Seasonal Businesses Can Stay Profitable in the Off-Season. Here’s How.
A seasonal business primarily derives its income during specific peak periods, which can span from weeks to a few months. Industries facing this cyclicality are diverse, from snow removal services and ice cream shops to Halloween stores and Christmas tree farms. Then there are those driven by government or deadline-based needs, such as accounting services during tax season. Most seasonal companies are familiar with the basics of budgeting: reviewing your financials and tracking against them, keeping a close eye on headcount, and leaning into part-time or seasonal staff in the peak season. But smart budgeting alone can’t tackle all the obstacles of a seasonal business. Companies must use outside-of-the-box thinking, effective planning, and careful execution to ensure profitable company. This includes building relationships with key internal and external stakeholders, offering impeccable customer service, finding ways to pivot in the off-season, and adopting a cash preservation mindset.
A seasonal business primarily derives its income during specific peak periods, which can span from weeks to a few months. Industries facing this cyclicality are diverse, from lawn maintenance businesses, snow removal services, and ice cream shops to Halloween stores and Christmas tree farms. Then there are those driven by government or deadline-based needs, such as accounting services during tax season.
Managing a seasonal business is not for the faint of heart. According to a recent survey by Constant Contact, half of small businesses rely on holiday shopping for at least one quarter of their annual revenue. In my experience as an executive of a seasonal business, I’ve seen that number rise to 90% of annual revenue. Business sprints along at a frantic pace, with a need for “all hands on deck.” But then, as the season draws to a close, business slows to a crawl and receivables dry up.
This makes management of cash flow the biggest challenge for a seasonal business — and that is just the start. Workforce planning becomes an obstacle. With the attention of the customer elsewhere in the off-season, is it possible to maintain your workforce, and if so, what are they working on? If you are unable to maintain your workforce, what becomes of your company culture? Add to this the customer acquisition and maintenance conundrum: You need to maintain your current customer base and acquire new customers to grow your business, but how do you do that when what you offer is not top-of-mind? Lastly, production, sales, and financial forecasts are a challenge to get right. There is limited data to work from given the shortened sales cycle, and forecasts can be deeply affected by something as simple as a changing weather pattern or as complicated as a worldwide pandemic. If a seasonal company misses the short window to capture the lion’s share of their annual revenue, the result is devastating.
Most seasonal companies are familiar with the basics of budgeting: reviewing your financials and tracking against them, keeping a close eye on headcount, and leaning into part-time or seasonal staff in the peak season. But smart budgeting alone can’t tackle all the obstacles of a seasonal business.
After nearly 20 years of surviving the financial desert every May–August and then watching the rains fall September–April, I am well-versed in managing seasonality. As the co-CEO and cofounder of The Lumistella Company (home to The Elf on the Shelf, Elf Pets, and Elf Mates brands), I know how hard it is. But with outside-of-the-box thinking, effective planning, and careful execution, it is possible to build a very profitable company. Here are a few tips I’ve learned.
As a business leader, it is difficult to detach from technology to prioritize personal relationships. With inboxes overflowing and management responsibilities piling up, sparing time for a face-to-face conversation or a personal interaction feels inefficient. But it is the best investment you can make in your company.
People buy from people they like. My father was the consummate sales professional, and that was his mantra. And, in my experience, it has proven true today. Humans run businesses and humans buy your goods — so, spend time with those humans! Identify the key investors, suppliers, customers, employees, and community leaders responsible for supporting your business. Sit down and think about them. Who are the decision makers that can help you if you find yourself in a bind? Then schedule time with them. Invite your banking relationship manager to lunch, but also invite their boss and their boss’s boss. For your suppliers, take coffee to their office and grab some donuts too! For your employees, walk around the office, spend time in the breakroom, or help clean up after a staff meeting.
Facetime allows for personal connection and a chance for people to like you, which means they will trust you, and subsequently help you when you need it most. These same principles are easily applied on a global scale. Schedule a video conference call with your top suppliers. You are still connecting. If you know of a personal struggle (like family illness or a death) or a reason for celebration (like the birth of a child or grandchild) among your network, send an email or handwritten note with no mention of business. If the occasion calls for it, send a gift personally. In short, be thoughtful.
