Managing Cash Flow – How can you handle seasonal deficiencies

Most businesses experience some fluctuations in business during the year. In many cases, these are seasonal deficiencies which can define the success of a business and either make or break it.

How to cope with seasonal deficiencies

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.

Managing cash flow

A successful survival strategy for truly seasonal businesses will involve managing cash flow and hiring the right kind of staff. Seasons don’t necessarily have to mean a change in the weather, holiday periods and sporting events can make a big impact on certain businesses.

In certain sectors businesses can experience seasonal fluctuation to such a degree it forces normal operations to close. With a lack of business to such a degree, the money on outgoing costs, such as utilities and staff pay can mean outgoing cots are higher than any incomings.

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.

In summary

Seasonal deficiencies can be a big problem for a lot of businesses in a lot of different sectors. The key is having a well-defined cash flow forecast to help you navigate through the difficult months. To avoid going through any insolvency procedures, running the risk of closure, having a contingency and temporarily closing down can sometimes save more in the long run.