5 Financial Tips for a Thriving Seasonal Business

Max Anderson

 local seasonal business renting kayaks

Many Northern Michigan businesses are seasonal, simply by nature of the summer tourism season where we live and work. Companies that operate for just a few months each year can often throttle down their expenses during the off-season. However, businesses that remain open all year long often struggle with cash flow through the leaner months when business slows down. But with a little planning and discipline, it’s possible to break out of the feast-or-famine cycle.

Whether your company operates year-round or just for a few months every year, these five tips for how to run a seasonal business’s finances will ensure that your operation will stay on steady footing, whether it’s your peak season or not.

  1. Identify your fixed, year-round expenses.
    There are certain bills you must pay every month that almost never fluctuate; rent, insurance, taxes, and professional fees are a few examples. It might be possible to reduce some of these costs; for instance, consider whether you could relocate to a smaller, more affordable office space. Create a budget sheet and list your fixed expenses and what they cost you each month.
  2. Identify variable year-round expenses.
    Other bills you pay every month may fluctuate a lot, often based on seasonality; payroll, utilities, inventory, and snow removal are a few examples. While some variable expenses are almost completely out of your control, you can look closely at areas like payroll and inventory to make sure you’re getting the best bang for your buck. Add your variable expenses to your budget sheet and estimate what they cost you each month, accounting for seasonality.
  3. Collect all the data you can.
    Now that you have a solid estimate of your month-to-month expenses, it’s time to get specific. Each month, update your budget sheet with actual revenues and expenses so you can see exactly how much money is coming in and going out. At this point, you can see whether revenues fall short of expenses in the slow season, and by how much.
  4. Set budget goals for the whole year.
    Calculate what percentage of your peak-season profits you need to set aside to help cover slow-season expenses. You will feel the urge to splurge when the money is rolling in, but building your off-season cushion must be one of your top goals.
  5. Look at your slow season as an opportunity for growth.
    Capitalize on the extra time and energy you have during your slow season. Consider how you could diversify. Identify potential secondary and tertiary income streams. People do take vacations up north all year long, so try out a “slow season” deal to capture some of that revenue. Network with other entrepreneurs and explore undiscovered partnership opportunities. Clean up your website and strengthen your marketing strategy.
  6. Get the advice of trusted lender:
    Often a seasonal line of credit is a business’ best friend. It can help balance the ups and downs of cash flow throughout the year. Consider talking with a banker about a line of credit. Also, ask your banker if seasonal payments are right for you. Many seasonal businesses make payments on their loans during their business season and skip payments during the off season. This can be a good way to manage your seasonal cash flow to ensure you can meet your obligations.

Want More Advice for How to Run a Seasonal Business?

If you’re ready to learn more about how to run a profitable seasonal business all year long, Honor Bank can help. Our business banking team has tools and resources to help ensure your company’s year-round success. Just call us at 877-325-8031 or click to schedule an appointment to discuss your seasonal business banking needs.

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