The Seasonal Business Owner’s Guide to Going with the (Cash) Flow

By Bryce Warnes on July 3, 2018

From fishing guide to wedding planner, there are certain businesses that depend on the change of seasons for their income. If that’s you, you need to be prepared to deal with an irregular cash flow.

Do a good job predicting your income and expenses over the course of the year, and you won’t have to worry about falling short—for tax payments, employee wages, or the next payment on your car.

We’ll cover the best way to manage cash flow for your seasonal business, so you never have to worry about coming up short.

Get accurate financial records

A major part of managing your cash flow is understanding how your business makes money, and how it spends it. To do that, you need financial statements provided by an accountant.

An accountant produces financial statements by first taking information from your general ledger (prepared by your bookkeeper). Then they compile that information into documents that explain how money enters and leaves your business.

You can learn more about the different types of financial statements, and what they tell you, from our introduction to the financial cycle.

Forecast your cash flow

If you want to prepare for the future, you should look to the past.

That’s not some philosophical credo. It’s just good, common business sense.

For instance, to put aside money for estimated quarterly taxes, you look back to your past earnings and use them to anticipate how much you’ll make in the present year.

Similarly, to anticipate your cash flow for years to come, you need to look back to how money has moved in and out of your business in the past—and be prepared for a similar pattern in times to come.

Here are four things you can do to help forecast cash flow for your seasonal business.

1. Forecast yearly, monthly, weekly, and even day-to-day

It’s not enough to forecast annual or even quarterly cash flow. Especially during your busy season, you should be prepared to forecast on a month-by-month or week-by-week basis.

You can adjust this according to the length of your season. For instance, suppose you sell skis in a part of the country where there’s snow on the hills eight months of the year. You may only need to forecast your cash flow month-to-month. Your season is so long, and so unlikely to drastically change, that weekly forecasting would be overkill.

On the other hand, suppose you sell fireworks in a city where their sale is prohibited most of the year—except during the two weeks leading up to the Fourth of July.

In that case, you’d probably want to use day-to-day forecasting. Your season is incredibly short. It’s possible, as the holiday approaches and demand rises, your cash flow could change significantly day-to-day.

2. Be ready for variable expenses

Certain operating expenses, such as rent and electricity, are predictable. But there are others which aren’t. They’re called variable expenses.

For instance, you can predict quarterly tax payments. But if you’re used to paying bills on a monthly cycle, there’s danger one of these payments may sneak up you. Yearly insurance premiums—and other payments that don’t follow a monthly cycle—could present the same problem.

As with most parts of cash flow forecasting, variable expenses can be handled by looking back over your financial history and anticipating the expenses that are to come.

3. Also, be ready for surprises

Outside of variable expenses, you should also expect the unexpected. That is, if there’s potential for an expense to arise that you didn’t plan on, be ready to budget for it.

One example: equipment malfunction. The riding mower for your landscaping business may need a tune-up at the beginning of every new season, and you can factor that into your cash flow forecasting.

But what if something goes wrong? Suppose your new employee rides over a small boulder, and completely destroys the mower’s cutting blade. How will repair costs factor into your seasonal cash flow?

Clearly, the unpredictable is hard to predict. But in this example, you could prepare by estimating the maximum cost of a repair to your mower, and setting aside enough money ahead of time to cover it.

This isn’t an exact science. But at the very least, looking at your financial weak points will encourage you to build up savings. Then, if disaster strikes, you’re ready.

4. Be aware, and be flexible

Finally, establish a schedule for reviewing your forecasts. At the end of every forecast period—whether it’s a week or a month—compare your predictions with what actually happened. Then, take notes, and let that inform your future forecasting.

Reduce swings in cash flow

There are steps you can take to keep your income on an even keel, and make your cash flow more predictable year-round.

Adapt to more seasons and customers

Depending on your industry, there may be ways you can adapt your business to serve customers for a larger part of the year, or appeal to a wider range of customers.

A common example is landscapers who offer snow removal services during the winter months. Some of their equipment—trucks for travelling to job sites, for instance—can be adapted to jobs where they clear driveways and streets. And employees who are already familiar with landscaping techniques—operating machinery, completing labor-intensive jobs on deadline—can adapt to snow removal.

