Seasonal Businesses

If the snow does not fall, then the merchant normally has taken out a special insurance policy that will cover most of his or her losses from the special sale, which has now turned out to be a worst-case scenario. Businesses that offer this kind of seasonal gimmick usually do their homework before they make what seems to be an outlandish offer. For example, the hardware store owner might know from studying statistical data that only twice in the last 100 years has the designated amount of snow not fallen, and therefore his odds of having to pay for the customers' snowblowers are extremely slim.

SUCCEEDING AT A TRULY SEASONAL BUSINESSES

In a business that is truly driven by the seasons, there are steps that can be taken to ensure greater success. The two most important factors are managing cash flow and hiring the right employees. Cash flow management is important to any business but for companies whose cash flow fluctuates dramatically from one period to the next this task is especially critical. Cash flow management does not need to be mysterious or complex. Cash flow management is, quite simply, all about timing cash inflows and outflows. Since a seasonal business can anticipate the inflows being heavier during one period than in others the key is to match the outflows to the same period as much as possible and create reserves to use during the off-season.

Finding and keeping good employees is another key to succeeding in a seasonal business. Paying well and creating a positive work environment are obvious ways to gain good employees, but there are other tactics a small business owner can use. Keeping employees informed of how the seasonal shift affects the company is a good idea, as the employees feel as if they matter more and are an important part of the business. It also helps employees identify the best time to take a vacation. When hiring new employees, two sources of good seasonal employees should be kept foremost in mind—students and retirees. Students are perfect for summer jobs because their time off from school matches the business's busy season perfectly, and most students need to earn money in the summer to pay for school in the fall. Retirees tend to make good employees because they may have years of experience in their field, but they no longer desire to work full time. Therefore, a job that lasts a few months each year is perfect.

One other tactic that seasonal business owners can use to succeed is to expand their business to include a new product line that is seasonal in the opposite way as their original line. For example, a lawn and garden company that sells lawn mowers and offers mowing and landscaping services can add snowblowers to their product mix and offer snow removal services to complement their landscaping services. The new product should be similar to the existing product so that an owner does not have to learn a brand new business or invest a great deal of money.

EVENT-OR HOLIDAY-BASED SEASONAL BUSINESS

The retail sector is one that tends to be very sensitive to seasonal fluctuations. This type of seasonal business is driven by holidays or events that greatly influence consumer spending. Christmas is by far the largest holiday that creates seasonal shopping. In fact, it is not unusual for many retail businesses to see sales rise by 15 percent above normal monthly sales in December and then drop 30 percent below normal monthly sales in January each year. Other examples of event- or holiday-based seasonal periods include Halloween, Mother's Day, graduation, and back-to-school. These events are held at the same time each year, which makes it easy for a businessperson to establish an annual schedule.

 PREV  1 | 2