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 ahead, 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 likely faces and how best to manage them.
Inconsistent cash flow
Likely, one of the reasons that you started your SME was how appealing the income is during the busy season. And SMEs can certainly churn up 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 slim to be able to plan ahead. 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 know at what point you’re at right now and what to expect to strategize successfully. Also, make sure to look at when your expenditures were greatest to know when you will need capital on hand the most. Taking all of that precious data and planning ahead 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 make use of downtime. Just as you should review your past financial activity to anticipate your future accounting needs, try and anticipate 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 things like ordering products ahead of time, having packaging organized, and having all of your marketing in place will help your busy season to be as productive as possible by being ready to unfurl your sail the minute those profitable winds start to blow. And just as important as being ready 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 have to continue to stay on top of people’s minds and win their business. If you don’t, your competition will.
SOLUTION: Diversify, adapt, and innovate. Remember to factor in new ways of marketing as a constant 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 in order to keep your company at the cutting edge and not left stranded in the wake of 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 you need to make each sale or service smooth and efficient to make every opportunity a success. Communication is key for this to happen- clear, responsive communication with your staff, with your suppliers, and of course, with your clients and customers.
Have you considered Factoring as a solution?
Some SMEs struggle because of not using 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 continue to be crucial with your SME. So study, plan, innovate and refine your seasonal SME to stay ahead of the changes in order to remain afloat and sailing towards greater success.