Understanding what it takes to keep your business afloat doesn’t sound like rocket science at first glance, but not all businesses work the same way financially. Some certainly can just follow the intuitive model of figuring out how much revenue they can earn in a month, and comparing that with their costs to get an idea of their profits or losses. Seasonal businesses, however, need to take a very different approach, because sometimes revenue just stops coming in.

Whether they depend on literal climatic seasons, tax season, the Christmas season, or cricket season, seasonal businesses only survive if they plan ahead and are ready to deal with poor revenues when they come. Here are a few important steps to take to help weather-proof your seasonal business.

Find cashflow solutions

The most immediate question for any seasonal business is how to keep the lights on when business is slow. If you haven’t been in business for a very long time it might still be difficult to predict exactly when slow times should be expected, which can lead to cash flow problems. In a pinch, it can be very effective to turn to these strategies:

Invoice financing
Invoice financing or invoice factoring is a way to get outstanding invoices paid right away as opposed to later. Your financial institution purchases your invoice from your business for most of its value and then collects the payment from the client when it comes due. At Fifo Capital there is no minimum number of invoices you have to commit to selling, making it a great tool for paying your business a much-needed advance when quick cashflow solutions are needed.

Free standby finance facilities
Standby finance facilities are perfect for dealing with unexpected cash flow problems. Instead of trying to take out a loan when your business is running into difficulties and your credit may be damaged, you can pre-emptively set up a standby loan. That means your loan terms are already sorted out and ready to go, but you don’t have to pay anything or take out the loan until you need it.

Keep investors clued in

A major risk for businesses that are operating with the help of investors is losing their funding due to a loss of investor confidence when revenues slump. Losing investors during a seasonal downturn can be fatal, so it’s very important to manage their expectations well ahead of time.

The only way to do that effectively is to go out of your way to educate them about how the business operates, and how it’s designed to generate profit in the long run. While many investors take steps to understand the businesses they invest in, many don’t and may panic the first time they see a major slump in revenue in a quarterly report.

Build alternative revenue streams

Many seasonal businesses find a way to make ends meet by generating additional revenue through other services. The trick to making this work is to find something that complements your primary business. For example, landscaping companies often also work as snow-removal contractors in winter, and essentially managing their clients’ outdoor environment year-round.

In some cases this kind of alternate side-service can tide your company over entirely, while for other businesses it might be a partial solution that can be coupled with seasonal cost cutting measures.

Minimise off-season costs

Not all seasonal businesses can generate alternative revenue streams, which means they need to push through the off season. “Pushing through”, however, doesn’t mean pretending that nothing is happening. To make it through the figurative winter, you’ll need to put your business into hibernation.

Manage off-season staffing
If you don’t have regular work for your staff, you’ll be forced to lay off non-essential workers to cut costs. That isn’t just a business reality, it’s also better for your employees if they have clear-cut off-seasons during which they can pursue other work. Individuals are more flexible than businesses, and they’ll be able to support themselves better without being on call on the off chance that there will be something to do.

Price your services carefully

The core point of seasonal work is that revenue is going to be irregular, and that means you’ll need to plan ahead in every respect. Seasonal businesses have to price their goods and services competitively, but also high enough to cover costs in the long term, including off-seasons. Setting low prices can undercut competitors and pay the bills while business is booming, but it will likely leave you vulnerable later.

Running a seasonal business offers some unique challenges, but if you deal with them very effectively those same challenges can actually offer significant protection from would-be competitors. They form a natural barrier to entry, so less experienced businesses are less likely to establish themselves. This keeps the market for seasonal work relatively attractive, and certainly makes it well worth the effort to pursue a career with a seasonal business.