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Surviving Seasonal Sales Slumps

October 1, 2001
URL: http://www.entrepreneur.com/article/44766

Chokecherries. Wild plums. Currants. Sandcherries. These are the fruits that bloom wildly on Snake Falls Ranch in rural Nebraska. Every summer, these are also the fruits for which Annie and David Kime venture out into the canyons surrounding the Snake River to harvest. And one year later, these are the fruits that Annie will transform into 15,000 jars of jams and jelly in the commercial kitchen she's built in her home 35 miles from the nearest town of 2,500 people.

Aside from the difficulties inherent in such a rural enterprise, Annie also has to deal with the most fickle of business partners: Mother Nature. If a spring frost comes late, Annie has no crop to harvest. Even when the seasons do show up on time, Annie must still plan her business around the seasons. The year begins slowly with catch-up work, business planning and vacation time. Come spring, Annie begins to cook the wild fruit into juice for freezing and start making jams and jellies. Summer and autumn are heavy production times, with approximately three weeks of harvesting, then the holidays bring in most of the sales.

Running a seasonal homebased business provides unique challenges. You have to stretch your funds to last a year when you may only be bringing in cash for three or six months. You must learn to prepare for the busy seasons and figure out how best to use your slow season to your business's advantage. And finally, you have to mentally prepare yourself for the rough times. "I know this may sound like a very simple piece of advice, but when times are difficult, I always know it won't remain that way," says Annie, who's seen her share of seasons since starting Annie's Jellies, Etc. LLC in 1996. "It will either get better or worse, and it's up to me to see that it gets better."

Money Survival Strategies
People have an all-too-common inclination to spend, spend, spend when the coffers are full. Rule No. 1 of seasonal businesses: Don't do that.

 
FAST FACTS
Are you saving enough cash to get you through the dry times? Compare what you save of your disposable personal income to the national average:
1999: 2.4 percent
2000: 1 percent
February 2001: 1.1 percent
March 2001: 1.3 percent
April 2001: 1.3 percent
May 2001: 1.1 percent
June 2001: 1 percent
July 2001: 2.5 percent
Source:Bureau of Economic Analysis
 

"Be extremely disciplined," says Mike Marchev, author of Become the Exception and a homebased professional speaker who focuses on sales, customer service and motivation. "My income is flat; it doesn't go up or down. We've learned to live within our means so when things get tough, it doesn't affect us. [With] many people, when they make a lot of money, they spend a lot of money. All of a sudden, the bottom falls out and they're in trouble."

Lorre McKeone, the owner of North Platte, Nebraska-based corporate training and consulting firm The Executive Extra didn't at first recognize the seasonal fluctuations in her business, which caused a cash crunch every year and led her to find part-time jobs a few slow summers.

"In the 'good times,' I wasn't putting aside any money," says McKeone, whose slumps are caused by summer vacations and busy holiday periods. "Then, after a slow time, it would take me a few months to pay my bills and restock depleted materials, so the cash crunch extended into the times I was making money again. I now realize that nearly every business has regular seasonal fluctuations, which you can determine through industry research or discussions with others already in the business. Had I done this initially, I may have been able to make better spending decisions."

McKeone learned to survive her early slow periods by deferring spending, taking less for her personal salary, buying used furniture and equipment, bartering her services and not using a credit card. Now, she saves regularly, encourages clients to schedule during her off season since she's often overbooked in her busy season, and has a year-round contract as a meeting facilitator with the Union Pacific Railroad.

Manage Your Time Wisely

In addition to a carefully balanced bankbook, a seasonal business will also require some master time-juggling. With part of the year appropriate for 25-hour workweeks and another part calling for double or triple that, seasonal businesses prosper only under the most organized of planners.

"Because it gets so busy in the summertime, our administrative and marketing [tasks] go by the wayside so we can concentrate on actually serving our customers. [In the slow winter months,] we do a lot of catch-up work," says Tonya Poole, who runs her real estate documentation and communication business, ink.spinners, out of her home in Reno, Nevada. When the real estate market is slow in the winter, Poole takes in non-real-estate assignments and offers incentives to current clients like special discounts or increased services. During her heavy season, she hires college interns to help her and her part-time assistant, a homebased independent contractor.

In her early years of business, McKeone marketed heavily to try to drum up business during her slow season. "After about four years, I decided it just wasn't worth the time, effort and expense to try to schedule something when people are not predisposed to take the training," says McKeone, who started her business 15 years ago. "Once I accepted that this is a seasonal business and took steps to better prepare for the slow times financially, I was able to be more relaxed about the one off-season and spent much of it doing things with my family. I also use the time for my own personal development--taking classes, reading, preparing new materials and rejuvenating myself physically and mentally so I'm better able to face the busy times around the corner."

During her busy times, she takes pains to not overbook herself. "Stress and burnout are a distinct danger when [I'm] overbooked. What I'm doing now is taking a hard look at all the different things I can do and then trying to focus on what I do best, enjoy the most and find to be the most profitable," says McKeone. "I'm gradually working out of those things that take too much time or add little to the bottom line."

Mike Marchev has no trouble keeping himself busy during his slow times. Here are some of the activities he advocates:

Stay Afloat Through Diversification

Another choice for seasonal business owners is to do as Tonya Poole has: branch out in the slow season. "We occasionally get people not in the real estate market who are looking for copywriters, editors or typesetters," says Poole, who also founded The Sierra Soho Association, a nonprofit organization for Nevada and California SOHOs. "During the summer months, it's very difficult for us to take those jobs, so we normally refer them out. But during the winter months, we take those in-house."

Gillian Christie's theory of seasonal slumps is that there are none--only "a lack of creativity." She helps her marketing and public relations firm clients figure out how they can overcome obstacles, like seasonality. One client, a full-spectrum lighting company with slow summer sales, repositioned its product to sell it as dental office lighting and as lighting for makeup applications. Another client--an African hot tea company--is focusing on the health benefits to nursing mothers of their herbal blend to sell more in the summer in America.

 

Next Step

You need to plan for your seasonal sales, and we've got just the way to do it: Include it in your marketing plan. Check out our marketing plan tutorial for more help.
 

"A person who feels they have a slump should look at it from a different angle or find a niche they haven't reviewed before," says Christie, whose firm, Christie Communications Inc., is headquartered in Santa Barbara, California, and focuses on ethically minded clients. "It's really a wonderful exercise in creativity. Just think and play with ideas. Study and read a lot of industry publications outside your category so you're familiar with what's going on in other industries."

Make Your Decision
With a seasonal business, you have several options. You can remain busy year-round through diversification, you can focus on other activities like writing a book, or you can plan carefully and take some extra time off for yourself.

"Despite all the downsides to a business that's seasonal," says Poole, "the upside is you can, if you plan it properly, make enough money during the busy periods to support yourself [while] you actually take some time off, relax and really enjoy what working from home is all about. That's much of the reason why people work from home--to either have that freedom to choose their own hours or to have more time with their family. So work a little bit extra hard during your seasonal highs and then during your seasonal lows, you can really enjoy that benefit that you started out to begin with."