Are the Holidays Your Off-Season? Stay on Top of Business Seasonality With These 7 Tips
by Caron_Beesley, Community Moderator
- Created: October 22, 2012, 7:45 am
- Updated: October 22, 2012, 7:50 am
All indicators point to a solid 2012 holiday season for retailers. The National Retail Federation points to one key indicator, its Global Port Tracker report, which showed a strong increase in imports for August, September and October – the three key months of the year when retailers buy the bulk of the merchandise they will sell during the holiday season.
Good news! But what if the holiday season is not your big selling season? For many businesses, particularly summer-seasonal businesses, the winter holiday season can bring a dive in sales and cash flow issues.
Here are seven tips for making the most out of the holiday season by effectively planning and managing cash flow – while ensuring your business stays top-of-mind as well.
Have a View of Cash Flow
If you operate a seasonal business, it’s important to include a cash flow projection template as part of your financial planning process. If you can, plan your cash flow over a year. Use historical reports from previous years to forecast your revenue, your busiest months and your estimated sales for each month. You’ll also need to consider your fixed expenses (rent, utilities, etc.) and your variable expenses (salaries, inventory, taxes, etc.) as well as when these variable expenses will be expended.
This blog offers some quick tips for simplifying the process: Projecting your Business Cash Flow, Made Simple.
Once you have a view of your revenues and outgoings, you can develop strategies to manage cash flow throughout the year.
Optimize Your Invoicing Process
Unfortunately for small business owners, the wait to get paid is only getting longer. According to a 2012 Wall Street Journal survey, 64 percent of small businesses had unpaid invoices over 60 days old while 20 percent say the problem is worsening.
Modifying your invoicing policies will help ensure off-season cash flow. This blog offers tips on how to do this: How to Get Paid Faster with a Better Invoicing Process.
Get Help Financing Your Seasonal Working Capital Needs
If you need help meeting your short-term and cyclical working capital needs, you might want to consider a short-term loan or line of credit such as SBA’s CAPLines Program, which provides advances against anticipated inventory and accounts receivable to help businesses with seasonal sales fluctuations. The program was streamlined this year to make it easier for small business owners to get financing even if collateral is tight. Read more about the program or talk to your local SBA Office to learn more.
Negotiate Flexible Payment Terms from Your Suppliers
Just as you want to expedite the flow of cash in, you should also consider negotiating extended payment terms from your suppliers. This is especially useful if your busy season ramps up again after the holidays because you are likely to be incurring most of your variable expenses (inventory, marketing, etc.) now. The trouble is, you won’t see any immediate returns on those investments until your revenues kick in, so an extended payment plan can help ease the pain of these pre-season costs.
Continue to Market Your Business
If you run a seasonal business, your off-season should be one of your busiest marketing seasons. Capture customer emails (use drawings, surveys, and other sign-up incentives), send updates year-round (entice them to come back next year) and use social media (check out this “Ultimate Guide to Social Media Marketing for Small Business”) to put out teasing content and updates all year long!
Offer time-limited promotions or incentives that drive customers to sign-up for your services now, and secure a percentage down-payment in advance.
Find Alternative Sources of Income
Earning income from alternative sources or diversifying your products or services to include ones that will be popular during your off-season is a great way of keeping cash flowing and your business on customers’ minds. Don’t forget to check whether you need any additional business licenses or permits. SBA.gov's Business Licenses and Permits Tool can help you find the paperwork you might need.
Use Your Downtime for Planning
Use your off-season wisely. Regroup, review and plan ahead to ensure a profitable busy season. How did your business perform against its plans? Did your marketing campaigns pan out as well as you’d hoped? What new products and services can you introduce in the new season? What’s the competition up to? How can you position yourself against them?
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