Some industries experience peak periods, such as ski resorts in winter, with many businesses enjoying a bump during summer seasonality. People want to be outside in the warm weather, and that usually means they spend more money. Don’t miss out on increased sales due to a lack of cash flow for your business expenses. Instead, consider how to conserve money for the busy period and consider getting a working capital loan to make it through the busy summer without leaving money on the table.
Budget a year in advance and overestimate your monthly costs to provide a buffer for unforeseen expenses. When the summer sales spike hits, put away cash to cover operating costs during slower periods. Meanwhile, keep costs as low as possible when the business pipeline slows to a trickle. In fact, the best rule is to put away enough money to cover the number of months you experience dry spells.
You can also negotiate with vendors by asking for increased payment terms during the off-season. This gives you enough time to settle payables. Another great strategy is discounting prepaid packages purchased in the off-season. This stretches out your cash flows and helps you avoid sharp peaks and valleys. Try to hire new staff during peak seasonality to lower overhead when business slows. You can also place a hold on any monthly subscription services.
Explore financing options, such as a working capital loan, to keep your small enterprise alive when no one is ordering your seasonal products and services.
Working capital impacts the cash flow statement of your small business. Consider the operating cash flow (OCF) portion, which pinpoints changes to short-term working capital requirements. When working capital increases, current assets are greater than current liabilities, and you have more cash tied up in your operations since high current assets represent an overall outflow. In contrast, when working capital decreases, your business has greater cash liquidity for other projects because higher current liabilities represent an overall inflow.
Monitor changes in working capital closely if your small business experiences erratic cash flow swings. Consider working capital loans to smooth out the trend so that you can keep the doors open during the slow months and expand when business booms.
If you’re looking to access cash to tide over your company for a short period of time, a working capital loan allows you to boost your capital so you can cover operating expenses quickly. MY Company Funding has great options for working capital and other loan types to help your business bridge the gap created by seasonality. Contact MY Company Funding today to find out how to apply for a working capital loan to ramp up for booming summer traffic.