When you are running a seasonal business, peaks and troughs in trade are par for the course. But for the business owner, that doesn’t have to mean famine or feast.
While the focus during high season is on maximising revenue, making efficient use of ‘down time’ to review all aspects of operations – from studying sales figures and comparing energy suppliers, to training staff and improving product ranges – is the key to all year round business success.
Peak season for personalised wedding ring service provider Smooch runs from February until August. The rest of the year is dedicated to getting the business in even better shape for the following season.
Founder Stephen Slade says: “We have a team of self-employed sales advisers who visit customers in their homes, and use our off peak season to focus on things like training, and also identifying parts of the country where we have no representation.”
Slade also uses the time to study the sales figures of their product lines and do some forward planning. “By actively making wedding rings, a fashionable item, we try to also create a new demand for the next selling season,” he says.
One of the biggest challenges for seasonal businesses is efficient staffing. Getting this wrong can have a huge impact on business costs. At garden hedging specialists Best4hedging, the year is definitely one of two halves.
Director June Pearce says: “During our busy periods we hire temps and offer overtime, and quite unusually, have all of our managers working operationally on sales and dispatch. Out of season, they go back to their normal roles but with the additional benefit of having had customer-facing experience and working alongside the operational teams for several weeks.”
As well as giving the entire team a better understanding of customers, products, carriers and operational challenges, this strategy avoids the risk of overstaffing in their sales, customer service and dispatch teams.
“During the downtime we have the right resource level to keep busy and productive,” says Pearce.
Without careful planning, firms that rely on seasonal weather for sales can also be caught out.
Last winter was one of the mildest and wettest for thirty years, and for winter gritting and snow clearance providers De–ice one of the worst on record.
Director and co-founder Vicky Lopez says: “Our teams were barely deployed for winter gritting services, and we weren’t required to provide any snow clearing services. Yet we continued to push with our investment and expansion, which was only made possible as a result of our planning activity from previous years.
“We manage our finances and planning over the entire 12-month cycle. And have learned to take the rough with the smooth, and operating as a seasonal business has never held us back.”
Some seasonal firms have found ways of generating new revenue streams during their quieter periods.
Hull-based Horizon MCV specialises in converting Mercedes-Benz vehicles into bespoke, state-of-the-art campervans, transforming the old fashioned stereotyped image of campervan holidays, and creating vehicles that are more appealing to families and older people.
The company, which employs 14 people, has benefited from the UK’s growing ‘staycation’ holiday trend and an increased demand for luxury travel experiences such as ‘glamping’.
And it has taken steps to compensate for the predictable fall in revenue over the winter months by adopting a business strategy that accommodates low demand for their vehicles during periods of colder weather.
Sales director James Burt says: “During the winter months people are naturally less inclined to take holidays in the UK and there is a perception that campervan holidays are for the summer only, no matter how luxurious the vehicle might be.
“To combat this, we have adapted our vehicle design to promote their suitability for ‘everyday use’, such as going to work, doing the shopping or taking the kids to school, which is reflected in our marketing strategy.”
With fewer customers requesting test-drives during the colder months, Horizon MCV also maximises its product visibility by showing its vehicles at trade show exhibitions.
The off-peak season also provides an opportunity for the team to address their customer feedback, making the necessary alterations to their vehicles to improve their attractiveness to new customers when the warm weather returns.
For businesses that operate in a seasonal industry, one of the most important lessons to learn is efficient management of cashflow.
“Covering your annual base costs must be the number one priority during busy periods, only after that can businesses invest in improving their offer to their customers,” adds Burt.
Energy can be one of the biggest overheads for small and medium-sized businesses but there are tools available to help SME’s analyse where there are peaks and troughs in their energy use.
E.ON has recently launched a new online Energy Toolkit that gives businesses insight into their energy consumption, helping to identify energy use patterns and calculate where and how a business can cut its energy use.
Iain Walker, head of SME sales and marketing at E.ON, says: “Through being able to monitor energy use our customers can identify where they can cut wastage and save money. One of our customers - Lime Restaurant in Nottingham – recognised the running costs of their heating and air conditioning equipment through monitoring their energy usage. This helped them to identify small changes they could make and, by adjusting their settings, they saved over £1,400 in a year”.
Registering for VAT can also improve cashflow for seasonal business owners because they will always pay less than they collect in, says Andrew Subramaniam, small business partner at chartered accountants HW Fisher & Company.
“If you are already registered, consider operating under the Flat Rate Scheme, as this can be beneficial,” he says.
He also advises seasonal business owners not to overspend on stock during peak periods, and only buy what is needed. He adds: “Ask for deposits on advance orders for seasonal products or services and arrange helpful but manageable credit lines if possible.”
Content on this page is paid for and produced to a brief agreed with E.ON, sponsor of the Efficiency hub.
