How to Run A Seasonal Business

Published May 03, 2012

| NewsCore

Whether it's a cocktail bar on the beach, a haunted house for Halloween, or a market stall selling Christmas trees, as the seasons shift, new opportunities abound for savvy entrepreneurs. While cashing in on the holiday rush may seem like easy money, running a successful seasonal business is often a year-round commitment, requiring dedication and hard work. Here are four tips for starting your own seasonal business.

Maximize your peak season
Unlike most traditional enterprises, seasonal businesses generally have only a brief window in which to generate the majority of their revenue. As a result, you must ensure that you make the most of your peak season, to compensate for the drier months ahead. To this end, preparation is vital, according to Rita McGrath, associate professor at Columbia Business School.

"Make sure that you are ready to sell, sell, sell when the window opens," she says. This means preparing your inventory and payment systems in advance, as well as straightening out any legal or financing ahead of time.

Willan Johnson, CEO of pool management company VivoPools, spends the lead-up to the peak season connecting with clients to map out their needs and schedule upgrades prior to the season's start. "In addition, we recruit and train additional employees each spring to ensure we are ready for the increased demand," he says.

Capitalize during the off-season
Falling demand is no reason to rest on your laurels -- there's still plenty you can and should do during the off-season. Upgrade and maintain equipment, invest in training, and build your mailing list in your down time, says McGrath. In addition, an effective public relations campaign can help bolster your reputation and generate new customers for the coming season.

Be flexible
As your income will be based primarily around a brief peak season, rather than a steady year-round revenue stream, flexibility and careful financial planning will be crucial to year-round success. However, it's important to strike the right balance between flexibility and accessibility, explains McGrath. "You want to be able to swing into gear quickly, but borrow, rent or lease what you need rather than buy it outright," explains McGrath. "If it is sitting around unused for a portion of the year, that's just a waste of money."

Johnson offsets lower demand during the off-season by reducing VivoPool's variable costs - such as payroll and chemical expenses - as much as possible. For instance, he will place his repair technicians on a part-time rather than a full-time schedule during the off-season.

Counter-cyclicality
Depending on the industry, some entrepreneurs can turn a seasonal business into a year-round money maker. By operating in cycles throughout the year, you may be able to capitalize on the changing seasons.

"Counter-cyclicality means that you actually run two businesses that peak at different times of the year," says McGrath. "The classic, of course, is lawn-mowing and garden services that run counter to snow removal. When you can use similar assets to run both businesses, that can help you even out your cash flows and avoid the worst of the expense of having them sit around."

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http://smallbusiness.foxbusiness.com/sbc/2012/05/03/how-to-run-seasonal-business/