Starting a Seasonal Business

By Jeff WuorioBusiness on Main

From ski lodges to costume stores to beach supply shops, running a seasonal business can come with risks and rewards. Here’s how to weather the possible storms.

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Not every small-business owner needs to be poised and ready to meet customers’ demands 24/7. Instead, that may happen only at certain times of the year — when the snow piles up or the beaches are packed with bathers.

Operating a seasonal business — be it a summer-only restaurant or a Christmas supply shop — carries with it its own special challenges and hurdles. If a seasonal business appeals to you, here are seven issues to bear in mind to help you get off the ground.

What sort of business is best?

Take into account the setting of your business. For instance, a vacation destination would lend itself to varied tourist-oriented businesses, such as restaurants and tour services. Communities without a natural tourist draw might be better served by a holiday focus, such as a Thanksgiving and Christmas catering service.

Consider, too, the level of risk. For example, a lakeside snack shop can pretty much rely on a certain number of summertime visitors. On the other hand, a snow removal service may spend the winter months twiddling its thumbs if there’s no snow to be removed.

Calculate cash flow conservatively

As far as cash flow goes, you’re likely dealing with a very lopsided formula. Your income may be relegated to three months or even less, but inventory has to be ordered in advance and other costs are bound to crop up outside your peak periods. So, budget carefully. Keep overhead low as long as possible and look to save at every opportunity. “That means things like buying used office equipment and shopping carefully for office supplies,” says Annie Logue, a lecturer in finance at University of Illinois at Chicago.

Build a year-round financial plan

If your business is running for a limited period of time, think about your financial needs when everything is shuttered. Do you have sufficient savings to last during the down months? Do you plan to work at another job to make up for an absence of business income? Although you need to focus on the specifics of your business financials, considering the year in its entirety can keep your finances on as even a keel as possible.

Market ahead of time

One seasonal business landmine is opening up for the season and simply expecting customers to appear. Don’t go on blind faith. Be sure that you get the word out with marketing and advertising campaigns that kick off well in advance.

“If you run a summer camp, make sure you’re communicating to your list of past attendees starting in January. If you provide holiday decorating help, beginning promotions after Labor Day is not too early,” says Marcia Layton Turner, author of “The Unofficial Guide to Starting a Small Business.” “Even better, stay in touch year-round to reduce the number of clients you lose from year to year.”

Make your employees want to come back

Another hurdle to operating on a seasonal basis is keeping a talented workforce, not to mention the expense of having to orient and train newcomers. Avoid the issue by making yours a business that workers want to rejoin every season. Build a productive and inclusive work environment and provide financial incentives. Additionally, keep in touch with solid employees during the offseason to remind them how much you’re looking forward to working with them again.

When the season comes, respond with quality

Seasonal businesses have a relatively tight income window, so be sure to make the most of it. If a customer calls, move quickly and be obsessive about customer satisfaction. “Homeowners gearing up for the holidays won’t take as long to choose a re-upholstery provider, because there are only a few weeks to get the job done,” says Turner. “The same goes for help planting a garden or putting down garden mulch — the decision can’t wait too long, or the season will pass by.”

Save for retirement

Saving for your future may not be strictly a business matter, but it’s no less important. Year-round business owners have the luxury not only of a steady income flow, but also the availability of cash for retirement savings withdrawals. Even a modest withdrawal for the retirement kitty may throw a seasonal business’s books off kilter during lengthy downtimes.

To keep your retirement savings on track, Logue recommends funding retirement savings when your business is up and running. Not only will that have the smallest impact on your cash needs, but you’ll likely have more funds available to set aside for retirement — never a bad strategy.

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