Those Long Hot Days of Summer
Changes in the amount of business your company does is often affected by seasonal changes. Sometimes these changes are subtle such as the end of the school year. Most parents plan vacations during the summer months to spend time with their families. Great if you are involved in the tourism industry or happen to have a local business in a popular tourist destination. For an Internet based or e-commerce company relying on online revenues however, this can mean a lot less people in front of their computers. A sudden and dramatic loss of traffic to your web site can cause consternation to your sales cycle. The best way to prevent any nasty bottom line surprises is of course being prepared for seasonal changes. When things are good, put some funds away for the lean times. It’s a common sense thing to do but you may be surprised at how few companies actually have the foresight to plan ahead for exactly these circumstances.
The winter holiday season is another example. Retailers often rely on this short selling season to generate a high percentage of their total yearly revenue. Not an entirely wise approach. Aspects such as disposable income levels, consumer confidence in the economy and job security all contribute to spending patterns of consumers. Relying entirely on one good selling season is indeed, a fickle and most unpredictable way to guarantee your businesses future. You would be much further ahead to plan and budget at minimal income levels for a constant burn throughout the entire year. This way if you have a “good season” it will be a bonus situation and should sales not increase as predicted or heaven forbid, slip a little you will still be able to handle the seasonal changes in stride.
Here’s a few tips to help you recognize and plan for seasonal changes. Analyze your monthly sales history for the past year. Write down any noticeable trends. Is your business affected (either positively or negatively) by major holidays? Does your data show more sales on a Monday rather than a Friday? Are the warmer months better or worse than colder ones? Some of these factors may seem insignificant by themselves but once applied to a longer time frame the sales trends may become all too apparent. Taking a step back from the day-to-day routine and looking at your long term sales cycles can provide valuable clues to your businesses strengths and weaknesses. It can also help provide indicators as to when you should be gearing up your marketing efforts. (big season coming up) or when it should be OK to coast for awhile. Most importantly, it will let you forecast the slower times well in advance, so you can prepare accordingly. Start putting a percentage of your revenue away in a ‘rainy day’ fund. Use it during the slow times to get you through until your sales cycle returns. If nothing else, it’s one heck of a stress relief technique.