Supplementing income for seasonal business

It’s hard enough scraping profit out of a business that’s viable all year round, but spare a thought for those business owners who literally have to ‘make hay while the sun shines’.

When you think about how great the weather was last summer and how much extra you spent on the garden or how many glasses of Pimms you consumed in the sunshine, then it’s not surprising to hear that more than 6 in 10 UK businesses are affected by seasonal patterns. According to recent research by Santander Corporate and Commercial our businesses have had to learn to adapt to seasonal trends, with 37 per cent saying they suffer “negative impact” from these fluctuations.

The conventional wisdom is that businesses that drive up demand during summer months or the festive season, for example, will naturally encounter a sales drought during the off-peak. Traditionally, these firms sell for all their worth in times of feast and strip back staff and overheads (or even suspend trading) when sales dry up.

But, increasingly, savvy bosses are contemplating more innovative ways to load into their businesses year-round income with diversified interests or even by starting completely new firms that create demand during the quieter months.

Commenting on the report Marcelino Castrillo at Santander said: “Certain seasons can represent a period of severe financial concern for many UK businesses…to the extent that many need to close during this time or make drastic structural changes.”

With such large numbers of businesses potentially losing out to the changing seasons, it’s no wonder so many are returning to business plans and considering new, complementary, markets and sales channels.

Hester Moore runs Festival Postcards, a “postal service for festival punters” that transports postcards to Royal Mail for delivery, for seven months during the year around the peak season for outdoor events.

With five months of the year to fill, she has also created Heston Moore Girl Friday, an events business supplying creative and planning services to customers running events, projects, campaigns and weddings.

“I don’t close my seasonal business down, but there are months when there’s nothing to do, usually from late August to early January. In January I start to prepare the business for the summer months. I begin with making pitch applications to organisers. In April and May I pay festival organisers and order stock,” Ms Moore told Startupdonut.co.uk.

She adds: “By late May, I can’t carry on with my other work commitments, I must concentrate on Festival Postcards. There’s so much work to be done and it must happen in sequence, so I have to think ahead, know what I need to do and remain organised.”

For Ms Moore, it’s important not to get sucked into the mistake of trying to make a genuinely seasonal business work throughout the year. It’s never good to expend creative energy on generating inorganic demand that simply isn’t there, she says.

Businesses that do manage to generate this kind of demand draw ideas from the left field and get in tune with their customer base. When James Lambert, chief executive of Richmond Foods, wanted to drive up ice cream sales in winter, he turned to dieters for the answer.

In January, there are swollen ranks of consumers feeling the added pounds of the post-Christmas period and this month is the ideal time to hard-sell low fat foods. Cue Skinny Cow – ice cream that’s naughty but nice.

“Seasonality isn’t necessarily a bad thing; you just have to manage it in line with your own strengths. What we’ve tried to do is reduce the effect of seasonality and optimise our sales,” says Mr Lambert in an interview with GrowthBusiness.co.uk.

“We do this by trying to pre-empt what our retailers and customers want. Our recently developed Skinny Cow range is a good example of this, as low-fat ice cream sells particularly well in January. While you can sell anything when it’s 85 degrees outside, in winter you have to be clever.”

For businesses unable to recreate this out-of-the-box thinking there remains hope. Price reductions, two-for-one offers, vouchers and other goodies tend to pull in the punters regardless what time of year it is. People love a bargain whether it’s January or August.

For others, the off-season is of strategic benefit; a time for consolidation, ideas generating, accounting and generally laying the foundations for the following busy spell. This won’t bring in the big bucks, but it helps firms hit the ground running when the flood gates re-open.

In general, seasonal businesses require a little extra creativity, forethought and good old fashioned effort. Get the formula right – by starting a complementary business, finding new revenue streams or planning for growth – and seasonal firms can hope to rival their year-round counterparts.