Many small business experience slow seasons, but those periods of decreased business can be opportunities to grow and expand your business. Preparing for seasonality can help you weather the decreased income, no matter what your industry.
Build a Cash Buffer
Seasonal variations in sales require financial preparation to cover your expenses. You still have the same bills coming in each month, even if your income decreases temporarily. It’s a good idea to build a cash buffer to help you weather the storm until your cash flow increases again. During your busy times, you may want to set aside money in a reserve account to act as a buffer. Consider putting the extra cash in a interest-bearing savings account so you can earn some income on your nest egg. With this financial padding, you don’t have to worry about borrowing money just to cover your bills during slower periods.
You can also apply for a line of revolving credit that you draw on during slow times and repay during the busy season. This is a common practice in many industries, such as agriculture.
Manage Variable Costs
Even though you can’t do much about fixed costs, you can try to reduce certain variable costs during a slow spell. For example, you can hire contractors or temporary workers during the hectic busy seasons and only extend their contracts if the busy period continues longer than you expected. If you run a multi-site business, it may be a good idea to temporarily close some of the less profitable sites during the slow season to reduce utility costs.
A similar option is to open an extra temporary location during your busy season if you can get a short-term lease. For example, you might open extra tax preparation locations only during the tax season if you can find office space that allows for a short lease. After tax season, you can go back to your normal locations.
Develop a Business Plan
It’s easy to get caught up on the day-to-day operations of your business, but it’s also a good idea to look to the future and plan for the slower times. It’s important to understand your business and develop a business plan for it. Take a look at the products and services you offer, and see if you can enter another market during slow seasons. For example, if you run a food truck business, you may consider offering catering services during the winter when it’s cold outside.
Use Slow Time for Care and Maintenance
Slow times are opportunities to work on things in your small business you don’t have time to deal with during your busy seasons. You can use the free time during the off-season to clean up, fix, and maintain your equipment so your small business is ready to go once the busy season arrives. You can also take advantage of the extra free time to evaluate the performance of your business and perhaps revisit your branding.
Work on Marketing
Your slow period is a good time to double down on your marketing efforts to line up more customers when things pick up again. Stay in touch with your current customers to keep them interested in your products and services. You might launch a marketing campaign to make existing clients aware of different servings you offer. It’s also a good time to reach out to prospective customers so they have you in mind when the peak season comes again.
Slow seasons don’t have to be setbacks for small businesses. Use them to your advantage, and position your business in a better place for the next upswing. Your accounting software can help you track your business and plan for busy and slow periods. 4.3 million customers use QuickBooks. Join them today to help your business thrive for free.