It’s the time of year many small businesses dread: the summer lull. Following a surge in business in the lead up to the holiday season, small and medium enterprises (SMEs) can find things slow down considerably come January. As a result, they face cash flow struggles.
This is part of a broader trend of seasonal fluctuations in cash flow, operations and profitability, which SMEs must navigate and prepare for.
At Bizcap, we’re committed to helping SMEs get on with business, not just through offering short-term loans, approving them in as little as 3 hours, but also with helpful advice. Here are seven small business tips for navigating fluctuations in the business cycle.
1. Engage With Your Customers
“If you don’t appreciate your customers, someone else will.” So says entrepreneur Jason Langella, pointing to the fact that a happy customer is the most effective business strategy of all. Maintaining contact with your customers throughout the year through channels such as email marketing and social media is critical for maintaining excellent customer relations.
In order to promote year-round business and lessen dependency on seasonal spikes, consider offering loyalty programs or exclusive deals for returning customers.
2. Conduct Thorough Market Research
A lack of knowledge about one’s industry is one of the leading causes of business failure. Observing competitors’ activities throughout the year can help you to identify patterns and trends that are common to your industry and market.
For example, certain retailers are geared towards specific holidays. The costume shop chain Party City booms during Halloween and New Year’s Eve, but also manages to gain consistent income from people throwing parties throughout the year. Being aware of their own seasonal trends and conducting thorough market research can help them prepare for peaks and off-seasons.
3. Diversify Goods and Services
Consider offering a variety of products or services that cater to different seasonal demands. This can help mitigate the impact of a slowdown in one area by capitalising on opportunities in another.
Introduce special offers, discounts and limited-edition items to keep your product relevant to changing customer preferences. If done correctly, diversification provides a tremendous boost to brand image and company profitability.
4. Implement Agile Marketing Strategies
Successful businesses often have marketing strategies that can be changed to suit the seasons. They may need to adjust their advertising, promotions and social media content to fit each holiday or time of year.
Be sure to utilise targeted marketing during peak seasons to maximise visibility and capture the attention of potential customers. Furthermore, seek out regular feedback on the effectiveness of your strategies, for example through data analysis of campaigns, to inform ongoing opportunities for improvement.
5. Optimise Inventory Management.
It’s important to adjust inventory levels based on expected seasonal demand. Implementing efficient inventory management systems to avoid overstocking or understocking helps your business minimise costs and maximise customer satisfaction.
Work closely with suppliers to ensure a steady supply chain and negotiate favourable terms to account for variations in demand.
6. Develop a Robust financial Plan and Budget
Develop a robust financial plan that accounts for seasonal variations in cash flow. Anticipate and budget for increased expenses during peak seasons and plan for reduced revenue during slower periods. Explore options for financing or lines of credit to help bridge financial gaps during off-peak seasons.
Invoice-based businesses are especially vulnerable during slow periods. They cannot evenly distribute their income over the year and often face challenges when customers delay payments. Maintaining a healthy cash flow is crucial to avoid disruptions in daily operations and hindering growth prospects.
7. Have a Cash Flow Backup Plan
If you find your business runs into cash-flow constraints, it helps to have a backup plan in place. At Bizcap, we specialise in helping small and medium enterprises plug cash-flow gaps with short-term loans. By offering $5,000 to $4 million in as little as 3 hours, we help SMEs to continue operating during seasonal fluctuations.
Our dedicated team of loan specialists is available every day, excluding public holidays. Call us on 1300 922 223 or apply online for a short-term loan (it takes less than 5 minutes!) and find out how Bizcap can help you get on with business.