Most businesses come with some level of seasonality, but when slow season rolls around, there’s a difference between a natural slowdown, and your business taking a significant hit. Chris Strode founder of Invoice2go shares his top tips for surviving the slow season.
Smart business owners know there’s a number of steps they can take to mitigate unpredictability, limit the negative impact of slow period, and ultimately future-proof the health of their business.
Listed below are a few simple ways to even things out so your business can survive (and even thrive) – no matter what the season holds.
Study how your business ebbs and flows
Analyse your slow periods and when they appear throughout the year. It may be obvious if you have a truly seasonal business (Christmas tree farming, anyone?), but most small businesses have a more nuanced cycle throughout the year that may have several points of slow down, and more than one busy season.
During your busiest times, plan to put yourself in the best position possible to earn as much as you can. Your fixed costs will be there all year round, so the more you can put away during busy times, the better. This may mean hiring temporary staff to take on more work, or increasing your advertising budget to bring even more business in the door.
Understanding when slow times will hit gives you a guide for planning major expenses, when to order more inventory and when to schedule in larger projects.
Focus on building repeat business
Nurturing your client relationships and focusing on turning one-time business into repeat business is one of the best things you can do to ensure new business keeps coming in throughout the year.
Think about the most useful way you can keep them engaged after you do business with them. Would they benefit from an occasional email update about your industry, or DIY tips? Updates about new service offerings, or interesting projects you’ve taken on in the local community? Even if they don’t require your services at the time, you’ll be top of mind next time they do.
You can also take a more personalised approach to building repeat business by checking in with past customers to make sure they’re still happy with your product/service, and offering a recommendation they might benefit from.
Shorten the time it takes to get paid
Small businesses tend to be the last to get paid, especially when their customers are other businesses. This hurts cash flow and can put you in a sticky situation during slow periods. Take control of unpaid invoices by shortening your payment terms, and being proactive with follow up. Send a friendly reminder about approaching due dates, and follow up quickly once the deadline passes. You also cut down on wait time when you offer all the ways your customers expect to pay – from debit and credit card, to digital wallets like Apple Pay. When you make it too easy to pay, you’ll find you’re preventing excuses from happening before they can begin.
Build an emergency fund
Use your peak seasons to funnel some of your earnings into an emergency fund, so you don’t risk losing your business over a cash flow shortage. Ideally, it should be 3 – 6 months’ worth of expenses you can use to pay rent, utilities, etc. during slow seasons. This takes time, but you’ll be grateful when business slows and you have reserves to see you through. Once you have a surplus saved up, you can also use it to take advantage of opportunities as they come up, such as buying stock, equipment upgrades, or big sales on office supplies.
Small business owners do themselves a huge service by focusing on the ways they can smooth out cash flow all year round, but smart planning aside – having an emergency fund, should all else fail, is perhaps the best survival tip of all.