Running a business affected by seasonal peaks and troughs in trading can be a real challenge. If your business relies on one or two key times of year to get through the slower periods, there are a few strategies you can use to maximise annual profits and keep the cash flow woes at bay when things are slow.
Complete shutdown

Completely closing in the off season sounds radical, but if your business is highly seasonal then it can actually work out better overall. For example, a café in a seaside town will make the majority of its revenues over late spring and summer, with business dramatically reducing in the autumn and winter. In this case, paying for staff and stock in the off season when there’s only 10% or 20% of the revenue coming in could be fatal.

The obvious drawback of this route is that your business is guaranteed to make zero revenue when you’re closed, so it’s crucial to build up a cash reserve beforehand, and make sure you’re not missing opportunities.

Partial shutdown

In other cases, the slow season isn’t a complete write-off. Perhaps our seaside café is in a town that remains a popular destination during school holidays — if so, it could experiment with reduced opening times while still taking advantage of the spikes in revenue on half terms or bank holiday weekends.

Adjusting your opening times means adjusting your staffing and stock levels, which can be a difficult balancing act. Managed correctly, though, this dynamic approach is a good way of earning what you can in the slower season, while keeping your overheads as low as possible.

Take advantage of the extra time

As well as the obvious stock and staffing challenges, the off season represents opportunity. Maintenance, refurbishment, training and market research are all activities that can take place when things aren’t quite as hectic, and hopefully they’ll mean you’re even better-equipped to take advantage of the ‘on’ season.

There is another crucial thing that’s easy to overlook — downtime represents your best opportunity to rest, recharge, and come back to work energised and motivated. We’re hearing more and more that working too much can counterintuitively harm your overall productivity —so take the chance to let yourself and your staff enjoy a break.

Adapt in the off season

Depending on your business, this could mean a variety of things. Restaurants often have summer-only outdoor spaces, which require more staff to serve — perhaps halving your trading space makes sense when things are slower.

For wholesale businesses, adapting could mean renting extra warehouse space when it’s busy, but reverting back down to your regular storage space the rest of the time.

Seasonal firms can use different marketing strategies in the slower months too. Perhaps that’s a special offer designed to keep your business top-of-mind for your customers, or maybe you can use this breathing room to test a new product or service. These less hectic times are ideal for planning and preparation — like scheduling your social media campaigns or designing advertising materials.

Get the right funding

For some of the strategies we’ve talked about, you may want business funding to help. Many businesses that use card terminals find merchant cash advances useful — these are loans based on card turnover, and repaid as a percentage of revenue, which means you pay more when times are good, and less when things are slow.

Another type of finance worth exploring is a revolving credit facility. This is any overdraft-style product, which you can set up when things are going well, and dip into it when you need to. Many of the credit facilities available only charge interest when you’re using them, so it’s a reassuring safety net for the slow season.

Finally, if you invoice your customers, an invoice finance facility is a good way of speeding up your payment cycle to get paid sooner. There’s a range of different products on the market designed for various business types, but they’re all set up to help out when payment terms are causing a cash flow issue.

Final thoughts

Hopefully I’ve covered some ideas here that can help you keep things ticking over when you don’t have as many customers. With the right strategy, and perhaps some funding in place, you can use your off season as an incubation period to strengthen your business, and come flying out of the blocks when the busy period ramps up again.

Conrad Ford is chief executive of Funding Options, recently described by the Telegraph as “the matchmaking website for small businesses and lenders”.