July 27, 2017
Cash flow, credit and creativity—those are three driving forces behind every successful business, but they take on even more importance when it comes to seasonal businesses. Here are some tips to help you use them to your advantage.
Know the numbers.
Seasonal businesses are tough, and their owners must be tougher—with a thorough knowledge of their business financials. Being able to manage finances accurately and effectively is crucial. Considering the inherent income fluctuations of a seasonal business, it’s imperative to have a firm handle on costs, as well as knowing when to tap into credit and when it makes sense to ramp up or reduce activity based on objective numbers. A CPA or other financial professional can help you understand the numbers part of your business so that you can plan accordingly.
Keep cash flow current.
Together with knowing the key financials of your business is knowing how to keep your cash flowing. Of course, if you don’t know what’s coming in and going out down to the penny, you need to act to remedy the situation with a good accounting system (or an accounting firm that can do it for you). In addition, you’ll need an invoicing system that is quick and efficient, so you can easily keep track of which clients are current on payments and which ones are falling behind. This information can help you to quickly identify and rectify situations that may put a squeeze on your future cash flow.
Expand your demand.
Another strategy to shore up your business during slow periods is to use a creative approach to reduce the impact of seasonality. Look at your current products and/ or services and consider ways to grow interest in them; or consider what complementary items or services you could introduce to augment your sales during non-peak periods. You can also use slower times to market to existing and prospective customers to increase interest and demand.
Control your use of credit.
Not all cash flow and seasonality influences can be controlled, and that’s why it’s essential to keep extra cash on hand to cushion any unexpected blows to your business. A credit card or line of credit is one way to bridge a cash flow gap, especially if you are just starting out and not eligible for larger bank loans. However, it’s important not to get in over your head, which is something a solid financial plan will help you avoid.
Take the long view of your seasonal business.
Although your business may operate only part of the year, it’s important to think about it as a 12-month operation. This will ensure that you not only plan for new opportunities and maximize existing ones, but that you also set aside enough cash to pay any overhead costs that exist even when your business is closed. Carefully managing your cash flow and credit, along with implementing a little cash-infusing creativity can help you beat the seasonal business blues.
Sources: Inc.com and Entrepreneur.com via Advantage Magazine July-August 2016 issue. Edited.
Is your family’s money mantra, “Easy come, easy go?” Does your family ever talk about saving money or setting financial goals? No matter where your family is on the financial literacy spectrum, it’s important to help your kids learn the value and wise management of money so they grow up to be financially responsible.
There are many details that go into your return, so it is not uncommon to overlook an item in the process of filing a return. It is also possible that after you have filed your return, your employer, contractor, or investment manager will send you a correction on the total income you earned throughout the year.
If you’re like many self-employed business owners, you may be tempted to stick to the tried-and-true tax deductions (your home office, if you have one, office supplies, mileage, meals, etc.) when doing your taxes. However, one important money-saving advantage of working with a tax professional is they can identify lesser known deductions that you may be entitled to, but are unaware of.