Cash flow is one of the main challenge that small and medium enterprises (SMEs) face and is likely to be a greater challenge for those that experience seasonal fluctuations like construction crews in cooler climates.
The fluctuations are something that every entrepreneur dreads: the hours, days or even months of a silent telephone, empty inbox, or under-utilized resources. But the truth is that they are an unfortunate, yet often unavoidable, reality for many industries. And while you may not be able to control the seasonality itself, you can control how you prepare for and handle the quieter season in order to minimize the uncertainty that it is usually associated with.
Below are nine tips to help new business owners in coming to grips with them:
1. Familiarize yourself with your business’ cycle: The better you know your industry’s seasonal curves, the better you can plan for it
2. Build a buffer: Set aside some of your gains during the busy season to tide over off-season.
3. Put the slow season to use: A quiet period in a business is good for maintenance, retooling and clearing out.
4. Cut expenses: Clarify where you are able to cut unnecessary expenses.
5. Don't stop marketing: Investigate new and cost-effective marketing methods.
6. Consider staffing carefully: Reduce shifts rather than letting go some of your staff.
7. Negotiate suitable finance:It is hard to maintain the installments on a straight bank loan in the off season, but it is possible to negotiate repayment terms to accommodate your business’s seasonality.
8. Consider a side-line project: The side-line’s peak should coincide with the trough of the main business, or at least you should be able to turn off the sideline when the main business hits the peak season.
9. Stay positive: Avoid showing signs of panic and actively cultivate a positive mindset.