9 Techniques for Managing Seasonal Sales Fluctuations

9 Techniques for Managing Seasonal Sales Fluctuations
Jackie Lam
on September 8, 2017
Read in 4 min

If you’re a small business owner whose cash flow is affected by seasonal sales — we’re talking seasonal companies like Halloween or Christmas retailers, tax preparation services, and landscaping companies — your business may experience peaks and valleys in monthly revenue.

In turn, you could have difficulties covering your payroll and expenses.

To protect your business from lulls in revenue and make the most of the peak periods, here are some top ways you can prepare for fluctuations in cash flow caused by changes in seasonal sales demands.

9 Cash Flow Strategies for Dealing with Seasonal Demand

Project your cash flow a year ahead of time.

Putting out year-long projections before and after your busy season is important to understanding what your goals are, and what cash you actually have, says Jeff White, analyst and staff writer at FitSmallBusiness.com.

“This is a step many small businesses don’t take, but it’ll allow you to fully account for any shortcomings that you may have had, which were unexpected before the season began,” says White.

“When the season ends and the money is counted, you then need to go back and re-evaluate your projections again based on how much money you actually have.”

Budget based on the slower months.

Damon Millotte, General Manager & VP of Tailor Made Lawns, recommends not getting too ahead of yourself during the months you’re bringing in the most of their annual sales.

“Don’t pay off one huge expense or spend extra money you have in the bank simply because you have the cash right now,” says Milliotte.

Instead, know your upcoming expenses and budget accordingly.

So If you know that sales historically drop off during a specific period, save money in your busy season to help make up for the lack of sales in your slower season.

Overestimate your monthly costs.

Overestimate your burn rate and monthly costs, suggests Earl Choate, CEO of Concrete Camouflage.

That way you can be prepared for the worst possible scenario.

Choate recommends overestimating your monthly expenses by adding 10% to 15% onto your costs from the same period in the previous year.

“Then you’ll have the unforeseen covered, and will always be doing better than expected,” says Choate.

Save for operating expenses during the peak season.

The best rule is to sock away money during the busy season for the number of months you expect to be off-season, recommends Choate.

As a home renovation company with busy season during the summer months, Choate sets aside a portion of his small business’ profits.

For instance, if there are generally three months that are generally slower, aim to sock away three months worth of expenses during the busier season.

Negotiate with vendors.

Another thing you can do to help manage a tight cash flow from seasonal sales is to increase the terms with your vendors during the off season so you have longer to settle your payables, suggests Passov, President of GreekU.  

Build trust and open the gates of communication with your vendors so they may be more agreeable to negotiating the terms during your small business’s slower season.

“Our relationships with our vendors is just as — or even more — important than our relationships with our customers,”  says Passov, whose business is affected by retail seasonality.

“We simply talk to our vendors and tell them when cash flow is getting tight, but they usually know it is coming every year around the same time. They always work with us because they know we are good for the money.”

Offer a prepaid option.

You can offer a discount for customers who would like to pre-pay for the entire upcoming year, suggests Millotte.

As Tailor Made makes the majority of its yearly sales during the spring and struggles financially during the winter, netting that extra money from end-of-year sales from pre-paid services (the company rakes in on average $50,000 to $60,000), helps it stay on top of bills and payroll come January.

“This is something that would be really helpful for companies in the home services field — or companies that require yearly contracts for their customers,” says Millotte.

Hire help during peak season.

To keep your overhead low during the slower periods, hire seasonal help during the busier periods, suggests Bob Ellis, owner of the e-commerce company Bavarian Clocks.

As Bavarian Clocks makes 80 percent of its sales during the holiday season, Ellis hires extra staff right during the holidays to keep up with the spike in sales and customer demand.

“This helps us manage our cash flow because we’re able to cut staff during the slow season and lower our expenses accordingly,” says Ellis.

Put a hold on monthly subscription services.

Passov suggests putting a seasonal hold on monthly services that you may not need during the slower seasons.

For instance, online subscriptions to SAAS products, marketing services, and so forth.

You’ll want to inquire about whether there’s a minimum length of time you need to put a seasonal hold on, and if there’s any penalty if you want to start up your services early.

That way you won’t be in a bind if business ramps up unexpectedly. 

Look into financing options.

To help you keep your small business afloat during the slower season, you may want to consider taking out a line of credit or loan.

Because small businesses with seasonal sales may not have the cash on hand until their busy season begins, getting financing for your business might be a good move, says White.

“If you time it right, and use the right financial product, then it can be affordable for small businesses to do,” says White.

