February 2nd marks Groundhog Day, which brings the annual return of Punxsutawney Phil and other weather-forecasting rodents. According to tradition, if a groundhog comes out of its hole on February 2nd and sees its shadow, it will go back into its hole and there will be six more weeks of winter weather ahead. If he does not find his shadow, the animal will stay outside and look for it, thus translating into an early arrival of spring.
This peculiar holiday begat the 1993 comedy Groundhog Day in which the main character, played by Bill Murray, relives the day over and over again without change. The film provides a good lesson for small business owners: you never want to keep doing the same thing over and over if results do not change.
The early winter months are often slow ones for small business owners. Shoppers curtail their spending in order to pay off the holiday debts. As the year progresses, different industries will pick up: athletic apparel companies will begin selling more sporting goods in the spring, vacation spots start seeing more visitors, and seasonal businesses, such as landscapers, start gearing up for their peak periods.
So as the second full month of winter begins, my suggestion is to take this time as an opportunity to plan ahead for longer, brighter days.
No. 1: Run "Lean and Mean" During Down Periods
If business drops during the winter months, try to cut your staffing expenses, which are often the biggest line item on a company's balance sheet. An owner of an ice cream store that operates 7 days a week could consider closing on Mondays if revenues are slow. (Don't close on the weekend when children are home from school and could very well want to visit.) Figure out what you can scale back now; you can always ramp up during busier periods.
Many small business owners take cash advances when their cash flow is poor. Seasonal businesses that didn't manage their resources well enough during robust periods may be among them. Although they might be able to provide funds quickly, cash advances are a costly form of capital because the interest rates typically are high -- sometimes up to 30 or 40 percent. If you aren't desperate for money immediately, get a line of or a bank loan that comes with a much more attractive lending rate. I have too often seen a company get hooked on cash advances and wind up in a never-ending cycle of borrowing high interest money.
No. 2: Plan Your Warm Weather Marketing Now
If you own a restaurant that has a patio or al fresco seating on a sidewalk, start planning promotions for the return of outdoor dining. Attend food shows and keep abreast of trends in consumer tastes, such as high markup "signature" cocktails that are popular during warm weather months. Try new recipes for entrees and plan desserts that incorporate trendy fruits. Sports bars can follow the lead of places such as Foley's Pub, New York's top baseball bar, which hosts draft parties for fans that participate in Fantasy Baseball leagues that begin in April when MLB returns.
The summer will bring the national political conventions for the Democratic and Republican nominees for U.S. President. Start thinking of ways to take advantage of the media's interest in things related to the election. Another big event that businesses can tie into will be the 2016 Olympics from Rio. Owners of Brazilian restaurants, for instance, may want to up their marketing budget around the games as NBC will broadcast two weeks' worth of programming highlighting the country's culture.
No. 3: File Your Taxes Early -- Especially If You Expect a Refund
If you have time available now because business is slower, use the opportunity to prepare your tax returns. Why wait until April 15 when the weather is warm and business picks up? Start organizing your documents and meet with your CPA, accountant or other tax preparer -- especially if you expect to receive a refund. Ask your accountant to eFile for you; it's quicker and easier, and you'll get your refund sooner.
Although there is still snow on the ground in many places, spring will be here soon enough -- and along with it, warmer and brighter days ahead.