How to survive seasonal business downturns
Many business areas change supply and demand several times during the year. The seasonality of this phenomenon depends on many factors: customer habits, seasonality of the product itself, weather conditions and others. This article examines the market for goods and services.
The consumer market for goods and services is a variety of products. Demand for these products is constantly changing. This also includes companies that have only seasonal activities (for example, summer cafes, beach business in the northern regions and others).
How to survive seasonal business downturns
In Russia, as you know, there is a women’s holiday – March 8, on this day floristic firms have a profit that they would receive in about 10 months of trading.
Another example is tire shops, which, as a standard, receive the largest profit 2 times a year – in spring and autumn, when climatic conditions indicate a re-car.
It is these seasonal types of business that are the most risky. Since it is on peak days that the company should receive all the lost profits for the year. During this period of time, the company receives a lot of orders that employees of the company may not cope with, as a result of which the business will get a bad reputation and there will be a risk of not making a profit in the next peak season.
In most cases, the seasonality of the business is divided into 2 periods – summer and winter. The summer season, as a rule, has little demand, since most people are on vacation. In winter, according to marketers, a season of vacations and summer cottages takes place, and people tend to go shopping, theaters, restaurants and so on.
Although, by no means all firms have a summer stagnation, for example, the construction business: in the summer, demand for construction materials and construction works increases. According to the rules, the high season starts from the end of August and lasts until November. In December, the biggest sales are coming; since January, sales, on the contrary, are decreasing.
If you take into account the laws of seasonality, then you can manage sales.
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There are two solutions to this problem:
1. Expanding the range of products (services).
Diversification – helps businesses to have a steady income. So, for example, ski lifts, and work in the summer, taking people to the peaks to the observation deck. The next example is the store shelves, in the winter on which there are Christmas trees and Christmas toys, and in the summer camping equipment.
Thanks to such a change in products, companies do not incur big losses, but can hold on, albeit with little demand. Knowing the demand in advance, you can optimize the work of your company.
2. Cost management and image development.
If we return to the flower business again and imagine that on the peak day of March 8, firms that take extra labor these days would take them to the state, then after the holiday, companies would suffer huge losses, even if all the extra employees at once cut back.
The same happens with other companies, for example, banquets and holidays, as a rule, before the new year the number of applications increases hundreds of times, the existing staff simply could not cope with this task, even if it worked for days and nights. Therefore, in this case, it is necessary to temporarily accept new employees.
During peak activity, it is necessary to attract skilled labor. So, if you do not take care of finding the right staff in time, then at the crucial moment you can well spoil your reputation. There are also companies that at the right time retrain one employee to another.
So, accounting, supply department, and others can sell flowers on the right day. Such a replacement of employees requires great responsibility. The employee must undergo retraining courses, even if it does not require small expenses from the company, but as a result, it will receive guaranteed employees.
When working on business planning, it is necessary to remember the seasonality of goods, to forecast and optimize work, thereby ensuring a stable profit for your company.