Some retail and service businesses see their strongest sales during certain seasons. For instance, a landscaping business may see brisker business during the summer, while a holiday decorating service likely has higher sales at the end of the year. Indeed, many retailers, regardless of product, see their strongest sales during the end-of-year holiday season.
Because of this, retailers and seasonal service businesses often experience annual “sales slump” periods. However, that doesn’t mean the team needs to sit idle or that there aren’t smart strategies that can strengthen the company’s financial position. To make sure your business doesn’t fall into the red during slower sales periods, below, 14 members of Forbes Finance Council share steps to help ensure financial health year-round.
Get ahead of seasonal slow periods by making sure your operational cash flow is positive and setting aside reserves before the slow season hits. If it looks like your business doesn’t have enough cash flow to cover costs during a slow period, it might be necessary to get short-term working capital or a line of credit to help bridge the gap. – Xan Myburgh, Backd Business Funding
As your business enters the seasonal downturn, the financial leadership team needs to manage the cash cycle and control the elements of working capital as you use up profits from other quarters. It is also critical to manage your relationship with the bank and have a line of credit to draw from. Also, work with your marketing and sales teams to promote off-season sales through discounts. – Bilal Surahyo, Sleep Country
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Continue building your pipeline and bringing potential new clients in. If you slow down marketing and prospecting during slow months, it’s inevitable that the months to follow will be slow as well. If you continue to pursue new clients, they’ll come through once the holiday season is over. – Christina DeSimone Nappi, The DeSimone Agency Inc.
Use the “surge” in revenue and profits you may realize during the holidays to maintain, if not increase, your marketing efforts going into the new year. Many businesses often cut this line item back in times like these, so it naturally contributes to a slower first quarter in the new year. Don’t be like the herd or the norm in your industry; instead, deploy this strategy. – Christopher Hurn, Fountainhead
We use two helpful strategies to maintain financial health. First, we make sure we have regular conversations with our vendors to ensure we are maximizing the services in our contracts or to renegotiate for services we are not using. Second, we conduct technology audits on a regular basis to ensure that we are scaling and utilizing all of the automation functions available to us. – Paul Blanco, Barnum Financial Group
Cash flow is often an issue for seasonal businesses. One approach a business can take is to diversify its products or services to earn more revenue outside of the peak season. For example, a landscaping business that traditionally is busiest over the summer might consider offering fall clean-up and snow-plowing services to generate income throughout the year. – Jeff Call, Bennett Thrasher
Figure out ways to break up larger expenditures and pay them off incrementally over the year. Make sure you stash a percentage of the cash you bring in during a seasonal bump to ride out leaner periods. Also, evaluate if there are any expenses you can reduce or eliminate in Q1. This seems simplistic, but the goal is to have cash on hand and avoid a month or quarter of elevated costs. – Paul Davis, Strategic Resource Management
The slow period is an opportunity to work on longer-term planning. Devote time to understanding and building relationships with your customers. Refresh your marketing materials and plan out new campaigns to grow your reach. Look at how your competitors are differentiating themselves in the market. And ensure you and your employees are up to date on training that can strengthen your business. – Luz Urrutia, Accion Opportunity Fund
Ask yourself: “Are there any cuts I can make in the new year?” and, “Are there any out-of-the-box ideas I can implement in my business?” More importantly, you should never waste a slow season. It’s a great time to look into your business from an expense perspective and clean things up to ensure you‘re ahead of the game when things pick back up. – Joe Camberato, National Business Capital
Use your most valuable assets wisely by enhancing your online brand visibility. You should market your business by posting on social media networks such as Facebook and Twitter, as well as by publishing images of your products on Instagram and Pinterest. This will help to increase website traffic and attract new clients who may not have heard of you before. – Neil Anders, Trusted Rate, Inc.
Make sure that you have access to working capital (either through cash reserves or a working capital facility) to ensure that the business can continue operating comfortably during a slow season. To ensure success, it’s important to position the business so that it can continue operating in accordance with its strategic plan instead of reacting based on the available cash in its bank account. – Sean Frank, Cloud Equity Group
One strategy that a seasonal business can leverage to maintain financial health during a slow period is to consider diversifying its services or products. This could involve offering add-on products or services such as maintenance plans, extended warranties and customer loyalty programs. Also, businesses can investigate new markets and customer segments to capitalize on untapped opportunities. – Angelo Ciaramello, The Funded Trader
If you know you are heading into a sales slump after a large holiday revenue period you should plan accordingly. Put enough cash aside to make it through the slow months, and be cautious of your nonrecurring spending during this slow period. Also, overestimate the reserves you’ll need—double or triple your estimate, as it is much better to have extra cash in reserves than not enough. – Joseph Orseno, Tiltify
Cash is king in any business. Practice discipline with holiday profits. If you know the holidays are a thick period and Q1 of the following year is a thin period, be smart with your cash. Defer capital expenditures or leverage credit to ensure you have cash on hand. Being wise with cash reduces stress and gives entrepreneurs breathing room to dream bigger dreams. – Todd Sixt, Strait & Sound Wealth Management LLC