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Six Ways to Manage Cash Flow as a Seasonal Business Owner

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Six Ways to Manage Cash Flow as a Seasonal Business Owner

By Caron_Beesley, Contributor
Published: October 11, 2011 Updated: August 18, 2015

Do you operate a seasonal business? If your revenue peaks and declines depending on the time of year, or you only operate your business during a certain season—then you can be considered a seasonal a business owner.

If this is you, then you know that monitoring and managing your cash flow and revenues through these fluctuations is essential. Below are six ways you can better plan and manage for the ebb and flow of seasonal business cash flow.  

Make a Budget that Includes Cash Flow Projection

Every business operates off a set budget, but if you operate a seasonal business it’s important to include a cash flow projection template as part of your financial planning process. This will help alleviate the guesswork involved in predicting your income and outgoings over the year, and inform you of the best ways to conserve cash flow throughout the year.

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 hit.

Now that you have a view of your revenues and outgoings you can develop strategies to manage cash flow throughout the year.

Steam Roll Your Invoicing

One way of expediting the flow of cash as you head into your quiet season is to modify your invoicing policies. If you can, try to secure a percentage payment upfront. This will also help you deal with slow paying customers. This article also offers tips:Getting your Customers to Pay-Up: Tips for Protecting Yourself from Non-Paying Clients.

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 as you head into your busy season and incur most of your variable expenses (inventory, marketing, etc.). 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.

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 top of mind. Don’t forget to check whether you need any additional business licenses or permits to do this, SBA.gov's "Permit Me" tool can help you find the paperwork that you might need.

Consider a Short-Term Loan or Line of Credit

Government-backed small business loans are a useful option if your cash flow projections show potential tight spots in your calendar. One option to consider is the Small Business Administration (SBA) CAPLine Loans umbrella program which helps small businesses meet their short-term and cyclical working-capital needs. Part of the CAPLine program is the Seasonal Line short-term working capital loan program which provides advances against anticipated inventory and accounts receivable to help businesses with seasonal sales fluctuations. Read more about the SBA Loan Application Process.

Another option is a revolving line of credit (RLC). An RLC is a flexible method of borrowing cash for your seasonal small business needs. It is very similar to a credit card in the sense that an RLC has an established credit limit that you can borrow up to, only without a plastic card. Learn more about The Basics of Revolving Lines of Credit.

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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About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


Banks like to see stable, consistent revenue, and seasonality is seen as an additional risk. Especially if the seasonality itself is not predictable or varies annual due to weather, climate, etc. Owners of seasonal businesses should consider asset-based lending or factoring, since they are vastly more scalable with volume spikes.
Great advice for seasonal business owners that deal with the challenge of peaks and valleys in their revenue stream but the key is planning and budgeting. If the plan and budget is for the fiscal year broken down by months, it eliminate the temptation to bask in the highs and struggle through the lows. Great article!
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You identified a very significant issue. Most small businesses,that budget,do not consider the seasonal aspect of their business. Almost  every business is seasonable, so this is very important. Some quick tips to obtain the information to address the seasonality issue is to use the same cashflows as last years or the average last five years(if you have them) and choosing the most relevant measurement base. Just go to last year's bankstatement and you can find the cashflows. While the other option is to sit down and brainstorm as to the timing by month of cashflows either by youself or with a CPA. Either use a spreadsheet,or an accounting program like QuickBooks or your existing accounting software.If your accounting software does not offer budgeting, its time for you to realize that you graduated and need to upgrade software that offers budgeting by month.If you have any questions, do not take any chances with projections of your business , ask your CPA. Don't forget to budget by department. Its even better to find software that budgets a balance sheet and statement of cashflows by month. Such software may cost a little more, but is well worth it. Nevertheless, QuickBooks and I am sure many other comparable(under $200) and similar priced accounting software will offer this monthly budgeting option. I hope you understand how important this feature to budget monthly or project monthly for next year or the succeeding years. <br>Sandor Lenner, CPA, MBA www.SL-CPA.net</br>
Great advice for seasonal business owners that deal with the challenge of peaks and valleys in their revenue stream but the key is planning and budgeting. If the plan and budget is for the fiscal year broken down by months, it eliminate the temptation to bask in the highs and struggle through the lows. Great article!
Nice tips for newbie!
I am not sure, that you can do the same with krill oil business

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