Businesses that surge during certain months and slow to a trickle in the “offseason” know that managing cash flow is both essential, and tricky.
The key to smoothing out this lumpiness is to start with the end in mind, by knowing what your business’s growth goals are. Then we plan around the seasonality.
Businesses that weather seasonality best are the ones that set annual goals and use those goals to guide how they plan, price, and spend–and (potentially) develop offseason offerings.
Your peak season isn’t just about more customers—it’s about higher value. When demand is consistently high during certain months of the year, we encourage our clients to revisit pricing. Make hay while the sun shines! Even a modest pricing increase can significantly boost profits, giving us a “free pass” to build up cash reserves without taking on any additional work. Too often, businesses leave money on the table during the time of year when customers are most willing to pay a premium. We counsel our clients to price courageously in a way that reflects the value your product or service delivers.
By knowing what our ultimate growth goals for the year are, we can plan to make process improvements or upgrade systems when we know the team has more time. When we’ve seen businesses try to overhaul systems or launch major internal projects during the busy season, the result is predictable: Burnout. Frustration. Shoddy workmanship. These are real risks when we’re juggling high-demand operations with behind-the-scenes changes. Avoid this pitfall by planning for these essential changes in the “offseason”.
All of this leads to building a cash buffer: our business’s own internal line of credit to dip into during the lean months. Building this reserve can be predictable when we have mapped out the growth goals for the year and aligned the financial plan with those goals. Instead of guessing how much we need to build up, we calculate what we’ll need. That way we have liquidity to achieve our growth goals even when the sun doesn’t shine.