To help with seasonal sale fluctuations, some options for financing include:

Cash Flow Loans

A cash flow loan is a type of financing that is backed by your anticipated cash flow.

So your repayment schedule are based on your projected cash flows.

Working Capital Loans

If you’re looking to access cash to tide over your company for a short period of time, a working capital loan could allow you to quickly boost your small business’s capital so you can cover operating expenses.

Inventory Financing

If you need to purchase inventory to get you through the peak season, inventory financing could help bolster your equipment and inventory when you need it most.

You can also use your inventory as collateral.

LendGenius offers a simple online form that can help you start the process of connecting with a potential lender – and it’s available 24/7 so you can have peace of mind all year long.

See Business Lenders

Jackie Lam Finance Journalist

Jackie Lam is a personal finance writer and and blogs at Cheapsters, which helps freelancers and artists get creative with their money.

Her work has appeared in Investopedia, Business Insider, Huffington Post, and Acorns’ Grow Magazine.

When not writing about money she enjoys roller derby, volunteering, and writing fiction.

Recommended for Business Loans
Lendio
Lending Express

Important Disclosures. Please Read Carefully.

Persons facing serious financial difficulties should consider other alternatives or should seek out professional financial advice. This website is not an offer to lend. Lendgenius.com is not a lender or lending partner and does not make loan or credit decisions. Lendgenius.com connects interested persons with a lender or lending partner from its network of approved lenders and lending partners. Lendgenius.com does not control and is not responsible for the actions or inactions of any lender or lending partner, is not an agent, representative or broker of any lender or lending partner, and does not endorse any lender or lending partner. Lendgenius.com receives compensation from its lenders and lending partners, often based on a ping-tree model similar to Google AdWords where the highest available bidder is connected to the consumer. Regardless, Lendgenius.com’s service is always free to you. This service is not available in all states. If you request to connect with a lender or lending partner in a particular state where such loans are prohibited, or in a location where Lendgenius.com does not have an available lender or lending partner, you will not be connected to a lender or lending partner. You are urged to read and understand the terms of any loan offered by any lender or lending partner, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you. By submitting your information via this website, you are authorizing Lendgenius.com and/or lenders and lending partners in its network or other intermediaries to do a credit check, which may include verifying your social security number, driver license number or other identification, and a review of your creditworthiness. Credit checks are usually performed by one of the major credit bureaus such as Experian, Equifax and Trans Union, but also may include alternative credit bureaus such as Teletrack, DP Bureau or others. You also authorize Lendgenius.com to share your information and credit history with its network of approved lenders and lending partners. For qualified consumers, our lenders offer loans with an Annual Percentage Rate (APR) of 35.99% and below. For qualified consumers, the maximum APR (including the interest rates plus fees and other costs) is 35.99%. All loans are subject to the lender’s approval based on its own unique underwriting criteria. Example: Loan Amount: $4,300.00, Annual Percentage Rate: 35.99%. Number of Monthly Payments: 30. Monthly Payment Amount: $219.36. Total Amount Payable: $6,581.78 Loans include a minimum repayment plan of 12 months and a maximum repayment plan of 30 months. In some cases, you may be given the option of obtaining a loan from a tribal lender. Tribal lenders are subject to tribal and certain federal laws while being immune from state law including usury caps. If you are connected to a tribal lender, please understand that the tribal lender’s rates and fees may be higher than state-licensed lenders. Additionally, tribal lenders may require you to agree to resolve any disputes in a tribal jurisdiction. You are urged to read and understand the terms of any loan offered by any lender, whether tribal or state-licensed, and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Lender’s or Lending Partner’s Disclosure of Terms.

The lenders and lending partners you are connected to will provide documents that contain all fees and rate information pertaining to the loan being offered, including any potential fees for late-payments and the rules under which you may be allowed (if permitted by applicable law) to refinance, renew or rollover your loan. Loan fees and interest rates are determined solely by the lender or lending partner based on the lender’s or lending partner’s internal policies, underwriting criteria and applicable law. Lendgenius.com has no knowledge of or control over the loan terms offered by a lender and lending partner. You are urged to read and understand the terms of any loan offered by any lenders and lending partners and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Late Payments Hurt Your Credit Score

Please be aware that missing a payment or making a late payment can negatively impact your credit score. To protect yourself and your credit history, make sure you only accept loan terms that you can afford to repay. If you cannot make a payment on time, you should contact your lenders and lending partners immediately and discuss how to handle late payments.