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How small businesses can plan for a low season

Operations

How small businesses can plan for a low season

How small businesses can plan for a low season

Updated: Feb 1, 2019

For some businesses, there’s no getting around it: Certain times of the year are slow. Whether you operate in a seasonal location or your products or services are more suited for summer than winter, you’re going to see a lull in sales.

For small businesses, even when lulls are expected, they can be lethal. According to CB Insights, running out of cash is the second-most-common reason startups fail. And there’s no coming back from that.

This is why it’s so important for businesses that see a low season on the horizon to make plans to weather it and find their way back into high season. If this sort of planning isn’t written into your official business plan, it should be — even non-seasonal businesses can expect to see dips in January.  

Remember, there is no slow season for opportunity. You just need to know where to look. Here are some ideas for how small business owners can plan for a slow season:

Expand into new products and services.

This is likely where a lot of businesses start, and it’s not a bad idea. What related or semi-related products can you create that will appeal to customers across seasons? By utilizing your existing team and infrastructure (or building out a few key areas) to fashion a new line of products, you may be able to eliminate your low-season entirely, or at least lessen its impact.

If you’re a restaurant, for example, you could offer a new food item more appropriate for the season. Or you could add services like snow plowing and general home maintenance to your lawn care service.

Ramp down your expenses.

Whatever you’re paying in overhead during the high season is likely only sustainable because of the cash you’re bringing in due to high demand. You shouldn’t pay the same for utilities, payroll, and other overhead costs during the months you can’t afford it.

Talk to your landlord or utility companies about possible compromises you can make during your slow seasons, such as paying a flat rate on utilities so you know what you’ll be paying ahead of time, rather than a more variable cost. You can also adjust your operating hours to reflect diminished need as well.  

Use the low season to fortify your high season.

When it’s high season, you might be so worried about execution and sales that you let other important or helpful tasks fall by the wayside. Shift your priorities for the low season and make them about strengthening your business so it’s even more robust and profitable during high season. Some tactics include:

  • Invest in SEO: Embark on an SEO strategy that includes writing blog posts and making your website more technically responsive so your pages rank higher on Google and your business is more visible.
  • Gather customer reviews and testimonials: Using social media, email newsletters, and in-person events, encourage customers to submit reviews of your business you can use on your website.
  • Build a social media presence: As we’ll discuss below, social media-driven marketing is a low-cost way to find and cultivate new customers. A large presence on social media can help keep you top-of-mind for customers who might not have thought of you during your slow season.
  • Buy discounted inventory: Depending on your industry, and whether such inventory will keep, you can use your low season to stock up on inventory that you can hold onto and unleash when demand picks back up.

Pivot to cheaper marketing strategies.

Blogging, social media, repackaging old content into new formats such as video or infographics, and responding to PR requests are all forms of digital marketing that can be done at little cost to you, rather than expensive tactics such as placing ads in targeted markets. These are the methods you should be using when cash flow is at its lowest.  

Acquire a flexible form of financing.

When unexpected expenses arrive — a natural disaster, a spike in inventory costs, the departure of a long-time employee that needs to be replaced immediately — you might need access to funds that you may not have in the bank account, especially during a slow season.

That’s where some sort of flexible financing comes in handy. A business credit card, line of credit, or short-term loan may be just the stop-gap you need to make it through the crisis — and some financing options (for example, a credit card or LOC) won’t be a drag on your bottom line until you actually use them.  

Cultivate a transparent relationship with your financial institutions.

If you already have — or have had — a loan with your local bank, lender, or other financial institution, it’s helpful to have an open and honest relationship with them. Don’t hide cash flow issues from your bank, as they’ll find out sooner or later. Instead, work to create an environment where you can feel comfortable discussing your issues. You may find your bank more open to flexible payments than you realized.

Enlist an adaptable workforce.

Hire a workforce that can scale with your needs during your low seasons. Find people who are comfortable working on a freelance or contract basis, or — depending on your business — hire virtual workers who are willing to work more variable hours.  

Team up with other local businesses.

The local business owners near you aren’t necessarily competitors — they can also be peers and fellow cogs in the community. Have conversations with other business owners about how you can band together during your collective slow seasons to boost each other’s sales: Create cross-promotions, host joint events, or share store or office space when possible.

Build a local following with discounts and events.

If you set up shop in an area that depends on a high tourist season to make ends meet, you’ll likely still have a local population to cater to once the crowds die down. The trick here is to ingratiate yourself to those customers to keep some level of consistent business.  Create a strong local presence by slashing prices, hosting special events like a trivia or movie night, and marketing specifically to those who understand the struggle of staying afloat in a seasonal town.

***

Surviving lulls is an annual rite of passage for seasonal businesses, and that won’t change as long as your location or products and services stay the same. Start planning for weak sales when business is good — looking ahead with these tips may be the difference between extended runs of success and yearly struggles to survive.  

Meredith Wood

Meredith Wood is the Editor-in-Chief at Fundera, an online marketplace for small business loans that matches business owners with the best funding providers for their business. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.

Tags: Operations

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