Keeping and handling cash flow is always a challenge for business owners and it’s one of the main reasons why small businesses fail.
It doesn’t matter if your business is successful on paper when you don’t have enough cash flow or don’t know how to handle it properly. It can be a big problem and even bigger when you have a seasonal business.
As a seasonal business owner, you need to be even more organized and disciplined to ensure that you can accommodate all the challenges and opportunities that keep appearing.
5 Tips To Handle Cash Flow For Your Seasonal Business
#1: Know Your Peak Season
When you have a seasonal business, it is important that you clearly identify your busy and slow seasons to ensure that you do a good forecast for your cash flow. Make sure that you are realistic with the numbers. You shouldn’t underestimate your off-season expenses as well as you shouldn’t overestimate your peak season revenues.
#2: Don’t Forget The Recurring Variable Expenses
While it is fairly easy to remember fixed expenses such as utilities and rent, you may have some problems determining the variable expenses. Some of these expenses include the months with three pay periods, annual insurance premiums, and even the quarterly tax payments.
#3: Use A Business Line Of Credit
No matter how good you are or are becoming in maintaining a detailed cash flow forecast, unexpected things can happen. You may encounter an unexpected expense, you may not have received a payment you were supposed to or you may need to make a big purchase. In situations like this, it is always important to have a business line of credit, especially during the slow season. Besides, a line of credit is more beneficial than simply turning to your credit card since the interest rates are lower.
#4: Keep Refining Your Forecasts
While you may have already a good history in what concerns forecasts, the truth is that they are forecasts and unexpected events can occur. So, to ensure that your cash flow is always up to date, you should consider revising it each month and add the necessary changes. With this, you may need to change your previous forecasts but this is a great way to always be on top of your business.
#5: Think Twice About Year-Round Expenses:
While there are some year-round expenses that you can’t escape from such as hiring employees or signing a lease, there are others that you should think twice before committing to them.
Besides, there are also things you can do to decrease the number of expenses that you have during your slow season. For example, you may only hire staff during your peak season or you can decide to rent your office during the slow season. The reality is that there are always ways to decrease your expenses, especially during the slow season. You just need to be creative.