seasonal cash flow problems

Seasonal cash flow and how to manage it

Education

managing cash flow in a seasonal businessAny businesses cash flow levels can differ from season to season, which can be problematic to venture owners for obvious reasons, although it can also bring profitable time periods for all the same reasons.

Some seasons, such as the Christmas period can bring in larger amounts of money to business owners, but at the same time seasonal changes, even things as small as bad weather, can summon up some tougher times.

Solutions to seasonal cash flow problems

seasons attract more tourists, some encourage people to generally spend more and sometimes seasons can put people off of spending cash at your business, it is simply the way our world works. By finding out the best possible way to deal with this will be one of the main keys to success for any small business owner.

You should note that many business owners make the mistake of allowing their more successful seasons to lure them into a false sense of security, and therefore do not properly prepare for the lower and more challenging times of the year. Don’t fall into this trap and have a plan in place that you can refer to whenever you’re in doubt due to a seasonal change in cash flow management.

The importance of keeping a positive cash flow

Keeping a positive cash flow is very often down to the actions of the business owner themselves, so ensure that you’re staying on top of things and ending disturbances at their source, rather than letting them develop into something less controllable. Seasonal cash flow can be hard to predict at first, but once you get the hand of it, things will likely start looking up for your business venture.

Top tips on managing seasonal cash flow changes

There are a few things to look out for and a few ways of getting around some of the more challenging aspects of ever-changing seasonal cash flow at your business. Read on below for our top tips and tricks that will help to get you around this particular series of issues.

Know about your on and off seasons 

It is always helpful to start things off by actually identifying your on and off seasons, so you’ll be readily prepared for them before they arrive on your businesses doorstep. Once you become more aware of the pattern of you monthly income and how it is likely to change as the year progresses, you can create a cash flow forecast that’ll help you to budget effectively and accurately.

Over time you’ll get into the rhythm of doing this from month to month, so creating accurate forecasts will be no problem at all for you when you’ve got some experience of it under your belt. Remember to stick to your budget and avoid temptations to spend big money in areas that you simply don’t need to, as you may actually end up needing that money further down the road if things don’t get exactly to plan.

Anticipate slower months before they’ve arrived

Once you’ve analysed your business’ financial performance at different points of the year and realised when things often aren’t so great, you’ll be able to plan for them before they’ve even arrived. This will give you time to prepare for the more difficult points of the year and work out other possible methods of funding during those time periods.

Many different types of businesses struggle seasonally, such as restaurants and retailers, but on the other hand you can get more seasonal businesses. If you own a small to medium sized business venture that faces financial difficulties during certain times of the year, you may want to utilise a PDQ Cash Advance.

PDQ Funding are a leading business funding provider with an alternative finance solution known as a merchant cash advance. Your business can receive an instant cash injection of up to £200,000 repayments are simply made by using a small percentage of your customer card sales. This type of financial arrangement is unsecured, meaning it is not stacked against any assets the company may have.

Try not to over order on stock

As you approach seasons where you typically make higher levels of profit it can be rather tempting to order excessive amounts of stock. However, if you over order and don’t end up selling everything, you’ll actually lose out on money rather than feel the full advantage of it, so only order what you know you’re going to sell during your better performing time periods. Extra stock can become difficult to shift and is often a costly mistake made by many overly-eager small business owners.

Get on top of invoice payments

You can take a high level of control with your cash flow management by staying on top of your business venture’s invoicing. Be sure to set up a system you can utilise that helps to order and send out your invoices as soon as possible. Letting them stack up can be disruptive to cash flow. The sooner your invoices are sent out, the sooner you can get money pumped into your business, so look at it like that and get a move on when it comes to invoicing, in order to stay on top of things.

It’s also worth considering how easy it is for invoices to be paid, the simpler the process, the more likely a client is to complete it quickly and therefore you’ll avoid unexpected delays that could negatively impact on your cash flow. To overcome any seasonal cash flow problems one of the important aspects is to carryout weekly outstanding invoice collections, once an invoice or account is overdue, start to chase your client. By chasing weekly this will overcome any problems a shortage of cashflow may bring.

Put some money aside during profitable times

When you’re making a higher level of profit during your better seasons, be sure to put some extra cash aside, rather than simply splurging when the money is rolling in. This tip is all about thinking of the future of your enterprise, rather than what’s happening with it in the present day. Once again you’ll be better prepared to tackle those low points and more challenging periods if you’ve got some back-up cash to get you out of trouble when you need it.

