On the first day of spring each year, lines form and children gather with parents outside their local Rita’s Water Ice. It is a rite of passage that typically marks the change from cold winter months to the hope-filled days of spring. Started in the summer of 1984 by Bob Tumolo, a former Philadelphia firefighter, Rita’s has grown from selling Italian water ice at one storefront to over 500 locations. Rita’s is also unique because it started as a seasonal business operating in the warmer months of the year—when a customer’s craving for water ice was at a peak.
Running a successful seasonal business takes planning and discipline. For Rita’s, it was better to close for part of the year rather than stay open and incur unnecessary overhead. If your business is seasonal, these six tips can help you successfully transition from one season to next.
1. Seasonal Business or Open All Year?
Business owners should examine their potential sales volume for the year and see how it compares to the costs of running the business. In this example with Rita’s, it makes sense to close for the winter season when the demand for water ice is at its lowest. That way, you won’t incur the expense of staffing a location. If you see this as a strategy for your business, you must plan ahead to ensure that you have the cash reserves to cover minimum expenses.
2. Cash (Flow) is King
One of the most important metrics business owners need to follow is cash flow. This factor will help determine if a seasonal business should stay open in the off-season or close down and wait for customer demand to increase while allowing cash flow to remain positive. Cash flow is the amount of money being transferred in and out of the business. In order to survive, business owners need the money coming in to be greater than the money going out. Think of cash flow as the gas you need to drive your car—to power your business.
3. Keep a Full Pipeline
If your business is seasonal and you choose to remain open year-round, you must find ways to fill your pipeline with qualified leads when the demand for your product or service is not high. Many retail locations run promotions in the first several months of the year to encourage customers to shop after the holiday season and to entice buyers out of their homes in the wintertime.
4. Access to Staffing Resources and Inventory
If your business ramps up in a particular time of the year, you will want to ensure that you have proper staffing and inventory to meet the demand. Hiring seasonal employees to help customers, work the registers, and keep the shelves full are all part of a successful seasonal team. If you run out of stock, or customers can’t get the assistance they need, they will go elsewhere.
5. Cash Reserves or Access to Credit
As squirrels gather acorns to build their winter stash, a seasonal business owner must do the same with cash. It’s imperative to know the level of money your business will need to survive during the off-season. Business owners should also seek access to credit lines as a hedge against unexpected or increased variable expenses during non-revenue generating months.
6. Connect with Your Customers
During the busy season, owners of seasonal businesses focus on sales, inventory, and having enough employees to run the company. An additional area of importance is gathering information on your customers to stay connected with them when your business is not open. Encourage customers to follow you and your business on different social media platforms such as Facebook, Instagram, Pinterest, or Twitter. Over time, these customers will become your strongest advocates and best marketers for your company. You may also want to add their email addresses and favorite products or services from your business to your database. In the month or two before your seasonal business is ready to re-open, send them an email or connect with them on social media to let them know you are stocking up on their favorite items as well as adding new products they might enjoy.
Seasonal businesses can be feast or famine. The smart, savvy business owners will plan their entire year in advance to make the most of opportunities during peak seasons as well as the slower months.
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