The Pros and Cons of a Seasonal Business

Today’s business environment is fertile ground for entrepreneurs looking to customize their work-life balance. Running a seasonal business, for example, offers many advantages in terms of structuring your uptime and downtime – but it isn’t for everyone. Companies that only operate at certain times of the year come with a unique set of pros and cons. Understanding what these are will help you determine if opening a seasonal business is the right move for you.

Is a Seasonal Business a Good Fit for You?

There are two main types of seasonal businesses: those that shut down during the slow season, and those that remain open year-round but that generate most of their revenue during peak times. Whether you hope to offer tours or lawncare services, run a winter sports camp, or operate in a holiday retail environment, here are some of the pros and cons these businesses share.

Seasonal Business Pros

Off-season lets you regroup: The seasonal company’s regular slow periods gives business owners the opportunity to plan ahead without the stress of having to manage day-to-day operations at the same time.

The off-season is typically when seasonal entrepreneurs:

  • forecast cash flow, revise budgets, and update operational procedures,
  • service and upgrade their gear, computer systems, office machinery, or manufacturing equipment,
  • catch up on paperwork, and develop new strategies and marketing programs

But off-time is also an ideal time to travel, pursue leisure activities, spend more time with family and friends, and essentially recharge your batteries.

Marketing can be more efficient: Having dedicated time during the off-season to reach out and engage with past and potential customers is another advantage of running a seasonal business. Not only does it allow you to meet, plan and catch up with suppliers, industry associations, and strategic partners, many seasonal companies work with a highly targeted audience, making it easier to customize products, services, and marketing communications.

Seasonal employment has its appeal: Many employees are as keen to work seasonally as the business owners who employ them. Even if you don’t build a reliable team of temporary staff from previous seasons, regular off-time gives you the chance to screen and hire the best candidates, and establish a valuable employee mentorship program. A cohesive team and positive work environment enhance productivity, and encourage work referrals for the upcoming season.

Seasonal Business Cons

Unique financial concerns: A shortened annual income lifecycle means that seasonal companies face a distinct set of financial challenges. Some of these include:

  • difficulty obtaining startup capital, finding a part time location, or securing appropriate permits and insurance,
  • cash flow shortfalls that can occur at the start of each new season as supplies, staff, and other up-front costs all hit at once,
  • the need to carry certain expenses and resource costs year-round (like leased equipment or bank loans, for example) that are only generating a return part of the time

Eggs-in-one-basket syndrome: Because a seasonal business earns the bulk of its revenue during a condensed period, there’s less time to recover from unexpected events. Income and client relations can be negatively impacted during peak season by anything from system and equipment breakdowns, to weather-related delays and cancellations.

Feast or famine stress: Not everyone is comfortable with the idea of earnings that fluctuate dramatically over the course of each year. And with most seasonal businesses experiencing intense peak periods, long work long hours and a significant expenditure of energy are the norm while business is booming.

The decision to open a seasonal business should dovetail with both your personal interests and your priorities. Every entrepreneur faces ups and downs, but for seasonal business owners, those highs and lows become magnified. Do you thrive in a work hard-lay low environment? If so, a seasonal operation may be the ideal fit for your lifestyle.

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