Seasonal businesses thrive financially during the busy season, but that does not mean you cannot have passive income or be able to enjoy life during slow seasons. With optimizations to your operations (like knowing which products will sell and when), reducing cash flow waste (by knowing which items to exclude from your menu), and learning ways to make your slower seasons become income generators, you can keep your business running smoothly all year long.
Tax preparers flourish in Q1 up until Tax Day, and their skill sets make them ideal bookkeepers if they are also CPAs. Plus, they can potentially assist with credit repair consulting. Both of these services are in demand year-round and can bring in extra revenue. Christmas tree farms may be zoned to host concerts or events like weddings and bar mitzvahs. The forests and fields make perfect backdrops for memorable photos and venues.
Being profitable during the offseason isn’t just about creating a secondary stream of income. It is also about maximizing how you gear up for busy seasons. Then it’s important to find ways to not lose inventory that didn’t move as the season wraps up.
This guide is packed with tips, ideas, and ways you can maximize all three phases of a busy season and shares ideas to inspire you to build passive income for your seasonal business.
Pre-season preparation
Pre-season is all about making sure your busy season goes smoothly, including production, operations, and sales. That’s why you may want to start with operations.
Check operations first
The very first thing to do before the busy season starts is to test your equipment and check both inventory and supplier schedules. If something is broken or is starting to break, get it fixed before it has to work at full speed. When you put this off until the busy season starts, you may not be able to find a repair person and will miss out on revenue when every day matters.
The same goes for your supplies including packaging materials, shopping bags, inventory, and other items that have been stored. They could be damaged by mold or mildew if they needed to be stored at specific temperatures. By ensuring you have enough product to meet the demands at the start of the busy season, you can hit the ground running.
Normally, most businesses would want to pay for this type of maintenance out of pocket. But because you are a seasonal business, finances may be tight during the pre-season even though revenue will start flowing in fast. This is when it makes sense to take a short-term loan designed specifically for your obstacles.
If it is replacing damaged inventory or ordering new inventory, try inventory financing. For replacing equipment like ovens, cash registers, or a plow, equipment financing could be the right option for you. Fast access to funds and short payback periods via an alternative lender are designed to help seasonal businesses be ready once customers start coming through the door.
Staff up and stock up using data
Use payroll stubs and accounting records from previous years to see how money was spent on staffing seasonal employees when sales began coming in.
For staffing, you’ll want to track and look at the past few years to find trends with:
- How many team members would reach or surpass 40 hours per week.
- The amount of people it takes to prep the business for busy season and when prep begins.
- The length of time it takes to hire and train the new team members.
By knowing how many people reach 40 hours a week, you can eliminate or add a position so that you don’t spend time hiring for roles you don’t need or undercutting people on hours. Once you know the average time it takes to reopen the business for the pre-season and then get everything in full swing for the busy season, you’ll have an idea of when to staff up and spend the extra money on payroll and training.
Last is the length of time to hire. During the pre-season, there is less talent looking for seasonal businesses, especially in beach towns where college and high school students flock. Keep track of the time it took from posting the ads during pre-season to hiring and getting each employee operating at the level you need them.
Now you can start spending on advertising the role and staffing up without spending more money by hiring prematurely or having to spend extra when ad space gets limited as other businesses start competing for the same talent.
Ordering inventory
If you order too much inventory too early, you run multiple risks including items flopping vs. flying off the shelves and depleting cash flow that could be used for hiring, advertising, and promotions like samples to bring in customers. Meanwhile, when you order too little, you start the season slow. Here’s one way to help predict demand in addition to what and when to order.
- Track sales by week each year using your records and line them up.
- Look for patterns in when sales picked up and for which products.
- Calculate profits from the products that start selling early so you know what your revenue and cash flow may look like as you purchase the busy season’s inventory.
- Check shipping times with vendors.
- Create a calendar for when to place certain orders and keep track of expected spending and revenue. This lets you adjust as the season begins to help ensure you don’t spend too much on products where sales remain stagnant.
This applies to foods in restaurants, items in a shop, and the types of services requested for lawn care or home and garden nurseries. We’ll use a shop on the boardwalk as an example here.
If hoodies, keychains, and towels begin selling fast in the first two weeks, but t-shirts don’t take off until the second month of pre-season because the weather is cold, you’ll know to spend more on these items first. You can also see when t-shirts, flip flops, and sunscreen begin picking up steam.
Now list your suppliers and their shipping times, then line up your finances to match. By having your weekly inventory patterns with each season year over year and seeing the type of revenue they bring in with the shipping times by vendor, you can map out when to place orders.
This is one way to optimize your spend on inventory and leave yourself enough wiggle room in case there is a short delivery delay. The goals are to maximize your inventory and spending, as well as keep cash flow predictable in case of emergencies.
Ideas to begin maximizing pre-season revenue
- Restaurants can test new ingredients and menu items to find out what people are enjoying this year and which classic menu items are still popular. If there are two or three appetizers or dishes you want, but you can only serve one, the pre-season test gives you data to decide which to keep for the busy season and which to remove from the menu. If you find trends like a specific ingredient or food is normally ordered with a type of beverage, offer a combo on slow nights in busy season and for the slow season to increase your average order value and profits.
- Art sellers, gift shops, and retail shops can look for upcoming music releases, movies, and other pop culture items that may drive demand based on what is trending in pop culture. If a superhero movie is highly anticipated in May, people may be more inclined to buy items featuring it throughout June.
