Ebbs and Flows in Small Businesses

There are many businesses that thrive on certain seasons of the year and struggle in others. Some businesses, such as tourist attractions, may make more money in the summer season while grocery stores and malls may make more money during the holiday season. Below you’ll find a list of tips to account for the times of year where business is slowing, and cash flow seems to be taking a hit.

How to Handle Seasonal Changes in Small Businesses

• Create an Emergency Fund:
  • Most people have an emergency fund set in place for their personal accounts to cover unexpected events like unemployment, medical emergencies, natural disasters or other unforeseeable costs. Businesses should take the same approach and keep an emergency fund, usually anywhere from three to six months’ worth of expenses, saved.
• Secure a Line of Credit:
  • It is unwise and generally more expensive to wait until you desperately need it to start applying for a line of credit. Instead, secure a line of credit as soon as you can, even if it goes unused for a while. Kover Capital offers lines of credit with no annual fees and you only pay if and when you draw on the credit line.
• Forecast Your Needs:
  • Set up an accounting system and track where and when your money increases and decreases over the course of a year. This can help you form a basis as to how much money you need to save in your emergency fund and when to start saving.
• Take Advantage of the Off-Season:
  • Just because you’re in a slow season doesn’t mean your business cannot prosper! Take the extra time to take relevant certification courses, learn new management skills, work on a social media plan or fix equipment.
  • You could also use this time to think of new ways for your business to save money. Slower times may result in cutting employee hours, comparing vendor prices or doing a supply inventory to avoid overstocking.
• Take a Break:
  • Your business runs only as smoothly as the workers. Consider taking some time off and giving your employees the same, ensuring that everyone returns to the busy season feeling rested and ready to work!

If your business is sensitive to season changes, consider incorporating some of these tips into that slower season. You may be surprised at the outcome! Kover Capital is here to answer any questions you may have regarding cash flow or creating emergency funds. Please contact us at 936-899-5629 or email info@kovercapital.com.