Surviving a Seasonal Business
It takes a year-round effort to maximize profits in your peak season. Here are 4 principles to get you there.
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Seasonal business owners are often envied as having the ultimate gig: They work hard for the few months that form their peak season, then sail through the rest of the year with their feet up and a wad of cash in hand. Sound like the ultimate dream? Then it's time for a reality check:
Running a seasonal business requires year-round work and tough self-discipline. Behind every successful seasonal business is an entrepreneur who's willing to work twice as hard and twice as smart as the conventional business owner.
"Like any business or project in life, the outer results mirror the inner world of the individual at the helm," says Terry Kyle, author of 400 Latest & Greatest Small Business Ideas. Kyle recommends these four tips for running a tight ship and guiding your seasonal business through the inevitable rough waters ahead.
Be financially disciplined
It's imperative for seasonal business owners to be strict with their expenses, even when they're raking in the dough during their peak season.
"Seasonal business owners who can't control their spending during the good times of the year will inevitably run into trouble during the down time each year," Kyle says. "The long-term financial maturity required in running a seasonal business is much, much greater than a conventional 9-to-5 employee that can rely on a regular paycheck."
Teevan McManus, 32, learned this lesson the hard way when he started San Diego-based Coronado Surfing Academy in 2003. McManus failed to save enough money for the long winter months and nearly faced financial wipeout before the next surfing season began.
"I definitely didn't plan accordingly the first year," McManus says. "I burned through everything I made in the summer and was living off my business line of credit before the next season came around. I barely made it to the next June."
Since that first year, McManus has learned not only to sock away as much money as he can during his peak season of July and August, but also to manage his money during the long off-season.
Make the most of your peak season
"Every dollar counts in a seasonal business, and any entrepreneur who doesn't maximize every angle income-wise during the peak season is asking for financial problems later," Kyle says.
After nearly three decades of designing haunted houses, Steve Kopelman, 51, of HauntedHouse.com has learned a thing or two about maximizing his business's short six-week season. Every year, Kopelman polls his patrons to see the demographics of who's attending and what they thought of the event. He also checks out his competition in person and online by viewing every haunted house website in the country.
"I want to learn what's successful and get prepared for what works and doesn't work for the next year," says Kopelman, who estimates his four haunted houses based in Miami and Phoenix will bring in $2.6 million this year.
The valuable information Kopelman gathers during the peak season is then put to work during his off-season, and that brings Kyle to his third point.
Maximize your time during the off-season
According to Kyle, seasonal business owners must be just as "time-disciplined" in the off-season as they are financially disciplined during the peak season.
"I'm always stunned by small-business owners whose preparation for a one-off financial killing is so inept that literally thousands, possibly tens of thousands, of dollars are simply squandered. The time to prepare for the busy season is, of course, when business is slow," he says.
Preparing for the next year is a big part of Kopelman's work during the off-season. In addition to using the information gathered during the peak season to come up with new concepts and designs, he also nails down the leases for next year's houses and finds new technology to use at amusement park and haunt conventions throughout the country.
McManus also maximizes his free time in the off-season by marketing. With such a short window to make the majority of his income--about $85,000 annually--McManus spends a lot of the off-season coming up with new strategies to bring in as much business as possible during the summer. That includes marketing with local businesses, hotels and resorts, and adding dog surfing lessons and an annual dog surfing competition to draw attention.
"Seasonal business owners have to think like hardcore guerilla marketers and employ all the lateral thinking they're capable of. The best time to brainstorm such ideas and to experiment with them is during the slow season," Kyle says.
Start a complementary seasonal business
No matter how properly you manage and maximize your peak season and off-season, sometimes your business just doesn't generate enough income to support the long "winter" months. For each entrepreneur, the solution will vary, Kyle says, but one option is to start a related seasonal business.
That was the solution Blake Smith, 39, was looking for when he started Lubbock, Texas-based Christmas D?cor in 1986. He started the outdoor decorating business to generate income and retain his employees during his landscaping business' slow season of November through February.
"Here I've got this seasonal landscaping business and all the resources in place [for Christmas decorating]--customers to sell it to, crews to do the installation and trailers, vehicles and other assets that would normally be idle that time of year," Smith says. So it was a no-brainer for him to give it a shot.
What started as a complementary "side job" soon became more profitable than his full-time job, so Smith sold his landscaping business and started franchising Christmas D?cor in 1996. Since then, Christmas D?cor has grown to more than 375 locations and generates system-wide gross sales of $60 million. Smith hasn't stopped there, though; he's also started a landscape lighting service franchise, NiteTime D?cor, to fill in Christmas D?cor's off-peak season.
No matter what type of seasonal business you own, it's possible to be profitable all year round if you're disciplined, manage your time and explore your options.
"Ultimately, any business operation--seasonal or not--grows as the owner's insight, ideas, experience and solutions to inevitable problems develops," Kyle says. "The great news is that these aren't new problems, and the seasonal variation in business--unlike the stock market--is entirely predictable and can be planned for."