Similarly, if you run a store that sells camping goods, you can expect peak season to come during the summer months. But you could offset this seasonality by carrying goods for customers who are active year-round—for instance, yoga practitioners.

If you’re a landscaper, it could cost you money upfront to buy snow blowers and a large inventory of road salt. If you own a sporting goods store, you’ll be investing in an inventory of yoga mats and stretchy pants. But in both cases, the overhead has potential to pay off in the long term—by giving you a steady income year-round.

Keep operating costs low

Every business owner wants to keep their expenses to the minimum, but doing so is especially important when your business is seasonal. You can even out the peaks and valleys in your income by making your business cheaper to run, or by distributing your expenses more evenly throughout the year.

Now is a good time to look at your business, and consider taking some of the following steps.

Switch from full-time employees to contractors

If you have employees working for you full-time, you may be better off switching to contractors. Hire people to do the work you need done—and only the work you need done—and you’ll find yourself with greater flexibility and lower costs.

Negotiate payment with your vendors

See if you can reach an agreement with vendors to pay your bills when your revenue is high. For instance, maybe your camping store needs to stock up on sleeping bags in spring, before peak season hits. In that case, you may be better off paying your bill later—in fall, when you’ve pocketed your summer profits. This could mean the difference between paying your bill with cash, or resorting to a line of credit.

Negotiate rent with your landlord

If you business pays rent, talk to your landlord and see whether they’d be willing to charge you higher rent during peak season, when money is coming into your business. Then, you can pay lower rent during the off-season, when your income has decreased.

Rent out or sublet property during the low season

If you have equipment or property sitting dormant during the off-season, find a way to make it work for you. For instance, if you typically reduce how much inventory you hold during the off-season, that could mean an opportunity sublet the extra warehouse space to another business for temporary storage. Or, if you reduce your restaurant hours once the tourist season is over, it could be lucrative to rent out the space to individuals for private functions.

Lease equipment or property rather than renting it

It may be more expensive on a dollar-per-day basis, but leasing rather than renting property or equipment can save you money in the long term. For instance, you could lease your brick-and-mortar location only for the busy season, rather than paying rent month-to-month year-round. Depending on your relationship with your landlord, you may be able to agree upon recurring leases for every busy season.

Manage inventory, if you have it

Consider your inventory records part of your financial records. Tracking your inventory month-to-month and season-to-season, you should be able to anticipate when you need to be stocked up, and when you don’t.

A barcode scanning system, connected to inventory tracking software, can help you stay on top of stock as it enters and leaves your business. Then, regular stock audits ensure that what you have in inventory matches what’s listed in your records.

When you track your inventory effectively, you can make sure you’re not overstocking goods, and being forced to sell them off at reduced price at the end of the season.

Inventory management is a big topic, and every business is different. For a comprehensive rundown, see Square’s article Inventory Management 101.

Find a second gig

If off-season truly has you sitting on your hands, it may be time to consider a side gig.

When you’ve worked long and hard to become self-employed, going on the payroll for someone else may seem like a step backward. But the extra income can help take the edges off the peaks and valleys your seasonal business experiences. If swings in cash flow are a serious threat to your business operations, taking on another job could mean the difference between failing and succeeding.

Get financial backup

A successful off-season can leave your business flush with extra cash. In that case, it’s time to think about savings.

Some business owners, once they’re operating at a surplus, may prefer to pay down some of their debt. But don’t underestimate the value of savings.

Stash money away in a business savings account separate from your checking account, and you’ll have an easier time paying your bills in the event you hit an especially slow off-season. Your savings don’t have to be huge. Even a modest amount could be enough to take the sting out of your regular expenses when business is slow, or soften the blow of an unexpected payment.

Also, consider securing a business line of credit. It will have lower rates than your credit card, and possibly a higher limit. If you go to a lender looking for a line of credit in response to an emergency—unexpected expenses, a slow season—they’re less likely to grant one. Secure a line of credit in advance, and you’ll be prepared for the unexpected.

In order to improve cash flow for your seasonal business, you need accurate, up to date financial statements. A little foggy on the details? Check out our beginner’s guide to financial statements, and how they’re prepared.


This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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