How to Protect Against Seasonal Fluctuations in Your Small Business

Running a small business is hard enough without throwing seasonal fluctuations in cash flow into the mix as well. While some may believe that seasonal changes only affect businesses such as Christmas ornament retailers or swimwear shops, the reality is that every small business owner will experience a dip or sudden rise in sales at some point throughout the year.

Whether it’s going without an income for months, or experiencing a sharp influx of sales to the point where you run out of inventory, seasonal fluctuations can cause many overwhelming problems for business owners. Today, we're going to tell you the best ways that you can prepare your company for those unexpected highs and lows.

Have a Clear Plan

Do you already have a business plan in place? While this should cover topics such as your target market, product research, and more, it’s also vital that you think about what would happen in the case of fluctuations, including both an influx or reduction in sales. Study your industry well in order to predict shortfalls or opportunities and prepare for them accordingly.

Track Your Progress

If you’re not keeping on top of sales, market changes, and customer enquiries from the get-go, then fluctuations in cash flow will take you by surprise, meaning that you’ll be ill-prepared to deal with them. When it comes to making informed decisions in your business, this data is key - not gut feelings or hunches.

Make Your Business Scalable

No one wants to throw money away on resources they won’t use, so the trick is to be able to scale your resources up and down as needed. Demand and your need for resources go hand-in-hand, so don’t over-commit. For example, if you only need additional assistance for 3 months during the year, don’t commit to a year-long contract with a member of staff.

Diversification is the Key

By diversifying your products or services, you can better protect your small business from the harmful effects of seasonal fluctuations. You could diversify where you sell (geographic diversification), what you sell (product diversification) or who you sell to (customer diversification). 

While this might sound like a lot of hard work, it could be as simple as selling your winter stock during the summer months online to those living in the Northern Hemisphere.

Be Realistic

It’s important to be realistic about your expectations (rather than setting them too high), particularly during the beginning stages of your business. After all, no one wants to stretch their business, nor should they suffer from the dreaded ‘business owner burnout’. 

If, at the end of the day, you’ve sold your stock and met your budget, then this is a far better situation to be in than one where you’ve got tonnes of excess stock and are unable to pay your employee wages.

Avoid Ignorance

If you do experience seasonal fluctuations, it’s vital that you take action immediately to counteract its harmful effects. Start by seeking the advice of a business professional and then begin working on a solution. 

Can you offer a special promotion during a slow period or stock up on items which are the most popular? These are just some of the questions you will have to navigate as you work to protect your business against seasonal ebbs and flows.

Through taking on this advice, you’ll soon have a small business that isn’t just scalable, but also effectively protected against seasonal fluctuations. Onwards and upwards!

Author bio: Melanie Doncas is a content writer for Lumi, an Australian fintech specialising in unsecured business loans. She is passionate about helping SMEs, entrepreneurs, and startups to grow their business.