When you have a seasonal business, you already know that sometimes you have more money coming in, while at other times, cash is tight. Below are a few hot tips to help manage this seasonal flow of money.
Plan ahead and budget
Planning ahead and budgeting gives you insight into the seasonal trends of your business. It allows you to save enough in the high season to cover your expenses during the low season. Understand your fixed and variable costs, and know when you can cut back on your variable costs.
Take advantage of your off season to grow and plan
When you have a low season, you will have both less work to do and less money coming in. Instead of waiting around for business or going on holidays, take the time to build and strengthen your business. Work on your marketing plan, contact potential clients and work on new products or services.
Maintain a good credit rating
There may be times when you may need to take a loan, despite your best planning efforts. Make sure you pay your bills on time and try not to build up a large amount of debt. If you do require a loan, shop around to get a good deal. We have a network of trusted brokers that can help should you need.
Build relationships with suppliers
Building relationships with suppliers can be helpful, especially when cashflow is tight. Communicate with them regarding your ability to pay in your low seasons and negotiate different terms if required. In high seasons, ensure you pay your bills on time and be a good customer.
Keep stock levels down
Carrying excess stock ties up money you could be using elsewhere in your business. Keep records of stock levels so you can see patterns of what stock you should build up – and when you need it. Estimate demand by asking your regular customers what their needs will be. Using sales or promotions to shift stock that hasn’t sold well is also another good idea.
Improve your invoicing process
Consider charging up front, asking for a partial upfront payment or offering a discount for early payment. This will reduce the risk of sending out goods or providing services without having some money to pay for expenses.
Get help – outsource where necessary
If business planning isn’t your strong point, it is important to hire someone who excels at it. Use a good accountant to help with budgeting and planning. Meet with them regularly to keep you accountable to what you need to do. Also, find a good bookkeeping to ensure your accounts are up to date and accurate, so that you have the information to make even better business decisions.