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Five Ways to Prepare Your Seasonal Business for Decreased Demand

Human Resources
Article
09/18/2017

Running a seasonal business can provide small business owners with flexibility and work-life balance that year-round business models often cannot. But with those benefits can come increased demands to:

  • Cultivate customer loyalty that sustains throughout the year;
  • Maintain relationships with seasonal employees from one year to the next; and
  • Project and prepare for fluctuations in sales volume, relative to overhead expenses and cash flow.

Here are five ways to help prepare your seasonal business for decreased demand.

1. Analyze monthly sales cycles. Look at data from past seasons to estimate how long your off-season will last and how it may be impacted by factors outside of your control, including weather, local events, and changing trends and regulations. In addition to understanding just how long you may need to sustain decreased sales volume, understanding the business' unique sales cycles can help you optimize the number of employees on payroll relative to demand and structure promotions based on the inventory on hand as peak season nears its end.

2. Estimate how much cash you need to sustain low demand. Some of your seasonal business expenses may decrease as you downsize inventory and operations in the off-season, but some overhead expenses, like rent for office or warehouse space, basic utility costs, and business insurance remain throughout the year. Project the total costs of these expenses during your down cycles and prepare to have the cash on hand to cover them, in light of decreased of sales volume.

3. Secure access to funds. If you don't have an account that you can tap into to cover off-season expenses, form a plan to ensure you have access to cash reserves:

  • Outsource assets. Does your business have dedicated parking, office space, or equipment that will go unused during the off season? Consider renting it to another local business to generate additional income that you can use to pay for baseline operating expenses.
  • Research funding options. Many alternative-business funding providers now specialize in helping small businesses leverage their assets (which may include equipment, accounts receivables, or daily sales) to obtain access to cash when they need it. Research the various options for which you may qualify based on your business' financial history and specific needs to ensure you're financially prepared before your sales decrease.

4. Communicate with employees. You've invested time, energy, and money into hiring and training seasonal staff. Maximize it by proactively building lasting relationships with the employees you hope to hire back every peak season.

  • Provide advance notice of staffing changes. When you analyze your own sales cycles and trends, you'll form an understanding of when peak demand will start to slow. Notify seasonal employees of your expectations for staffing changes as soon as you have a sense that you'll soon reduce the size of your team. This way, they will be more likely to appreciate having time to adequately prepare for the change it will bring to their lives.
  • Cross-train seasonal employees. When seasonal employees are trained on other tasks, such as working the sales floor, supporting inventory, or contributing to marketing or service operations, you could increase the return on your human resources investment and give seasonal employees the opportunity to remain on your payroll well after the season winds down.
  • Allow flexibility. Your seasonal business may no longer have enough hours to maintain a full staff, but your employees still have bills to pay. While many seasonal workers file for unemployment once the season ends, it’s still important to be flexible with scheduling to suit their needs. They may need the time to interview and secure another job before your peak season ends. SHRM reports that seasonal employees are increasingly in demand and most value flexibility and bonus potential when they consider seasonal employers.

5. Minimize marketing expenses. Customer loyalty and brand awareness require consistent engagement. The more you proactively work to build your customer email list and encourage customers to connect with you during your peak season, the better equipped you can be to execute low-cost marketing efforts that help your brand stay top of mind throughout the year with automated email marketing campaigns, scheduled social media activity, and more.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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