Cash Flow Management for Seasonal Businesses

Seasonal businesses face unique challenges when it comes to year-long cash flow management. But there are steps business owners can take to better account for revenue peaks and valleys, such as investing in long-term planning; fostering strong, flexible vendor relationships; diversifying their business offerings; and considering strategic pricing structures and loan options.

1. Plan in advance, and use the off-season wisely

“Seasonal marketers who think long-term and use their off-season time wisely can help tee up their business for incredible success when peak season begins again,” says Brandon Stephens, president of Christmas Décor, a national holiday lighting and decorating franchise. Stephens certainly knows a thing or two about seasonal business planning. He advises owners to use the off-season to “outline their growth plan, revise their marketing plan, assess their company’s needs, and set goals and profit targets for the next season.”

A benefit of owning a seasonal business is that you know with near certainty when you’ll experience revenue surpluses. Make sure you’re charting and monitoring your income and expenses, and use this knowledge to your advantage. Try to schedule large outlays, such as loan payments, insurance renewals, taxes and vendor bills, during your busy season.

It’s also a good idea to talk with your vendors to secure the best terms possible for your long-term cash management. Let’s say you work in agribusiness, such as crop production or farm machinery. Your vendors and partners should understand the nuances of your season and be open to negotiating terms that work for all parties. You may also want to consider updating your own invoicing processes and terms to reflect your cash flow needs.

Payroll expenditures should also shift with your business demands and revenue stream. To help accomplish this, consider strategies such as commission-based pay models, whenever possible, and strategically partnering with independent contractors rather than hiring full-time employees. These strategies make it easier to scale or reduce staff overhead.

2. Diversify your services

Consider offering other goods or services during your “off” seasons. Having a steady mix of offerings throughout the year not only helps to generate a consistent cash flow, it also helps to maintain a strong client base and attract potential new customers. For example, a farming business may be able to grow an additional crop using its existing resources. Business owners can also consider investing in an add-on franchise.

“When determining a suitable second service to offer, business owners should choose complementary services that allow them to leverage their expertise and utilize existing equipment. This leads to an added revenue source while offsetting overhead costs,” Stephens says.

3. Consider a dynamic pricing model

According to the 2013 Deloitte Annual Holiday Survey, nearly three-quarters of shoppers are influenced by discounts. This can spell opportunity for your seasonal business.

“Business owners can maximize cash flow using a pricing strategy that responds to changes in sales and traffic,” says Angelica Valentine, content marketing manager at Wiser, a leading pricing and merchandising optimization engine. “With dynamic pricing, businesses have flexible prices that fluctuate based on supply, demand, and many other factors.” Businesses can stimulate demand by lowering prices, suggests Valentine. “The off-season is a great time to clear out old inventory with sales and promotions. While discounts will likely lower margins, they will successfully improve quantity sold, revenue, and cash flow.”

4. Look into revenue-based financing

This type of funding is specifically designed to provide small business owners with cash flow flexibility. Monthly payments are adjusted based on a percentage of the borrower’s monthly revenue, so you’ll have smaller outlays during slow times and larger ones during your busy season. It’s an effective option for businesses with fluctuating revenues, and it can help you better manage your cash flow.

With careful cash flow management and planning, seasonal businesses can effectively manage cash flow and even use the predictability of their revenue fluctuations to make strategic decisions that can ultimately help their business grow.


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This information is general in nature and is not intended to be legal, tax, or financial advice. Although Regions believes this information to be accurate, it cannot ensure that it will remain up to date. Statements or opinions of individuals referenced herein are their own—not Regions'. Consult an appropriate professional concerning your specific situation and for current tax rules. Regions, the Regions logo, and the LifeGreen bike are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.