How to Survive the Seasonal Sales Cycle

Q: Any tips on how to survive a highly seasonal small business?

A: For many retailers the holidays are a time when they encounter a huge spike in business. Seasonal businesses dedicate a large part of the year preparing for those certain weeks or months when most of their revenue is generated.

Those boom times come at a price—financial survival throughout the remainder of the year when business slows to a trickle.

To help smooth the bumps it will be important to create a tight budget and stick to it throughout the year. Create a special cash reserve account for use only in leaner months. Set money aside whenever you can. Creating a cash flow forecast will help you identify patterns and see what you are up against. Include a worst-case plan to anticipate any nasty shocks.

Operating a seasonal business also requires that you plan and use your time more efficiently than other business owners. Some periods may call for only 25-hour workweeks, while others go far beyond that. To make sure everything gets done and also avoid burnout, you’ll need to schedule your time carefully.

Put slower times to good use by using them to update your Web site, catch up on maintenance, strengthen customer relationships or write marketing plans. You may want to employ only a small core of permanent workers and use temps or interns to fill in. Consider offering off-season sales or rates, and look for ways to generate revenue during quieter periods.

Owners of seasonal businesses can also take advantage of CAPlines, an umbrella SBA 7(a) loan program providing guaranteed loans designed to help small businesses meet short-term and cyclical needs for working capital. With the Seasonal Line, your business must have established a definite pattern of seasonal activity. Eligibility is based on the size and type of business, how the loan will be used, and the availability of funds from other sources. To learn more about CAPlines, click Research SBA Loan Programs under the Loans and Grants section of www.sba.gov, then go to Special Purpose Loans.

To learn more about operating seasonally, contact SCORE, America’s free and confidential source of small business mentoring and coaching. SCORE is a nonprofit association of more than 12,000 business experts nationwide and 90 in the Houston area who volunteer as mentors. SCORE Houston offers low-cost seminars and workshops. Visit www.scorehouston.org to learn more about valuable SCORE resources.