Billie Attaway, an Entrepreneur's Organization member and "recovering serial entrepreneur," coaches business owners to achieve BHAGs (big, hairy, audacious goals) at HyperGrowth. We asked Billie to share strategies for bulletproofing a business against a summer slump. Here's what he had to say:
As business owners, we often have a love/hate relationship with the summer season. The warmer weather and longer days are good for the soul, but bad for the bottom line because they drive down employee motivation, engagement, sales and profitability while fixed costs and other financial obligations remain steady. Here are some creative strategies for thwarting a summer business slump:
1. Plan ahead for seasonal slowdowns. Analyze the seasonality of your business over the last several years and plan for the slowdown. Is it during summer? Midwinter? Spring break? Every business has a seasonality. Can you bank some profits from your busy season to carry you through the lull? With strategic planning, you can reduce the impact of a seasonal slump.
2. Leverage temps or contract labor. With strategic hires of temps, freelancers or contractors, your business can expand or contract quickly, depending on demand. As your seasonal lull hits, these contributors can enjoy some time off to give you a better handle on cash flow. Another great idea is to contact a local university's business school and hire a summer intern or two. This provides an opportunity to work with fresh, new talented people who may grow into valuable future employees. One of my coaching clients did this with such success that now every key person in the company is a previous summer intern.
3. Use factoring to accelerate payments from customers. If your customers share your seasonal business slowdown, their payments to you may dwindle at this time, too. Maintaining access to cash is critical. Plan ahead by setting up either a line of credit or a factoring relationship. Factoring is where a financial company advances 80-90 percent of invoice totals for a fee of 1.5-3 percent of the amount advanced. Establishing this in advance can avert a cash flow crisis.
4. Plan for year-end. A seasonal lull presents the ideal opportunity for company-wide planning. Take stock of where you started, where you are now, and the goals you want to reach as the year closes. Once these goals are established, plan step-by-step how you will pull the team together and charter milestones toward achieving them.
5. Practice giftology. What's that? Giftology is the art of using unique gifts and thoughtful gestures to reacquaint yourself with clients, increase referrals and maximize client retention. A slow season is an excellent opportunity to build or renew client relationships. Identify clients you want to reconnect with; call and ask to visit during lunch. Bring several gallons of ice cream to celebrate the season and thank them for their current―or former―business.
6. Shorten your cash conversion cycle. How many days does it take from the time an order is placed and your product is manufactured or produced for you to deliver, invoice and receive payment? A cash flow analysis can provide valuable insights on improving your cash flow management.
7. Determine whether customers practice calendar- or fiscal-year accounting. Many businesses, especially federal, state or local government entities or those working on government contracts, must exhaust their budget by year-end. Work with these specific customers to negotiate a purchase within their budget constraints during your slow time.
8. Host customer round tables. Ready to build key relationships and determine where your customers are heading from a growth standpoint? Host a mini-retreat, and make it fun with offsite activities or a relevant speaker. Organize two- or three-hour round table discussions, preferably in the morning. On Day One, find out where your customers see their future in the industry. On Day Two, share your ideas of where the industry is going, bounce ideas off of them and learn what innovations they notice in the marketplace. When it's done correctly, clients enjoy networking with other companies and hearing their stories while you gain intelligence that positions your company in their growth curve with the products and services to support their needs.
9. Hold a "summer sizzler" sale. Everyone loves a sale! To stimulate sales and jettison excess inventory, reach out to customers via social media featuring slow-moving inventory at door-buster prices. You'll generate buzz, trim inventory and boost your cash coffers.
10. Schedule maintenance or repairs. Turn the slower season into a productive time by performing necessary upkeep, cleaning and repairs. It's also a great time to review operational, accounting and marketing systems and implement new programs to maximize productivity when business picks up again.
11. Invest in yourself. Summer is a great time to reflect and spend time with family. If you know business will be slow, schedule vacations accordingly and encourage staff to do the same. Take advantage of the downtime to review your personal goals, identify what is working and what isn't. Make adjustments and prepare to get back on track for the busy season, which will be here before you know it!