Here’s another simplified example: If horses are popular this year but dolphins were popular last year, adjust your displays and portfolios to feature horse art and gift items first, but keep dolphins easy to find for people who want to add to last year’s collection or replace an item that got damaged.
Maximizing the high season
As high season approaches, you’re going to need to staff up. If you staff properly in the pre-season, you’ll have people that can train the on-season staff, saving you time. Based on what starts to sell from the pre-season, and using historic data, you can place orders for the peak season.
The difference between pre-season and busy season is you need to clear merchandise because if product does not move when demand should be high, it’ll be harder to move as the season winds down.
Pro-tip: Set reminders to check reorders and subscriptions and ensure you can adjust them as needed while the season progresses.
If glow sticks are no longer selling at a concert venue because glowing eyeglasses are the new item, change the order. It could also be the audience. Maybe glow sticks are perfect for college and high school students at shows, but family shows may require more glowing glasses.
Try bundling glow sticks as an upsell to increase AOV, while keeping margin in mind. This can be a great way to clear shelf space if you don’t have many shows for the high school and college crowds left in the year and vice versa.
Now you are moving inventory that would have sat on your shelf. Although your margin is slightly reduced, you won’t be left paying for storage in the off season and will still make money on this year’s supply. The goal is to clear shelf space and sell more items before discounting the products and reducing margins for the slow season.
Keeping demand high if new competitors move in
If there are new competitors and you’re splitting customers, making high season less profitable, use your established relationships for cross-promotions with complementary companies. If there is a theatre or concert venue with bands and you have a bar or restaurant, do a pre-show happy hour or dinner and offer a deal to people with a ticket for that night. You could also do a post-concert happy hour where ticket stubs get discounts on appetizers and a first drink.
Med spas can work with hotels and vacation rental companies for cross-promotions. Similarly, venues for weddings can cross-promote with florists, photographers, DJs, bakeries, and others that cater to couples getting married.
If your business is normally complementary to another type of business, like baby cribs and baby clothes, offer a bundle deal if customers buy both on the same day. The shopper only needs to bring a receipt. The same goes for the florists. If the person uses the florist and their recommended caterer and photographer, the client can save a certain amount because they used all three event vendors. Each company wins by getting more bookings through cross-promotions, ensuring the busy season stays busy.
Gearing down and making money during the slow season
The slow season does not mean you have to stop making money, or that you cannot take a break. There are plenty of ways you can keep cash coming in, at least enough to tide you over until the next season starts.
Fundraisers and loaning your space
Ice cream shops can host fundraisers for local groups and schools during winter, where a portion of the night’s revenue goes to the group. The added benefit is the group markets your business for you and brings customers to you. This also builds you a new customer base if they have never tried your products and they enjoy them.
Bookstores likely have seats for customers that want to preview a book before buying. They can invite book clubs to have their meetings in the store. If there are local knitting or quilting clubs, see if they’d like to also start a book club.
The members can read during the week and discuss the books while quilting in the store. If your store has a cafe, this could be even better because you can make food and coffee sales while none of the club members have to prepare or clean up a mess in their homes. This can be a double bonus for the book club, and you can try offering discounts on food and beverages if they purchase the books for their club through your store.
Liquidating inventory
Once your data shows that the busy season has slowed, anything that won’t sell next year needs to be moved so that you can reduce warehousing costs and free up shelf space for the next season. A few ways to begin moving inventory include promotions like:
- Bundling to save XY% or $X.
- A free gift when you spend over $AB.
- Discounts on products that need to go.
- Buy one, get X free or at a discount.
Look for trends where a decent number of purchases of product A relate to purchases of product B. If B is not going to sell next year, discount it when purchased at the same time as A.
If both A and B cost $10 retail with a 70% margin, you make $14 per sale. Let’s say B will not sell next year and will not move in a liquidation auction or the aftermarket. You can keep the price of A at $10 and offer B at $8 when purchased alone. If the person buying A also buys B, they can get both for $16. B will no longer be on your shelf, reducing warehousing costs and allowing you to remain profitable at +$11.
Pro-tip: If inventory did not move, collect email and SMS phone numbers from busy season customers. Offer a semi-annual sale (like Christmas in July) to see if they will buy the excess inventory.
Use your skills and knowledge to build a passive income
As a business owner, you have skills, assets, and knowledge that can be used to drive revenue during slow seasons. Here are a few examples:
- Dive instructors can teach swimming at community pools or offer classes at learning centers.
- Photographers can move into niches that are similar to their skill sets.
- Portrait photographers can try product and lifestyle product shoots for local retailers and ecommerce stores. Their knowledge of 2-point and 3-point studio lighting will help.
- Wedding photographers can do maternity photos and events like corporate holiday parties as they’re familiar with capturing moments in crowded rooms and ballroom or conference hall lighting.
- Landscapers can offer gutter cleaning services, snow shoveling, and setting up fall or holiday decorating. This includes hanging lights on trees, delivering and arranging pumpkins from a local farm, and setting up other seasonal holiday decor.
- Restaurants may be able to host cooking classes or demonstrations as slow seasons approach, or on nights that see low foot traffic.
- Business owners can offer mentoring and workshops to budding entrepreneurs during the slow seasons, or see if they can teach a class at a local college or business school.
- Vacation town companies like a hotel restaurant can offer locals-only or kids-eat-free deals during the slow season to encourage more visits when the whole town takes a hit.
Seasonal businesses can keep cash flow strong year-round with a bit of preparation and by using their data. As a seasonal business owner, you have skills that are in demand and can use them to build a passive income until the next season starts.
