Shift your business to a seasonal model for pandemic uncertainty

Many business owners are facing a brand new kind of uncertainty. They don’t know when they’ll be able to open at full capacity or whether they’ll face another temporary shutdown in the near future. It could cause some year-round businesses to have to start thinking and operating with a seasonal model.

That’s a significant change. The greatest challenge for any seasonal business is the sudden fluctuation in sales and cash flow, as sales might be squeezed into a short period but staff and overheads need to be paid all year round.

There are different types of seasonality, each with its own dynamic:

• event seasonality like scheduled football games, Valentine’s Day, Christmas or summer break where you know it will be busy
• weather seasonality changing from winter to summer activities (and vice versa)
• weekly seasonality where sales on certain days are always higher than others
• unpredictable demand like a sudden crisis that cuts sales or a sudden boom that doubles your business overnight

Here are some tactics to help spread the impact of seasonality.

Flatten the demand curve
Use your sales and marketing tactics to spread demand throughout the year by promoting during either side of the peaks. If you can, encourage customers to bring their purchases forward or allow you to deliver later to even out the sales bump. This is harder with perishable products and services, but it is possible to find alternate seasonal trends to piggy-back on.

Diversify and pivot
See if you can diversify what you deliver during quiet periods, as it could provide additional opportunities to redirect resources and be more resilient to fluctuating demand across the year.

Ways to diversify include:

• launch new products or services outside your sales high
• buy non-seasonal businesses
• import or export non-seasonal products
• investigate becoming a supplier to non-seasonal businesses

Also try and smooth out the demand curve. For example:

• move parts of your business online
• open locations in regions that don’t suffer wild seasonal swings
• create different ways of charging customers like online subscriptions
• license your intellectual property to other businesses
• sub-contract and supply to larger businesses

Once you decide to pivot, obtain as much input as you can from your advisors, existing staff, industry experts and those you trust for business advice. Don’t forget to search the internet, subscribe to industry news, visit business association sites and talk to suppliers to validate your ideas.

Open up during an opportunity
If it’s possible, take short-term advantage of anything that occurs out of the ordinary even if it’s only for a few days like your team winning the Super Bowl or NBA playoffs. This includes opening for longer during the day and seven-day weeks if you need to. Also consider:

• travelling and opening pop up stores in other regions
• approaching other businesses that are suddenly busy
• asking for the event calendars of local sports, community organizations or cities to build a sales calendar
• creating your own events in partnership with other businesses

Develop contingency of supply
Identify and access surplus products or services to satisfy temporary high demand if needed, or if you’re recovering from a crisis and now need to scale back up. To help do this:

• arrange back-up suppliers in case your existing providers run short
• buy in volume before any expected surge so you don’t run out
• use inventory management software linked to sales for real time information
• have inventory buying limits so staff don’t order too much of the wrong item
• be prepared to offload any spare product or materials at the end of the season
• check that quality isn’t compromised

The supply of staff is also critical so plan to add people quickly when busy and reduce when you’re not. You could also investigate contracting out parts of your operation to other businesses if demand dissipates.

Collaborate
Form partnerships with other businesses that either have different seasonality cycles or are in totally different industries that don’t experience the same fluctuations.

Closing down in the off season
Think about what you can do to efficiently scale down for the expected drop in sales. This could mean closing down parts of the business (think ski fields in summer) and using the time to prepare for the next season or doing something else. It’s not unusual for some businesses to have two separate parts to their business that open and close with the seasons.

Remember that almost every business has some form of seasonal demand and it doesn’t have to be a bad thing. How you manage and deal with any issues that can derail your business is what counts and take care to save and protect any cash surplus during the good times to rely on when times are tight.

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