There are some superb seasonal businesses out there that year upon year exceed expectation and are stalwarts of the economy as a whole.
In this post, we identify and suggest ways of dealing with, challenges specific to seasonal businesses; by seasonal businesses, we refer to businesses which only meaningfully trade during certain seasons of the year or which experience extensive trading peaks and troughs depending on a given season.
Some of the most simple examples of seasonal businesses by way of illustration may include:-
● iced cream manufacturers & retailers
● garden furniture manufacturers and retailers
● tanning outlets
● retailers and manufacturers or christmas decorations
Among the specific challenges that these types of businesses can face are:-
● managing lower cashflow during quiet seasons
● ensuring the organisation's capital adequacy year round
● stocking ahead into a relative unknown with susceptibility to seasonal trends (for example, in the clothing and apparel markets)
● minimising risk related to changing staff numbers through off peak to on peak periods.
Such business can also be at the mercy of Force majeure - meaning events outside their (or indeed anyone's) control such as a poor summer that can radically affect their performance; many seasonal businesses, for example, sadly became insolvent because covid lockdowns repeatedly fell during the busiest and most lucrative periods of the year for them.
So how can such businesses protect themselves from the particular dangers seasonality brings with it?
Suggestions are laid out below:-
● longer term financial and contingency planning is essential
● access to a flexible and where necessary temporary workforce is also vital
● consider holding stock on a returnable or discountable basis if possible even if it costs a bit more to do so
● all relevant contracts might provide for some level of performance or financial grace in the case of a Force Majeure
● be wary of making non refundable payments to suppliers - see "In a nutshell........deposits, payments on account & penalties"
● insurance coverage might as a result of the unique risks related to a seasonal business be wider and more bespoke - see "Make Insurance relevant to StressBust™ optimally"
● given that service or product critical suppliers may be at the same mercy of seasonality and force majeure, placing credit insurance might be a valid consideration - see "An Introduction to Credit Insurance revenue protection"
● the provision of guarantees might be avoided if possible - see "The difference between "warranties", "indemnities" and "guarantees""
● choice of accounting reference date might enable for most effective legitimate tax planning
● a bridge funding facility might be of use
● an extension of complimentary or ancillary service or product offerings to generate extra revenues "out of season" could be considered. If core seasonal business is product based, for example, perhaps consultancy services could be offered out of season; this might in its turn make the business more attractive to funders, purchasers and strategic partners alike - see "Break Time Quickie: "Niche" versus "Generic" business offerings"
● alternatively, might a formal strategic partnership with a business along the service or product production/sales lines be of use and if so, how? - see our post entitled "How to make Strategic Partnerships work for you".
And seasonal businesses, perhaps more than any others, need at an operational week to week level to be able to "see around corners" - see "Learn to Expect (and Accept) the Unexpected to Stressbust™ More Effectively"; and to make decisions on a swift, decisive basis when needed - see "5 Key Steps to Stressbusting™ Decision Making".
Importance should be attached to being realistic about outcomes and performance against seasonal uncertainties at all times - see "Be Ambitious but be Smart with it to StressBust™ effectively"; and being aware of, so thus making advance provision for, relevant dangers or risks- see "Learn to recognise your Kryptonite to Stressbust™ ahead".
If you can relate to the contents of this post and would like the value of our extensive network expertise in this area, please reach out to us in confidence via our "Contact" page or at connect@stressbustingexpert.com
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