Off-season revenue decreases are what some businesses fear. At one point of the year, they're driving in profits. At the other point of the year, they're hardly making any money. With this type of business model, businesses need a future plan in order to succeed and owners need to be keen on money management.
What are some ways to manage your business in the off-season and decrease the chance of it going extinct?
The most important thing you can do for your business is plan for the future. Here are some key strategies to help you plan:
Create a reserve, or “emergency” fund. Life keeps going, whether or not you're making profits. Setting money aside for unpredictable times is key to saving your business from going under.
• Anticipate the need to spend. Maybe your business will need new equipment or technology to thrive. Planning several years ahead can help your business in the long run.
• Understanding the things that drive in money. If you know which products or services increase your profits, then a reinvestment may be needed. Set aside a portion of your profits to market your money-makers.
Planning is one part of the big picture, but there are a number of other strategies to keep in mind when coming face-to-face with the off-season. These include:
• Expanding your products and services. Think of ways to keep earning money in the off-season. Expanding your product line can help your business through the downtime. The best example of this idea is a lawn care service offering snow removal in the winter.
• Working with your lease provider. If you're renting space, ask your lease provider about different options. You may be able to pay higher rents during your profitable period to ensure less spending in the off months.
• Creating multiple payment options. Make it easier for your customers to pay you with options like Square or PayPal.
• Be smart with loans. Loans can be a good way to get your business through the off-season, but you need to make sure to match your assets with the loans. You do not want your business to dig a hole with loan debt.
• Closing down. Closing down completely in the off-season might be the best option. If this is not an option, consider scaling back as much as needed. Only hire seasonal workers for the busy months and limit employees during the slow months.
• Using the downtime to plan. Since the off-season will be slow, this will provide a great opportunity to strategize: create budgets reflecting seasonal changes, market your business, and become financially literate. Taking advantage of the downtime could have significant impact on your business’ future.
• Explore other options. Consider joining forces with partners and independent contractors. Keeping a full staff of employees might be a burden on your budget. Outsourcing work to other partners and independent contractors might be the best option for your business and help retain an ideal budget for the off-seasons to come.
Education and Research Open Up Opportunities
There might be some other options you don't even consider, such as studying your customers. Keep them in mind. Your customers are spending money year-round. Try to figure out what they are spending their money on. Maybe your business can offer products and services for their needs.
You can also study your competition. Studying your competition can be beneficial to your business’ success – especially if your competition is successful in the off-season. Research their methods and practices. See if they market heavily in their downtime. Your competitor’s model could open the door to a successful business.
Managing seasonal cash flow is difficult, but these tips and tricks can help keep the cash continuously flowing, even in the off-season.