Five business tips to beat rock-bottom business confidence
Companies / 25 June 2019, 07:00am / Staff Reporter
DURBAN - Many business-to-consumer enterprises routinely experience a seasonal slowdown, which can cripple the business when this is not factored in planning for the business’ cash flows.
It is critical for these businesses to prepare for depressed sales numbers as a result of seasonal shifts, weather and other economic factors – like ice cream stores in winter or inner-city restaurants during holiday season when consumers tend to make for more exotic destinations.
This is according to Gugu Mjadu, Marketing Executive at Business Partners Limited and spokesperson for the Entrepreneur of the Year® competition said that when queues disappear and the stock doesn’t move, it can be an extremely scary experience for business owners.
"But the good news is that while you likely can’t control the seasonality itself, you are in control of how you prepare for and manage your quieter season to reduce the financial impact on your business," said Mjadu.
She shares 5 tips to help you tide over your business during low season:
1. Get to grips with your business’ cycle
When a business is still in its growth phase, it can be tricky to isolate the real fluctuations of the industry from the non-seasonal ups and downs that are common with any growing business. A certain amount of analysis of the company’s figures, compared with industry norms, may therefore be necessary to identify patterns. The better you know your industry’s seasonal curves, the better you can plan. Winners in the Entrepreneur of the Year® competition can use the technical assistance and mentorship support that forms part of their competition prizes to improve their insights into their industries.
2. Get money savvy
It may seem obvious to state that you should set aside some of your gains from the busy season to tide the business over the off season, but it is easy to spend too much in the middle of the peak when your focus is trapped in the here and now. Cultivate the discipline of focusing on the whole cycle, and build a buffer in time for the slow season.
If you have financing, it is hard to maintain the instalments on a straight bank loan in the off season. But it is possible to negotiate a repayment scheme to suit your seasonality particularly with risk financiers. One option is to link repayments to turnover, or to agree that in certain months only the interest of the loan will be serviced.
3. Put the slow season to use
Rather than slowing down and losing focus, identify other ways to use the time productively. A quiet period in a business is great for maintenance, retooling and clearing out, not only of physical equipment and infrastructure, but also for operational systems, clearing bottlenecks, identifying inefficiencies, training and reflection
4. Cut expenses but don’t stop marketing
One of the results of the introspection that you can do over the slow season is clarity on where you are able to cut unnecessary expenses. It might be necessary to reduce your stock, or to negotiate a more efficient stock delivery system with your suppliers. While marketing is often seen as a nice-to-have and these budgets usually get slashed first in hard times – rather investigate additional markets and cost-effective marketing methods, such as improving your social media presence or catching the attention of influential bloggers.
Salary bills are a big expense and not many seasonal businesses can keep a full staff complement throughout the year. But the risk of losing staff to more permanent employment can also be time consuming and costly.
One of the ways of minimising staff fluctuation is to reduce everyone’s shifts rather than letting some stay and some go. When short-term contracts or a reduction of shifts are unavoidable, the key is clear and open communication with your staff members. Avoid disputes and bad feelings by drawing up proper contracts, and making sure that everyone understands the nature of the business and the path to becoming a permanent staff member.
5. Keep positive
Watching your sales goals slide can be demoralizing. But negativity spreads and in an owner-managed business, the entrepreneur sets the tone for the rest of the business. If you become despondent, the whole staffing complement may lose motivation – which won’t help productivity. During these periods, it is therefore best to avoid showing signs of panic and actively cultivate a positive mind-set however possible.