Supply chain · 18 December 2015

How micro businesses can successfully navigate seasonal fluctuations

Effective preparation and planning is key to maintaining a seasonal businesses’ competitive edge all year round
Effective preparation and planning are key to maintaining a seasonal businesses’ competitive edge all year round

Regardless of sector or size, the steps business owners take to manage seasonal peaks and troughs in their business cycle are incredibly important.

While many businesses experience variations in trade and sales, seasonal micro businesses – employing between 0-9 people – need to focus on seasonal planning to level out busy and quieter periods.

From cash flow to pervasive customer engagement, effective preparation and planning is key to maintaining a seasonal businesses’ competitive edge all year round. At FedEx, the majority of our own experience in this field has been gleaned from managing our own periods of “peak” activity – allowing us to identify some indispensable techniques for managing seasonal supply and demand. Our top tips are:

(1) Manage money matters

There will be employees and suppliers to pay throughout the year regardless of the peaks and troughs in your business cycle. Having a sales forecasts drawn up based on past activity will help you handle your cash flow more effectively, and could highlight potential or growing means to boost revenue.

Introducing an additional product line and/or service during quieter periods can also help to stabilise cash flow e.g. a landscaping micro businesses could offer property maintenance services during winter months to maintain a more frequent flow of custom. Either way, it is important to have a strategy in place for each season to ensure costs are managed all year round.

(2) Recruit in line with seasonal demands

If yours is a micro business that relies considerably on the support of temporary staff to manage increases in demand during certain periods of the business cycle, you’ll know having an effective recruitment and staffing plan is critical.

Having seasonal staff to focus on the smaller yet necessary tasks, such as customer services and sales, will ensure your permanent team will be able to continue with the development of business operations without sacrificing the quality of service.

(3) Drive up profitability

During the busier seasons, it is vital you ensure your micro business has the necessary resources to capitalise on every sales opportunity and process it efficiently – from initial order right through to final delivery.

If you’re a micro business with a global customer base, the ability to service customers abroad quickly, regardless of distance, will strengthen your position in the international marketplace. Ask for advice from your logistics provider on seasonal strategy and ensure they are aware of your peak sales periods both in the UK and overseas, so they can adapt to meet increased demand and offer additional support as and when required.

(4) Advertise your business all year round

Rather than promoting your business solely in the lead-up to your busier periods, make sure the momentum is carried into your off-peak periods too. This can be achieved by offering discounts and out-of-season sales to help maintain higher sales levels. Promotions like these will also help sustain all-important customer relationships.

(5) Create a diversified business

Being a seasonal micro business grants you the time to put a thorough strategic plan in place and focus on product development, in order to level out any seasonal dips. When positioning your company for further growth, it is worth considering the expansion of your existing customer base, by selling online and exploring international markets.

By targeting new customers both at home and abroad, you could boost your turnover while developing your business as a whole.

Seasonal business model: Lumie

The end of British Summer Time (BST) in particular is often a prominent turning point for many seasonal businesses; falling on the last Sunday of October, it signifies the start of a busy period as we countdown to Christmas. For others, it is the physical changing of the seasons that calls for a shift in operations. For light therapy provider Lumie, an SME which develops products to treat Seasonal Affective Disorder (SAD), both of these factors have a big impact on sales over the winter months.

The company’s monthly consignments double during this period – an increase that accounts for 20 per cent of Lumie’s total annual shipments, in comparison to the two per cent seen throughout May to July. Similarly, its international shipments surge in October as well, with an increase in demand seen across Northern Europe and Scandinavia as well as North America and Canada where daylight hours are lower during winter.

In preparation for the influx of orders, Lumie’s management work diligently during quieter months to address staffing, scheduling and stock listings well in advance. At FedEx, we work closely with them to successfully manage expectations from customers across the globe and ensure service levels remain consistent throughout the year.

Businesses of all sizes will always face seasonal fluctuations – some as significantly as Lumie, others not. Regardless, the tips above demonstrate how forward planning and preparation are essential in the successful management of seasonal peaks. Remember, profitability should be an all year round occurrence for businesses large and small, so during quieter periods at home why not explore international markets and source fresh opportunities overseas?

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ABOUT THE EXPERT

David Poole is managing director of sales, UK South at FedEx Express and FedEx UK. FedEx Express is the world’s largest express transportation company, providing fast and reliable delivery to every US address, as well as more than 220 countries and territories. 

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