Managing cash flow for any business can be difficult, but owning a seasonal business often presents unique challenges. If you looking for ways to maintain a healthy cash flow within your seasonal business here are six quick tips to get you on your way.
- Assess the Situation
First, figure out if your business is a seasonal one. If you own an ice cream chop in Chicago, IL it’s pretty obvious that your business is seasonal, but if you aren’t sure, track your sales over the past few years and take notes of any consistent drops in sales and business. Is it always around a certain time of the year or do sales drop when the weather is bad? Does your business rely on tourism?
- Create a Plan and Budget
Looking at your sales and operating costs from previous years, create a cash flow forecast—can be done with accounting software—and project your sales over the next 12 months. Create a budget that creates space for where operating costs are higher than sales. During your busy season save your surplus to accommodate the slow seasons.
- Get Paid Faster
A good and efficient invoicing season goes a long way. Invoice customers and clients immediately. Make sure they are accurate and that your payment terms are clear. Make making payments as easy and quick as possible by including a link in digital invoices where they can check out immediately and accept multiple forms of payment. When payments become overdue, reach out to resolve the balance immediately.
Effective invoicing allows you to take on more clients and customers during your peak seasons and keep you cost efficient during your slow season.
- Increase Income
There are two approaches to generating more income: create new products and services or increase the value (and price) of the products and services that you already have. You can do both. During peak seasons you can tailor services to customers in order to create unique one-of-a-kind experiences and during slow seasons you can teach lessons or sell corresponding and complimentary merchandise. Increasing your business’ revenue will mean thinking of your business as a year long experience
- Cut Costs
It’s a good practice to go over your expenses quarterly, at the very least. Hidden costs and fees always find a way to creep into budgets interrupt cash flow. Delete subscriptions that you don’t need, find more efficient vendors and look for ways to save money any way you can. Consider closing temporarily during your slow season to save on operating costs.
- Look into Financing
Lastly, look into opening a business line of credit to assist with your cash flow. Similar to a credit card, a line of credit provides you with access to a certain amount of money that you can borrow from and repay over time. Lines of credit are incredibly flexible, allowing you to receive cash that is able to be used as your business requires.
Taking the time to acknowledge, budget and plan for the slow seasons in your business will help you grow a financially stable and successful business for years to come.