeting them towards the hemisphere with the closest forthcoming ski season.

  • Update your website and any online listings. Snow Trainers has listings on gap year websites, so Phare ensures the information about their various courses is accurate on these third-party sites.

  • Keep your social media active and post regularly so any repeat customers keep you in mind for when the next high season rolls around.

  • In general, get around to the things that you didn’t have time to take care of during your high season that will make your business run like a well-oiled machine next time around. Keep a running list of these things when they pop up during your busy season and tackle them once things die down.

2.  Be Smart with Your Cash

For businesses whose cash flow fluctuates dramatically depending on the season, being careful where you spend money and where you save it is crucial. As a seasonal business owner, you’ll generally be able to anticipate when cash inflows will be heavier and when they’ll be lighter. Cloud accounting software is an easy-to-use and generally cost-effective business tool that you can use to accurately time cash inflows and outflows and help you plan for these fluctuations with a laser focus.

With your accounting software automatically tracking your cash flow position, you’ll be able to make those big picture decisions without the need for convoluted spreadsheets. Even better, if you have the resources to hire an accountant, they’ll be able to provide you with key insights as to how your business is traveling.

Cash flow is the lifeblood of any business. For some, it’s as simple as, ‘If you don’t have the money don’t spend it.' All in all, try to always have some cash in reserve so you can be as prepared as possible for the unexpected.

3. Watch for Signals and Learn

If you’re tracking the key factors that determine how much business is coming in the door, you’ll be able to plan for areas like staffing, marketing, and inventory with more accuracy. While some seasonal business owners will be able to look to simple indicators for some insight - like, for example, how busy the coffee shop down the street is depending on the season - others will need to rely on data from inventory management software and website traffic.

Utilizing good POS software that integrates with your cloud accounting platform can help in this area. If it’s early days for your business, after about a year, you’ll have enough data to use as a benchmark for resource planning.

At the end of your busy season, take stock of what worked and what didn’t and what you can improve on next year. Mom and Popcorn, a purveyor of specialty popcorn based in McKinney, Texas, has done a lot of work trying to understand their market. One Halloween, not long after owners Dave and Jon Willson took over the business, they made sure they were fully stocked for the candy season. The high level of sales they were expecting never came to fruition, says Jon.

“You would think as a candy store, the week before Halloween would be big. We learned that wasn’t true. It’s also not great after Halloween because everyone’s loaded up on sugar,” Willson explains.

He learned that most people load up on cheap candy around October 31, rather than quality, niche sweets. Willson’s tale just shows that running a seasonal business comes with a learning curve.

Sometimes in business, nothing is for certain. With planning and preparation, you can ensure your seasonal business will thrive year round.