How to cope with seasonal fluctuations

Many businesses will experience seasonal fluctuations. These can occur for a number of reasons – for example, most retailers will be at their busiest over Christmas, whereas manufacturers producing specific items may see slowdowns due to the weather, e.g. selling more umbrellas in the autumn.

A seasonal fluctuation is a type of business cycle – a time period during which a business, industry or the economy as a whole expands and contracts. These cycles can take place in the short and long-term. For example, a retailer would most likely be at its busiest over lunchtime (daily cycle), on a Saturday (weekly cycle) or around payday (monthly cycle) or Christmas (yearly cycle). However, the wider economy may see fluctuations more gradually.

Managing your cashflow

One of the more common problems with seasonal fluctuations is that they lead to irregular cashflow. You will need to plan carefully to organise your finances in order to cover expenses during your quieter times. A cashflow forecast can help you to decide on when you are most likely to run into problems – it should show all your expenses for each month of the year as well as your expected monthly revenues.

There are some steps that you can take to manage your cashflow. Always try to ensure you are paid on time, and as quickly as possible – send out invoices and chase late payers. The Federation of Small Businesses now has a dedicated section on its website to name and shame late payers. You should also try to hold as little stock as you can manage – try to ensure that you cover what you need and don’t hold too much excess stock. Speak to your suppliers to try and work out the best deal, e.g. by arranging a longer payment period.

You should also try to put money aside wherever possible – open a business savings account, but ensure that you receive the best deal available and regularly review your options.

Staffing levels

You will probably have noticed that the majority of larger retailers, as well as many smaller retailers, take on extra staff around Christmas and New Year as this is their busiest period and helps them to meet demand. Throughout the year, however, many retailers employ part-time workers to come in and cover lunchtimes and weekends.

As with cashflow, you will need to plan ahead in order to ensure that you have the right number of staff. If you only need one or two staff for large parts of the year, only hire one or two permanent staff. You should examine your cashflow forecast to decide when you are likely to need more staff and then hire temporary or fixed-term contract staff accordingly.

Another option would be outsourcing – say if, for example, you were to build a mobile phone application for your business, it may make sense to hire another company to do this on your behalf. This way, you can agree a fixed fee and completion date with them before they begin the project.

Making use of quiet periods

You should always ensure that you are using quieter periods to your full advantage. Even if you’re not busy dealing with customers, you can be planning for when you are. One of the first things you could examine is your marketing plan. These tend to go out-of-date very quickly, especially as so many new mediums are constantly emerging, so take a look over it and examine what’s working and what’s not. If you don’t have a marketing plan, use your off-peak time to write one. The same goes for sales plans and overall business plans.

You could also take advantage of this time to do some stocktaking. Although we’d recommend not holding too much stock as it can be expensive, it’s always a good idea to be aware of exactly what you have in order to anticipate what you will need to have by the time you become busier.

Alternatively, use the downtime to take a holiday – fewer business owners are taking holidays, with many of them saying that they simply don’t have the time to do so.