Dealing with Seasonality for Small Businesses

Walking down the downtown alley of a small suburban college town can be a completely different experience depending on the time of year. During the spring and fall, shops may be bustling with customers and energy, while people may be hard to find in the summer months. As for coastal vacation cities, customer traffic would be the opposite- packed in the summer and deserted during the winter. Regardless of the type and location, most (if not all) small businesses experience seasonal fluctuations. There is no going around this fact, and business owners must be prudent in their management decisions as they face seasonality. 

Indeed, most seasoned small businesses are fully aware of these variations. Yet, too many managers and owners make a critical mistake of over-attributing business outcomes with seasonality, which may lead to missed opportunities and losses. For instance, reduced traffic and sales during the summer months for a college town store is, in the owners’ minds, because of seasonality; however, local customers may also be falling away further because the owner simply makes no effort to maintain a high level of service and product quality during these low tides. In fact, this happens quite often. Low traffic and sales during the summer inevitably leads to negative moods for owners and managers, which can spillover to less than optimal service to customers. With reduced and tight cash flow, small businesses are extra reluctant to invest in their business during the summer to ramp up business in the fall. 

Taking advantage of seasonality can actually be a huge opportunity for small businesses. By using the slow times to invest in new décor and equipment or develop new products, small businesses can reach new levels each year. It is therefore extremely important to manage a company’s finances in highly seasonal markets. With the advent of online financing companies such as LVRG, small businesses can now efficiently and reliably find optimal rates and terms to fund their strategic decisions to invest during slower times, and harvest the returns in a matter of months.