The Christmas period

Seasonal cash flow can be particularly apparent over the Christmas holidays, where customers typically go out shopping more and spend more money at retailers. Both physical and online retail business owners usually benefit over Christmas time, although the trend in online shopping towards the end of the year is increasing more and more as time continues to go on.

It is worth noting that there are things you can do to take advantage of the Christmas period for the betterment of your own business venture. By taking the required precautionary measures, such as making sure you’re utilising your marketing strategies, purchasing enough stock to maximise profit, etc. you will give your cash flow the seasonal boost so many small and independent businesses rely on during this time of the year.

Year after year customers are spending more and more over the Christmas period all over the world, including right here in the UK. However, this spending increase is largely down to the continuous rise of online shopping popularity. Since 2011 we’ve clearly been seeing this trend and even back in 2015 14.1% of Christmas-based retail sales were made online. This means that eCommerce is the way to go if you’re the owner of a small or independent business at Christmas.

Christmas time, amongst other seasonal holidays, is often a time of year that’s used as a balancing act for the cash flow of small and medium sized business ventures. If things haven’t been going exactly to plan recently in terms of your company’s financial situation, you could use Christmas as a springboard and elevate yourself to a place of financial safety and certainty.

Don’t limit yourself to solely relying on Christmas for a money boost within your firm however, look to other events such as Halloween for example and see how you can perform positively there. You may find that different seasonal events effect your business in different ways, so the best option is to figure out what works well for you and then create an ongoing business plan that will help to develop your venture’s future from there.

A great solutions to seasonal cash flow problems is to start planning for the Christmas period in September, this will allow four months to the big day to work on cashflow for your business.

Focus on the 2021 events

2021 doesn’t have to be another year of your business going through turmoil, instead why don’t you choose to turn things around and pre-plan for the seasonal events that are fast approaching us. You have the likes of Valentine’s Day and the Easter Bank Holiday arriving in the next few months, so take the time to plan for them here and now. 

As the owner of a small business venture, you likely conduct some form of email marketing in order to help get the word out about your company. Seasonal events can be the perfect time to go that extra step and connect with your consumers on a more personal and relatable level than ever before. Why not try sending some Easter Holiday-themed emails out to old clients that have fell out of touch with your brand? This sort of thing could potentially get them to restart the fire with your business that they once had.

Give your email marketing a specific theme which relates to the time of year; you could do this by using a pun in the subject line, using certain types of images, or even running special offers. Therefore, further enticing your customers to interact with your company’s offerings. If you travel down this route, ensure the body text of your email follows in the same footsteps of the theme, so that it can present itself as legitimate and timely. A subject line that doesn’t match the body text will simply look out of place.

Become more socialised

Social Media accounts are another prime tool for seasonal events with marketing opportunities. It helps that audiences mostly go to social media to consume a more relaxed business environment, allowing you to get more creative and fun with your posts around this time of year. A host of company accounts will be doing the same so you won’t catch yourself being the odd one out with this marketing strategy.

Speaking of the modern marketing scene that is social media, be sure to only use relevant hashtags throughout this time of year. Don’t attempt to cram in everything to a single post, hoping to appeal to the masses, it won’t work. Spread out your social media posts and stick to your usual posting schedule for the best results. You can be more playful with your writing than usual when it comes to the actual content of your posts however.

The best marketing campaigns are always the most memorable ones.  An example of this is the hashtag Coca Cola uses: #ShareACoke. The idea behind this hashtag was to coincide with the Coke bottles that featured different names on them and it worked brilliantly. It saw a huge increase in sales for the company and is still now the ultimate example of effective social media marketing. It was short, catchy, and memorable, everything that a marketing hashtag needs to be to have any chance of truly connecting with a large audience.

The engagement with consumers you can build with a strong social media presence is unmatched in today’s society. So being active across a range of social platforms and sites is a wise choice to make for the modern day business owner.

Be prepared for those unexpected expenses

Even for those with a perfect business plan, that analyse every single aspect of their venture to the very finest of small details, unexpected expenses will undoubtedly still rock up from time to time. These surprises never seem to wait for a convenient time either, making them even more challenging than they need to be. Higher costs can crop up from an unexpectedly high tax bill, last minute repairs for equipment and tech, or countless other things; it all stacks up and can be the cause of some serious cash flow issues.

Consider giving yourself an extra line of credit through the use of a business overdraft or credit card for situations such as these. It is best to do your own research in regards to this so you can find yourself the best rates and finance options.

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