As a natural part of business, it is not so much seasonality itself that is the problem, says Arnold February, area manager at Business Partners Limited, but the uncertainty that goes with it.
He offers nine tips for entrepreneurs to come to grips with the seasonality of their business:
1. Keep a positive mindset
The doldrums of the lean season can have a profound impact on the mood of the entrepreneur. It is very important to guard against negativity, because in an owner-managed business the entrepreneur sets the tone for the rest of the business. If the business owner becomes despondent, the whole staff will lose motivation. Don’t panic, remain calm, and actively cultivate a positive mindset.
2. Get to know the cycle
It may be difficult for a growing business to tease out the real fluctuations of the industry from the growth and non-seasonal ups and downs of the particular business, but it is crucial to identify the patterns. A certain amount of analysis of the company’s figures, compared with industry norms, will be necessary. The better you know your industry’s seasonal curves, the better you can plan for it.
3. Put the slow season to use
It never feels good to see business slowing down, but a quiet period in a business is great for maintenance, retooling and clearing out, not only of physical equipment and infrastructure, but also for operational systems, clearing bottlenecks, identifying inefficiencies, training and reflection. Rather than crawl into your shell, get out and get ready for the next upturn.
4. Cut expenses
One of the results of the introspection that you can do over the slow season is clarity on where you are able to cut unnecessary expenses. It might be necessary to reduce your stock, or to negotiate a more efficient stock delivery system with your suppliers.
5. Don’t stop marketing
The down season is no time for embarking on a marketing spree, but don’t stop altogether either. By focusing your marketing efforts on the uniqueness of your product or service, the impact of your efforts can improve even as the resources spent on it decrease. Investigate new and leaner marketing methods, such as improving your social media presence or catching the attention of influential bloggers.
6. Build a buffer
It may seem obvious to state that you should set aside some of your gains of the busy season to tide the business over the off season, but It is easy to spend too much in the middle of the peak when your focus is trapped in the here and now. Cultivate the discipline of focusing on the whole cycle, and build a buffer in time for the slow season.
7. Consider a sideline
The conventional wisdom is that an entrepreneur should focus on one business only in order to avoid being stretched too thin, but there are many examples of business owners who have successfully started a secondary income stream to counteract the off season. Ideally, the sideline’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. A restaurateur could, for example, tender for short-term catering contracts over its off season, and go back to focusing on the restaurant during the busy season.
The ideal would also use the same equipment and staff, and even the same client base, as the main business.
8. Consider your staffing carefully
One of the most difficult aspects of seasonality in business is staffing. Not many seasonal businesses can keep a full staff complement throughout the year. On the other hand, having to let people go over the quiet season means that they will probably find other, more permanent employment by the time you are ready to contract them again for the new season. This means constantly having to spend time and money to train up new staff members, which also makes team building difficult.
One of the ways of minimising such fluctuation is to reduce everyone’s shifts rather than letting some stay and some go. Employing staff members in an off-season sideline is another solution.
When short-term contracts or a reduction of shifts are unavoidable, the key is clear and open communication with your staff members. Avoid disputes and bad feelings by drawing up proper contracts, and making sure that everyone understands the nature of the business and the path to becoming a permanent staff member.
9. Negotiate suitable finance
It is hard to maintain the instalments on a straight bank loan in the off season, but it is possible to negotiate a repayment scheme to suit your seasonality. One option is to link repayments to turnover, or to agree that in certain months only the interest of the loan will be serviced.