01/ 04/ 2008
by Glenn Townes
Entrepreneurs who operate seasonal businesses often contend with the dilemma of meeting the demands of what is typically a short season and the long challenge of sustaining the business after the season ends. With the Christmas holiday just behind us, many seasonal businesses generate more than a third of their annual revenue during the months of late October, November and December. Seasonal business owners must be creative, resourceful and savvy when it comes to generating revenue during the off-season.
A business owner can achieve financial security and still meet the company payroll during the off peak season in several different ways. One viable alternative is to find another job during the down time that will supplement income and keep the business afloat. Another is to establish a healthy relationship with the local bank and utilize a solid line of credit during the slow period.
Seasonal staffing
One of the main challenges for seasonal business owners is finding staff that is willing to go through the rigors of being properly trained and educated for a limited time. For example, in states where fireworks are legal, small businesses that manufacture or distribute fireworks generate the bulk of their revenues in the weeks or months leading to the Fourth of July holiday. In addition, some states mandate that workers be trained in the handling of combustible goods and services. If they aren't, the business owner or distributor can be fined. Securing and educating staff for a seasonal selling period of what generally amounts to between six to eight weeks can indeed be a daunting task for some business owners. One way to lure temporary staffers is to offer incentives—discounts on products and the promise to bring them back on board the following year.
Maintaining cash flow
Besides staffing, maintaining a steady stream of cash is crucial for a seasonal business. For example, in the case of businesses banking on a bonanza from the Independence Day holiday, the weeks and months leading up to the big day can be costly. Often there is more cash going out than is coming in. Costs for materials, supplies and payroll are continual and lump sum payments for these things usually don't come until after the big Fourth of July celebration. It's a good idea to maintain a solid relationship with the bank or angel investor in your business for access to a line of credit during the lean months.
Some businesses begin prepping for the Christmas holiday season in January. Through a process called Christmas dating, merchants and small entrepreneurs can delay full payment for supplies and other items until the Christmas season when income substantially increases.
Sideline gigs become mainline stays
As most seasonal entrepreneurs know, picking up a temporary sideline gig in order to bring in cash during the slow times is a quick and easy fix for the cash flow crunch.
A temporary part-time or full-time job to augment cash flow during the off-season of your business is a smart move. Also, consider adding another dimension to your seasonal business. For example, if you specialize in selling arts and crafts for the holiday season, consider expanding your services to include plants and other items for other holidays such as Easter or Mother's Day.
As with any business, the key elements to maintaining a successful and lucrative seasonal business include being creative and shrewd enough to develop strategies that will maintain your business through the lean times.
