How your seasonal SME can weather challenges throughout the year

An age-old proverb to anticipate what the weather will bring goes like this: “Red sky at night, sailor’s delight; Red sky at morning, sailor take warning.”

To plan, sailors need to know what weather awaits them: When will the sea be smooth-sailing? Or does a shipwrecking storm lie ahead?

Anticipating the future for your seasonal SME

You need to ask the same questions about what lies ahead for your seasonal SME to stay afloat successfully. What opportunities and what challenges will come your way, and how can you plan accordingly?

Here are some common problems your SME is likely to face and how to best manage them.

Inconsistent cash flow

Likely, one of the reasons you started your SME was the appealing income during the busy season. And SMEs can certainly generate a healthy income- according to the Federation of Small Businesses, in 2018, the combined annual turnover of SMEs was £2.0 trillion, 52% of all private sector turnover. But that’s not the way the wind always blows, especially for seasonal SMEs; a delightful summer breeze of productivity will eventually give way to a harsh, parching wind that can dry up your SME’s cash reserves quicker than you realize.

SOLUTION: Know what to expect by analyzing the past and plan accordingly for the entire year. It’s crucial to anticipate which quarters will be busy and which ones will be slow, to plan accordingly. Study your previous years: pinpoint during what part of the year you had a healthy cash flow, when did that stream begin to slow to a trickle, and how long before it picked up again. These insights will help you understand your current position and what to expect, enabling you to strategize successfully. Also, be sure to note when your expenditures were greatest to determine when you will need capital on hand the most. Taking all of that precious data and planning for the coming year will keep your SME sailing smoothly.

Time management

For part of the year, you’re so busy that you can’t even glance out the window to observe the weather. However, the slow season might present the opposite problem: too much time, where it seems that all there is to do is stare out the window and wait for change.

SOLUTION: Forecast your seasons and utilize downtime effectively. Just as you should review your past financial activity to anticipate your future accounting needs, try to predict when your busy season will be so that you can be ready to go full-steam ahead right when things get busy again. Utilizing slow periods for tasks like ordering products ahead of time, organizing packaging, and having all your marketing materials in place will help your busy season be as productive as possible by being ready to unfurl your sails the minute those profitable winds start to blow. And just as important as being prepared to go is knowing when to furl the sail and coast in order not to waste time, effort, and resources.

Changing markets

Cash flow and time aren’t the only things that can change without you realizing it. You also need to continue staying top of mind and winning their business. If you don’t, your competition will.

SOLUTION: Diversify, adapt, and innovate. Remember to incorporate new marketing strategies as a regular part of your business. Continue to reach new or larger markets using the technology available to your business. And don’t forget to develop your products and systems further to keep your company at the cutting edge and not left behind by your competition.

Missed opportunities

Even though your busy season brought in revenue, that doesn’t mean every sale or job was automatically a success. There could have been problems with an order, communication issues, or other hiccups along the way.

SOLUTION: Refine your processes to maximize revenue for your busy season. From the initial interaction with the customer to the product being a part of their life, ensure that your SME is equipped with the resources needed to make each sale or service smooth and efficient, thereby making every opportunity a success. Communication is key for this to happen – clear, responsive communication with your staff, suppliers, and, of course, with your clients and customers.

Have you considered Factoring as a solution?

Some SMEs struggle because they do not use factoring as an innovative source of capital. Factris is trying to change that by supplying SMEs with the short-term finances needed to get through the slow season while eliminating the complications and headaches of applying for a loan. Read more about it to give your seasonal SME the boost it needs to have the most successful year possible.

Keeping ahead of the storm while maximizing productivity during fair weather will remain crucial for your SME. So, study, plan, innovate, and refine your seasonal SME to stay ahead of the changes and remain afloat, sailing towards greater success.