Small Business Seasonal Cyclicality

Small Business Seasonal Cyclicality

Many retailers depend on holiday sales to earn a profit for the year. Some small businesses rely on sales generated primarily in one season, too, even those that aren’t involved in retailing.  But unlike national chains, small businesses typically need to generate a profit every quarter or month. They must optimize their earning potential year-round to really establish a strong financial footing.  Following are three very basic concepts.

Diversify a Company’s Offerings.  Everyone is familiar with the Halloween stores that pop up in late August or early September. They appear in vacant shopping mall storefronts, luring in customers with animatronic displays and interesting costumes.  They do a booming business—for the two months they’re open.  As soon as November begins, Halloween shops are vacated and become empty storefronts again.  Although these business owners struggle with cyclical revenues, they need not necessarily cease operations entirely.  They can work to generate a profit even when their primary activity is out of season. .    

A landscaping company owner, for example, may find that come October, his business prospects begin to wither.  He can optimize his earning potential year-round by raking leaves and winterizing properties in fall, clearing snow and ice in winter and prepping gardens and lawns in the spring. He may need to invest in some new equipment, but the cyclicality of his earnings will be reduced significantly.

Similarly, the owner of a Christmas shop may do 90 percent of her sales between October and December.  If, for example, she changes her product offerings slightly, diversifying into home décor or other holiday items, she is more likely to help normalize (evenly spread) her earning potential throughout the year.

Seek Opportunities to Promote Yourself in the Offseason.  Though, clearly, small business owners shouldn’t move away from their primary revenue drivers. The landscaper and Christmas shop owner ought to continue landscaping and selling Christmas items.  But, they should also try to market their original business offerings while they are generating revenue in the offseason. The landscaper can mention to winter clients that he would be happy to work on their property in the spring or summer. Similarly, the Christmas retailer can advertise her store’s holiday offerings months before the holiday merchandise is even put on display.

Marketing is a study in consumer psychology, and small business owners can hint at the value their enterprise adds. Rather than refer to his business as a landscaping company, the landscaper can refer to it as a “property maintenance” firm. The retailer can use red and green in her logo or marketing materials to subtly suggest that Christmas is her specialty.

Seek Other Income Sources.  Perhaps an entrepreneur’s revenue optimization and marketing strategies are not working as planned. Or a business owner may want to expand his or her roster of talents and have new career experiences.  The best way to pursue personal growth and new revenue streams may be the addition of entirely new business activities.  Consulting is one such option, an avenue by which a small business owner can offer his or her expertise and make money doing so.  In addition, business owners likely have talents that they don’t typically use in their line of work. The Christmas retailer may be a talented writer; she could write on a freelance basis to supplement her income.

Seasonal cyclicality is something that many small business owners may face. They can take action to reduce cyclicality and bolster their revenue stream. Being creative, flexible, and open to new challenges can move a business into the black. By offering new services, marketing cleverly, or pursuing new personal ventures, a business owner can take charge and ensure his or her success.





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