Seasonal Businesses

Related Terms: Business Cycles; Fiscal Year

Most businesses experience some ebb and flow in business and in many cases these fluctuations correspond with the seasons. Seasonal business is a term that refers to the fluctuations in business that correspond to changes in season. Season can be understood in this context to include a) seasons of the year and their weather-related changes, b) holidays, and c) events like the summer school holiday, the fall return to school, or the Super Bowl. Although most businesses experience some seasonal business fluctuations, others experience severe seasonal fluctuations and may even limit their operations to particular seasons. Examples of such businesses include operators of vacation cottages, lawn care service businesses, and businesses that contract to do snow removal. Extremely seasonal businesses may close down completely for part of the year or drastically scale back operations during their off-season, managing only basic services such as accounts payable and/or maintenance work. Many retail businesses have a strong seasonal component and see the majority of their profits generated in one or two seasons of the year, the year-end or Christmas season being a typically busy period.

There are predictable events that can influence sales in every month of the year. These seasonal events affect different industries and businesses differently. For example, January is a good month for health club memberships as well as self-help books and programs. February is generally the slowest month of the year, but it does feature Valentine's Day, which triggers a great deal of seasonal business. In March, attendance at church and other religious activities jumps 60 percent. April is the month to market household cleaners and other spring cleaning products, while May features the cash cow that is Mother's Day. June features a lot of family activities, such as weddings, graduations, and vacations. July is the best month for all summer products. August is the busiest travel month of the year. September features back-to-school sales, while October is a marketing bonanza thanks to Halloween and the World Series. Finally, November and December are the biggest months of the year for almost every retailer because of the holidays—Thanksgiving, Hanukkah, Kwanza, Christmas, and New Year's.

BUSINESSES BASED ON THE ACTUAL SEASONS

Throughout the business world, there are numerous types of businesses that operate on a strictly seasonal basis, while many others stay open year-round but make a significant portion of their annual profits in one, or possibly two, seasons. Examples include vacation resorts, which in some regions of the United States are only open for part of the year (spring and summer in the northern U.S., fall and winter in the southern half of the country); cross-country and downhill skiing facilities; youth summer camps; lawn care and landscaping firms; golf courses; and sports leagues, from amateur all the way to the top professional leagues. Smaller-scale examples include snow removal services, pool cleaning services (in the northern U.S.), ice cream stands, golf driving ranges, and drive-in movie theaters, just to name a few.

If it is feasible, a business that relies heavily on one season tries to at least make some money during the remaining months of the year. If it absolutely cannot turn a profit, then the business often closes during its off-season to avoid paying employees and to reduce the cost of supplies and overhead. For example, in the northern United States, ice cream shops other than those located inside shopping malls simply close for the winter once the temperature dips down to the freezing level. On the other hand, some lawn care businesses in the northern United States may attempt to put their equipment and machinery to use during their off-season by cultivating a snow removal service in the winter months.

The movie industry remains one of the largest industries in the world driven by seasonal buying habits. The two biggest seasons of the year for the movie industry are summer and winter. Movie theaters do not shut down like some other seasonal businesses, but they hire extra employees for those two seasons and create budgets that reflect the dominance of those two seasons. Each year, the movie studios' most important releases are planned for those two times of year. High-budget, wide-appeal movies that have blockbuster potential are usually released in the summer, often at either the Memorial Day or Fourth of July holiday weekend. Around Christmas, the studios release serious pictures expected to gain Academy Award attention together with big-budget films that are aimed at the entire family.

EVEN DURING BUSY SEASONS, THINGS CAN FLUCTUATE

For truly seasonal businesses, there are often situations beyond the business's control that cause sales to fluctuate wildly each year, with almost no way to predict what will happen in any given year. Perhaps the best example of this, in cold climates, is the amount of snow that falls. Snowfall levels can affect any number of businesses, from ski resorts to hardware stores that sell snowblowers, salt, and chemical de-icers. (The reverse of this situation for summer resorts is a summer that is colder and rainier than usual.) One winter can be extremely snowy, while the next can see almost no snowfall, with very little chance of consistently predicting which way a winter will turn out in advance.

Some businesses use this uncertainty to their advantage, offering unique sales pitches revolving around the snow, or lack of it. For example, it is not unusual for a creative hardware store to run a special on snowblowers late in the fall. As a gimmick to lure buyers, the store offers to refund the entire purchase price of a new snowblowers if a certain amount of snow does not fall that winter. If the snow does fall, then all sales are final, and the merchant was able to sell all his snowblowers at full price.

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