It takes a creative and discerning entrepreneur to start up and maintain a seasonal SME. The income may be up during the busy season, but when that peak period ends, the stresses of relying on cash reserves begin. Here are a few challenges seasonal SMEs commonly face and tips to help you weather their economic demands throughout the year.
Many problems aren't specific to the seasonal SME, but the nature of the business creates some unique hurdles, such as:
- Inconsistent Cash Flow. It can feel like a "feast or famine" situation when it comes to cash flow. This creates a threat of depleting your cash reserves more quickly than expected or hoped — which can be exacerbated by other economic factors and events.
- Short-Term Consumer Memory. Your customers are always targeted and bombarded with advertising from all sides. The question becomes how to remain a presence in their minds when your prime time of the year has ended.
- Missing Opportunities for Business Growth. The busy season may have seen increased revenue, but were your profits maximised, given your limited peak operating period? Business owners are often surprised at how sales could have been improved — or expenses lowered — with some planning and insight.
- Attracting and Maintaining the Optimal Staffing. Seasonal businesses tend to need lots of help during the busy season but can't keep them the rest of the time. This means having to dedicate time and resources to train brand-new people every year.
During your SME's busy season, it's probably impossible to catch your breath. Meanwhile, the rest of the year is "dead". The good news is, this downtime provides an excellent opportunity to shape the success of the next peak period. Taking advantage of it may make the difference between riding the wave and having it crash into you.
- Do a Serious Self-Assessment. If you haven't already, start with a review of previous years. Pinpoint when your busy season tends to start and end, and the highs and lows of your cash flow. If there is an inconsistent year, see if you can identify what was going on that may have affected the business. Also look at spending patterns. These insights will inform your capital planning and shed light on trends. Look at areas of improvement — customer service, wait times, feedback processes, social media presence, for example.
- Stay Relevant. Savvy marketers know that just being "out there" isn't as important as knowing your target audience well and tailoring your marketing to catch — and keep — their attention. Do your research and pay attention to trends in that group. Revisit your marketing strategies. Consider making entertaining and/or educative content so prospective customers stay tuned into your channels, for example. Where feasible, revamp products and services to make them more enticing for your evolving consumer base. Diversify to either extend your peak or create another one during the year.
- Use the Downtime Wisely. Order products ahead of time. Organise packaging. Schedule out marketing campaigns. The idea is to get as much preparation done when you are not busy so that you can jump right in and take off running when your season starts.
- Build a Flexible Workforce. Ideally, you want a small core team — made up of competent talent to invest in — to stay with the business and operate it year-round, as well as train the seasonal staff. For the latter, look for students, retirees, and similar folk: people who aren't looking for a long-term, permanent gig but who may be interested in being regular seasonal hirees.
- Consider Financing Solutions. Maintaining cash flow through the thick and thin is important for staying afloat. Look into the benefits of factoring and invoice finance. Consider leasing equipment instead of buying — not only could this lower your overall expenditures, but this will also likely let you stay up to date with the technology without having to buy new assets.
Running a seasonal SME demands adaptability and foresight to tackle challenges like inconsistent cash flow and short-term consumer memory. By leveraging the off-peak season wisely and staying relevant through tailored marketing, entrepreneurs can optimize success year-round. To maintain financial stability, consider exploring financing solutions such as factoring, invoice finance, or equipment leasing. With the right strategies and financial support, your seasonal SME can thrive and achieve long-term growth. Take the next step and explore financing options today to secure your business's future success.