Weekly Business Insights from Top Ten Business Magazines | Week 327
Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 327 | December 15-21, 2023
Entrepreneurship Section 1
How Extremely Seasonal Businesses Can Stay Profitable and Thrive All Year Round
By Chritine Lagorio-Chafikin | Inc Magazine | December 20, 2023
Extractive Summary of the Article | Listen
Seasonality affects many businesses such as hospitality, retail, construction, and contracting. The author spoke with founders who depend entirely on the winter holiday months to get them through the full year and got their tips for ramping up inventory, managing cash flow, and getting customers to return, holiday season after holiday season.
- Think Differently About Cash Flow. For Lumistella, the Atlanta-based parent company of Elf on a Shelf, which sells books, décor, and entertainment around its December Santa’s helper elf, 85 percent of revenue comes in during the fourth quarter of the year. While funding was an issue early on, these days, cash flow is a predictable annual cycle–but one that needs to be closely considered and reevaluated. Lumistella focuses on new-product development early in the year, then sales in spring. In the summer, ordering and logistics take on more importance. By the fourth quarter, the company bolsters marketing and sales. This is when its revenue really starts flowing, but also when expenses are highest, due to increased payroll, marketing spend, and events costs. “You need to hold onto that cash as much as you possibly can; you have to be very thoughtful and conservative in the way you spend it when it’s the dry season,” she says.
- Diversify in the Off Season. Most entrepreneurs don’t see “dry season” as slow–but it does require intense investment. During this time, Lumistella’s 118 full-time, year-round employees work on solidifying existing partnerships and entertainment deals, and creating new ones. Listen to your clients as a way of generating new ideas: “If they feel comfortable coming to you to execute their vision or idea, it can really open up your mind to other possibilities and other areas of growth. There can be ripe opportunity in taking what you already know and applying it to a different product or service.
- Use Great Customer Service to Build a Long-Lasting Reputation. You’ve got to be the absolute best when it comes to customer service because your business really depends on a loyal fan base. For a customer to come back year after once-a-year, you have to not only be reliable, but also memorable.
- Keep Employees Coming Back, Too. Contact past seasonal staff earlier, and let them know enthusiastically that you have a role for them. Also, think about being as flexible as you can about hours and dates–and any additional benefits you can offer. Culture can keep many employees coming back.
- Consider Shortening Your Supply Chain. Companies that do most of their sales around the winter holidays have always had to be whizzes at forecasting–typically, highly seasonal companies start placing orders during the summer. But the pandemic’s supply chain disruptions woke some up to planning even further ahead. Just in time delivery is a valuable factor for your sales, to consider looking for suppliers on shore or near shore. It can save far more money in the long-term for some businesses. You need to consider the risk factors versus the fiscal reward of having a long supply chain.
2 key takeaways from the article
- Seasonality affects many businesses such as hospitality, retail, construction, and contracting.
- Some tips for ramping up inventory, managing cash flow, and getting customers to return, holiday season after holiday season based on insights from the entrepreneurs running seasonal businesses are: Think Differently About Cash Flow, Diversify in the Off Season, Use Great Customer Service to Build a Long-Lasting Reputation, Keep Employees Coming Back, Too, and Consider Shortening Your Supply Chain.
(Copyright lies with the publisher)
Topics: Entrepreneurship, Seasonal Business