During the supply chain crisis of 2021, despite delays at ports across the globe, shortages of trucks, containers, chassis, and drivers, it was our personal relationships, built over the years and across the supply chain, which helped us move our goods off shipping vessels and into warehouses weeks faster than other businesses. Had that not happened, we would have missed the entire Christmas season.
Make every interaction count. Seasonal businesses, more than any other, depend on nurturing a loyal fan base and gaining return customers. Success depends on the ability to accumulate a loyal following. There is no better (or less expensive) way to do it than for a seasonal business to achieve what I affectionately call the “IWOM” status: Iconic Word-of-Mouth. If you have a great offering, so what? A lot of other companies do, too. But if you have top-notch customer service, you will be set apart. According to research by McKinsey & Company, improving the customer experience increases sales revenues by 2 to 7 percent and profitability by 1 to 2 percent.
When my sister and I first started the business, we had no money for a marketing campaign, but we could ensure our customers felt like they had something special, unique, and one-of-a-kind. We responded to every email personally, included the official seal of Santa’s North Pole on every box we shipped out, and leaned into a teacher program for grades K-5, which provided lesson plans and classroom activities to burdened educators who craved holiday-themed material. This attention to detail and leveled-up approach led to five-star reviews and an IWOM campaign unlike any other.
Really think about your resources. For instance, as a landscape company, you have employees, an existing customer base, transportation for heavy equipment, and a business that dies in the winter. Why not pivot to outdoor décor in the off-season? Think about the houses in your community decked with ghoulish Halloween displays and dazzling holiday decorations. Offer a service setting up and taking down these decorations. Based on your summer business, you know your customers are paying for the convenience of not having to do the work themselves. It’s similar here. Additionally, offer a discount if they sign up to use your landscape services. Now, you have exposed your company to a broader customer base and maintained your employees, two of the biggest challenges for a seasonal business.
Consider partnering in the off-season as well. Take, for instance, a golf course which is busy in the spring and summer months but becomes a ghost town in the winter. Why not collaborate with a company that puts on immersive events? Most of them not only help you build out a concept but can also handle your ticketing and logistics. Or offer your parking lot for a drive-thru experience. If you have a built-in concession space for managing food and beverage sales, crank up the hot chocolate machine, pop some popcorn, build goodwill in the community, and smooth out your revenue roller coaster. As a bonus, it could help you keep your prized staff members employed year-round.
Effectively managing cash flow is critical and in a cyclical business; it is a timing game. Assuming you have secured the proper financing in advance of the need, what levers can be pulled if you need to “float?” Floating is a term often used in seasonal companies to indicate the need to hold on to your cash when the inflow of money to the business is slowest. Is there a way to incentivize your customers to pay early?
Years ago, we allowed many of our retailers to pay by credit card. We took the hit on the merchant service fees, but they had at least 30 days before their bill was due and most enjoyed added points in their credit card reward programs. Many large retailers also offer options for early pay with a net discount against the invoice. It’s not ideal, but it is an option. Businesses can also lean into incentive and loyalty programs for brand fans to make purchases in the offseason. Perhaps one of the best strategies I’ve seen in recent years occurred during the 2020 pandemic lockdown, when thousands of businesses offered gift cards and gift certificates at a discount. For instance, you could receive a $100 restaurant or spa gift card, but only pay $75 for it at the time of purchase. Again, the customer gets a value, and the business gets cash immediately.
Success lies in forging genuine connections, offering impeccable customer service, and understanding where opportunity lies that you may have not yet discovered. Seasonality doesn’t have to restrict your business. It can be a promising place to build a brand, and watch it grow from there.
Business management, Customer service, Brand management, Customer experience, Operations and supply chain management, Digital Article
Christa Pitts
Christa Pitts is the co-CEO and cofounder of The Lumistella Company, the powerhouse bringing Santa’s North Pole to life through consumer products, engaging brand experiences and original entertainment through brands like The Elf on the Shelf, Elf Pets, and Elf Mates.
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