As we move into the silly season and plan our next holidays, many business owners are under increasing pressure to plan and prepare for the swath of people that rush to their businesses over the warmer months. To assist with this we will look at 5 strategies to be more profitable.
With the rise of discretional spending across the economy, more people are travelling domestically than ever before and have a record level of savings built up from the pandemic, and as such, this year will no doubt be another busy year for Australian small businesses working in the hospitality, tourism and entertainment sectors as holidaymakers rush to cafes, drink at their local watering holes and try to entertain their kids.
Although this time can be extremely busy, the cash made during this period will typically fund the business year-round and is used to hire employees, maintain inventory and services, amp up marketing efforts and ensure there is enough cash in the bank to get them to the end and prepare for the following year. As a result, many seasonal businesses will fail to take advantage of the opportunity, being temporarily cash rich, but failing to grow due to a lack of consistent cash flow.
But what if it didn’t have to be this way?
Taking advantage of the opportunity on offer takes considered planning, preparation and awareness of the options available to each business. Here are a few things businesses can do to make the most of the silly season and ensure they’re growing their businesses to meet demand during peak periods.
Five strategies to be more profitable:
Understand and manage cashflow
As a business owner, you always need to understand and manage your cash flow and expenses, but this is especially important for seasonal businesses. Once you understand your offseason costs and fluctuations, look for ways to minimise or cut business expenses by restructuring working capital, streamlining accounts and financing the purchase of equipment that will be profitable to your business through loans. Every dollar saved in quieter periods can be used to invest in new equipment and staff that can help make the most of the opportunity in busier periods.
Ensure you have the right cashflow solution for your business to meet growing demand, purchase stock / inventory and hire new employees. As a starting point, look into invoice financing, working capital loans, trade and asset finance.
Use the quiet time to plan for the busy season
Using quieter periods to strategise for the year ahead is a key exercise that most business owners and management should partake in. You can start by evaluating the previous peak season data and surveying staff, seeing what improvements could be made to streamline service and product delivery such as planning for new upgrades, maintenance and new processes to improve efficiency.
Diversify income streams
When diversifying your income stream, you want to choose a venture that you can utilise using the same people and equipment you have for your core business, reducing overhead costs and making it easy to leverage your current customer base to market to. This will save you time and money when starting, which is important for cashflow. Additionally, look for ideas that offset off-seasons and build upon our current offering to better serve your customers to build a consistent and more reliable revenue stream. This will create new income sources to fuel the lulls throughout the off-season.
Plan staffing and employee training in advance for your busier periods
Business owners already have a plethora of tasks to do and sometimes delegating can be the hardest task of them all. Training staff is a crucial process to taking the stress off owners during busy periods and planning out these activities will make your business more autonomous during busy periods. This might include calculating the ideal number of customers to retain, adjusting the training process to meet new processes, ordering new equipment or investing in automation of tasks to reduce headcount which can quickly pay itself off within a matter of years. If taking this approach, start a week earlier as a trial run so you can smooth out new processes and maximise efficiencies.
Customer Relations
In slower times it is a great opportunity to maintain contact with your customers. Strengthening relationships with repeat customers can help ensure they return to your business using loyalty offerings, marketing activities to lure them in the off-season and targeting them during shoulder season or in the lead up to peak periods. It is also the perfect time to focus on prospective customers in preparation for your peak season.
So, if you’re a small business owner worried about the upcoming rush, use some of the tips above to plan out the next couple of months. It could be a profitable exercise!
Written by Rael Ross, Co-Founder and Co-CEO of Butn