Addressing Seasonal Cyclicality in a Small Business

The holiday season is coming to an end, and retailers have some cause to celebrate. Retail sales were up 1 percent on an adjusted basis through December 24, a far better result than 2008's 2.3 percent decline.

Many retailers depend on holiday sales to earn a profit for the year. Some small businesses rely on sales generated in one season, too, even those that aren't involved in retailing.

But unlike national chains, small businesses may need to generate a profit every quarter or month. Tracking cash inflows and outflows in bookkeeping software can help a business owner get a handle on her finances, but she must optimize her firm's earning potential year-round to really establish her financial footing.

Strategy 1: Diversify a Company's Offerings


Everyone is familiar with the Halloween stores that pop up in late August or early September. They appear in vacant shopping mall storefronts, luring in customers with animatronic displays and ornate costumes. And they do a booming business—for the two months they're open. As soon as November begins, Halloween shops are laid bare and become empty storefronts again.

They're a commentary on the transience of life, perhaps… or a teachable moment for business owners. Entrepreneurs, especially those who don't generate revenue year-round, should see Halloween stores as an example of how not to address cyclicality.

Business owners struggling with cyclical revenues shouldn't just shutter their operations. They must work to generate a profit even when their primary activity is out of season.

A landscaping company owner may find that, come October, her business prospects are reduced to nil. But she can optimize her earning potential year-round by raking leaves and winterizing properties in fall, clearing snow and ice in winter and prepping gardens and lawns in the spring. She may need to invest in some new equipment, but the cyclicality of her earnings will be reduced significantly.

Similarly, the owner of a Christmas shop may do 90 percent of her sales between October and December. The remainder of the year, she's left with boxes of inventory and no customers. But by changing her product offerings slightly—offering items for other holidays or diversifying into home decor, say—she is more likely to increase her earning potential.

Strategy 2: Seek Promotion Opportunities in the Offseason


Small business owners shouldn't move away from their primary revenue driver. The landscaper and Christmas shop owner ought to continue landscaping and selling Christmas items.

With that in mind, entrepreneurs should try to market their original enterprise while they are generating revenue in the offseason. The landscaper can mention to winter clients that she would be happy to work on their property in the spring or summer. Similarly, the Christmas retailer can advertise her store's holiday offerings months before the holiday merchandise is set out.

Marketing is a study in consumer psychology, and small business owners can hint at the value their enterprise adds. Rather than refer to her business as a landscaping company, the landscaper can refer to it as a "property maintenance" firm. The retailer can use red and green in her logo or marketing materials to subtly suggest that Christmas is her specialty.

Strategy 3: Seek Other Income Sources


Perhaps an entrepreneur's revenue optimization and marketing strategies are not working as planned. Or a business owner may want to grow her roster of talents and have new career experiences.

The best way to pursue personal growth and new revenue streams may be entirely new business enterprises.

Consulting is one such option, an avenue by which a small business owner can offer her expertise and make money doing so. A consulting service does not have to strictly follow an entrepreneur's primary line of work; the landscaper would not have to consult solely for landscaping companies, for example. Rather, all successful small business owners have a story to tell (and potentially sell) about their own experience.

In addition, business owners likely have talents that they don't typically use in their line of work. The landscaper may be a talented writer; she could write on a freelance basis to increase her income. The Christmas retailer could be a skilled standardized-test taker and might want to offer tutoring services.

In Conclusion


Seasonal cyclicality is something that many small business owners may face. While bookkeeping software may make financial management easy, overcoming the challenge posed by inconsistent revenue delivery is anything but.

Yet small business owners can take action to reduce cyclicality and bolster their revenue stream. Being creative, flexible, and open to new challenges can move a business into the black. By offering new services, marketing cleverly, or pursuing new personal ventures, a business owner can take charge and ensure her firm's success.
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