June 14, 2019
Ask five people how seasonality affects their business and you’ll get five different answers. From a tourism business in the summer to a retailer during the holidays, every business has to deal with seasonal ups and downs and the cash flow challenges that come with them.
As Kabbage customers explain, managing seasonal impact on revenue requires preparation – and if possible, alternate ways to bring money in the door.
Launching new services for traditionally slow seasons
In the winter, homeowners don’t do much landscaping. At the end of the year, Carson Browning, owner of ITM Landscapes in Jackson, Georgia, shifts to maintenance services. He recently added a crew that only handles landscape maintenance, such as pruning plants, repairing patios and cleaning stonework.
“That’s good cash flow in the winter when installations are slow,” Carson says. “As we tell our customers, if you’re hiring us to transform your property, then you should trust us to take care of it forever.” If cash flow runs low in the winter, he uses a Kabbage line of credit to pay for supplies and salaries.
Like Carson, Joe Lanzi, the owner of Always Positive Group in Sicklerville, N.J., generates income in the slow months with testing innovative business ideas. For Lanzi’s home improvement expos, winter and spring are peak seasons, while summer is sleepy.
To even out cash flow, he recently decided to stage some summer home expos on the New Jersey shore, aimed at vacation homeowners. “The new shows will help me with cash flow in the summer when I don’t usually have much,” says Joe.
Taking advantage of football season’s downtime
For Jason Sheetz, owner of Atlanta-area restaurant group Succulent Hospitality, football has the biggest effect on business. His restaurants are busy in the spring and summer, but get quiet in the fall and winter — especially when the beloved Georgia Bulldogs are playing.
“If you’re not a straight-up sports bar with wings, burgers and beer, it’s tough to bring in customers,” says Jason, whose two restaurants, Hammocks Trading Company and Under the Cork Tree, focus on seafood and tapas respectively. The pattern is so predictable that Jason plans for it. “It’s like clockwork. As soon as the championships are over, our business picks right up,” he says.
Jason takes advantage of the downtime to spruce up the restaurants for the region’s balmy spring and summer weather when customers flock to the patios. “We invest money in painting, buying new chairs and umbrellas, and doing some landscaping,” says Jason. These are tasks that are easier to do when the restaurants aren’t crowded.
Jason also invests in people during the quiet seasons, even though it costs money to pay servers and chefs when the restaurants aren’t very busy. “We’re very chef-driven; we’re not fast food,” he says. “When people fall in love with the lamb ribs at Under the Cork Tree, you need to keep people who can execute on that.” To retain talent, Jason uses his Kabbage line of credit to cover the cost of salaries for experienced staff.
To bring in more revenue year-round, Jason recently launched three new delivery-only businesses, selling meat dishes, burgers and grain bowls. “Maybe only 20 percent of people in our market like to go out to full-service restaurants – but 100 percent of people have to eat,” Jason says. “So with delivery, we can appeal to a larger audience.”
It’s clear that diverse sources of revenue help businesses weather seasonal changes in income – as does the availability of a line of credit to cover costs. As Jason, Joe and Carson know, managing cash flow is a necessary skill for business success.
Aditya Narula is Head of Customer Success at Kabbage. Kabbage has pioneered a financial services data and technology platform to provide access to automated funding to small businesses in minutes. Since 2011, the company has helped more than 185,000 small businesses access more than $7 billion.