Managing Cash Flow – Are you in season?
A successful survival strategy for truly seasonal businesses will involve managing cash flow and hiring the right staff.
Most businesses experience some fluctuations in business during the year, and in many cases these changes correspond with the seasons.
Seasons could mean the seasons of the year and their climate related changes, holiday periods and events – sporting and community. In University towns the influx of students can have a huge impact on traffic as well as trade.
Some businesses experience severe seasonal fluctuations which even restrict their operations and force closure during off-season periods to avoid paying staff and to reduce supply costs and overheads.
As we feel the first blast of cold weather, spare a thought for those who operate outside, gardening and landscaping firms, builders, painters and decorators, holiday accommodation providers and seaside businesses, who now take a back seat operations-wise.
However the fireworks, festive bargain shops and bird food suppliers are ready to pounce…
A successful survival strategy for truly seasonal businesses will involve managing cash flow and hiring the right staff.
Cash flow management is important for any business, but for businesses whose cash flow dramatically changes from one period to the next, it is critical. Cash flow management has to focus on timing inflows and outflows. Anticipating flow and creating reserves to use during the off-season is paramount.
Incentivising staff is a challenge for many seasonal companies. Communication is key. Letting staff know about how seasonal shift influences the business they work for is important to gain support. Carefully managing holiday times and who you employ can make big differences. Considering the employment of part-time employees and those on temporary contracts could help in managing time and money.
Some businesses offer additional services and products which tie in with the season – heating engineers in the winter; aircon in the summer, summer sunshine breaks, complimented with ski packages and winter sun. Of course, fashion retailers have always had “seasonal” stock.
Most retailers are now gearing up for the C word – Christmas – where they see the majority of their profits generated.