Whether you run a pop-up Halloween shop, a food truck, or a Christmas gift store, your seasonal business has one commonality with others: in all likelihood, it experiences cash flow challenges in the off-season. Even when your sales slow, your business expenses continue to accrue and come due, so it’s vital to manage your cash flow wisely. So what are your options when it comes to managing cash flow during those slow months?

1. Know Your Projected Cash Flow

Cash flow projection is actually a simple skill that any business owner can learn. Just estimate your sales by averaging your last few years of income (for best results, average each month individually). Then, estimate your fixed and variable expenses on a monthly basis. Finally, subtract projected expenses for each month from projected income.

That gives you a month-by-month breakdown of what to expect, and you can see your slow season and busy season mapped out right in front of you in clear terms.

2. Cycle Your Inventory

Good inventory management can make a huge difference in your cash flow. You should have a good idea of your slow season now, so perform cycle counts throughout the season, counting a different product on a rotating schedule and prioritizing high-value items.

Then, as you approach the slow season, check your (hopefully accurate) cycle counts and identify items that you have in overstock, or items that won’t be great sellers next year (e.g. their sales performance was low this year). This is your opportunity to throw a calculated blowout sale and clear out inventory for a quick boost in cash flow heading into the slower months.

3. Diversify Products

Just because you have a seasonal business doesn’t mean that you can’t make sales in the off-season. If you sell Halloween decorations, consider branching out and selling decorations for other seasons, too. Your Easter decorations may not be your primary product, but they’ll generate much-needed cash-flow in the months when you need it most. This can easily stop your problems with seasonal cash flow. 

4. Cut Off-Season Expenses

What do your off-season expenses look like? Chances are that you have some chaff in your budget that you can weed out to make more room for those expenses that can’t be cut. You don’t have to operate on a shoestring budget (and shouldn’t, because then your business suffers from a lack of resources), but you can always cut out extra costs that aren’t needed. This if key information for seasonal businesses. Examples include:

• Minimizing product that needs storage
• Weighting your marketing budget in favor of the busy season
• Hiring seasonal employees rather than year-round employees
• Moving to a smaller space in the off-season 

Of course, any budget changes need to be calculated. Don’t cut your budget in desperation midway through the slow season; rather, plan for budget changes during the busy season when you have the time to be thoughtful about it. There’s nothing worse than realizing in August that you’ve allocated no budget toward September marketing for your October busy season.

5. Use Alternative Business Funding Sources

Business lines of credit, or products that function like a line of credit, can go a long way toward alleviating the financial stress of the off-season. Don’t be afraid to take on debt when you need it, as long as you’re sure that the busy season brings enough cashflow to pay it off.

Just be cautious when it comes to choosing a business funding source. Traditional bank loans can hamper your cash flow rather than help it, because you’re often on the hook for hefty interest and unwavering payments that don’t take into account your business ebbs and flows.

A business line of credit or similar products are flexible because you can take advantage of these funds year-round, whether it’s to get through a sluggish spring or to gear up for a busy autumn. Or, a working capital loan gives you the option of manageable daily payments that scale with your business cash flow, so you can stay on top of your debt even when your business is slow.

Managing cash flow for your seasonal business doesn’t have to be a challenge when you have access to alternative business funding solutions. Manage your cash flow through calculating projections, managing your inventory wisely, and cutting expenses where you can, but don’t be afraid to rely on an alternative business funding source when times get tough. Especially when you need business funding fast for unexpected expenses. Mullligan Funding understands your need for speed. 

Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.