How to survive a slow business season
Running a business is a little like farming: there’s a planting season, and there’s a harvest season. You’ll generate new leads in one quarter and reap sales rewards in the others.
For some businesses, seasonality is literal. Those specializing in weather-dependent industries – like summer beach resorts – must plan for alternate sources of revenue during the down season. On the flipside, other businesses may find that busy seasons can overwhelm their workforces, deplete inventories and cause financial and mental stress in similar ways to a slow season.
Planning ahead is important to braving business seasonality. Many small businesses fail because of cash flow demands. As a result, experts agree that the most valuable step you can take to survive (and thrive) amid seasonality is to be strategic with your funds. Continue reading to learn about:
Make a plan with your bank
Preparing for lean times can be daunting but creating and executing a well-defined approach can help you establish a seasonal shelter with a firm foundation. There are several financing options to help small businesses facing seasonality:
Open a business line of credit: Most businesses approach seasonal cash crunches with a ready source of funding. Much like a credit card but typically featuring a lower rate, a line of credit offers revolving terms. You and your bank work out a set amount of cash that’s available for withdrawal as needed. Pay back the principal and interest during boom times to replenish your access to cash.
Take out a loan: Another simple option is to take out a short-term loan for an immediate cash injection structured to take you through tough times. With a loan, your bank gives you a lump sum for solid financing with consistent payments. Typically, loans are used to finance fixed assets like equipment or property:
Equipment leasing and financing loans: Consider this option for new machinery, technology or vehicles for your business. Prudent alternatives can include equipment that’s used but in good shape or renting in lieu of investing in new technology.
Finance or refinance commercial real estate. This is a strategic way to consolidate debt while gaining less expensive funding and repurposing cash for other uses.
Try a business credit card: While a line of credit is a convenient way to fund payroll and ensure there’s cash on hand during slow seasons, business credit cards are suited for avoiding a cash pinch when making everyday purchases.
Credit cards provide spending power for a breadth of discretionary purchases. They offer a great way to pay utilities and other recurring expenses. Plus, credit cards allow new businesses to establish a strong credit score. Be sure to compare interest rates to make certain your short-term priorities don’t erode your long-term viability.
Six tips for slow seasons
Having financing to get through dry spells is key but once that is squared away, take the advice of smart business owners to safeguard against seasonality and prepare for your next busy season:
1. Be more efficient: Take steps toward efficiency and productivity while focusing on eliminating unnecessary costs.
2. Hire a flexible workforce: Stay lean in hiring and bump up staffing with seasonal workers or part-time employees to round out your roster during peak selling seasons.
3. Open a pop-up shop: A temporary establishment in a busy part of your city can provide a greater footprint and allow you to test out ideas with little risk.
4. Start a side gig: Businesses that specialize in seasonal services can provide secondary service offerings to steel themselves during slow seasons. Snow removal services, for example, often provide lawn maintenance and landscaping when the weather turns warm.
5. Use projection software: Get the facts about specialized computer software designed to help you better plan, strategize and organize orders and inventory.
6. Stay positive: Most importantly, have a clear business plan in place and take action ahead of time to build a bridge to a busier season when your business can thrive.
Learn from bankers and business leaders
Slow periods aren’t limited to the seasons of the year. They extend to economic fluctuations and market changes. Be sure to read these testimonials from small business owners to learn more about making it through tough times.
You’ll also want to contact a banker for guidance on protecting yourself against financial shortfalls. Investigate your borrowing options today so you can meet future cash flow needs. [cite::171::cite] [cite::172::cite]