Small Biz Advice: Know Your Seasonality



Dear Holly,

I run a small fitness center here in Brooklyn. Business is going well, but I’m a little concerned about the last quarter of the year. I do really well after the start of the New Year and through the summer, but when I get to the final quarter, my cash flow takes a nose dive.

How can I avoid being there in the future?


Not Working Out

Dear Not Working Out,

This is such a great question! Almost all types of businesses deal with this problem. Most businesses experience what’s called seasonality. That means that there are times of the year when you’re busy and you’re earning money, and there are times of the year when you’re slower and need a cash reserve to get you through. Your seasonality is a repeating pattern that occurs almost every year.

When you do all of your business planning, it’s vital that you’re clear on the seasonality of your business. If you’re keeping good accounting records, it will be simple to map this out.

Go back and review your records to see if there is a pattern year over year. You said that January through September is busy and then business drops off in October. Once you’re clear on that pattern, you can create your marketing and business growth strategies based on that curve. There are two ways to look at this.

First, capitalize on the busy time of year. Remember that this time of year has to earn enough profit to carry you through the slow time. So when you know the customers will be coming, don’t just shoot to break even, shoot to increase your profits and maximize your cash flow. If you have to squeeze all of your membership sign ups into the first nine months of the year, but cover expenses for twelve months of the year, what would that look like? Knowing the target number of people you need coming through the doors the first nine months will help ease the stress of the last three months.

Then, look at your slow time of year. What message can you put out this time of year to motivate customers to keep using your services? Or are there promotions you can be using to bring in customers? If you know that the last three months of the year are typically slower, then you must anticipate it and plan accordingly. Are there any variable expenses that you can cut to save money, such as staffing? Work from both angles—try to increase your business and decrease expenses.

The key is that you recognize that all twelve months are not created equal. It’s a common mistake that business owners make and the sooner you understand your seasonality, the easier it will be to plan accordingly. You’ll never again be caught off guard in the last quarter and you can finish the year knowing that you have the cash you need to make it through. Good luck!

Holly Howard runs Ask Holly How, a small business consulting company based out of Williamsburg, Brooklyn that works with a wide variety of businesses from restaurants to retail to art studios and pretty much everything in between. Her clients report increased income and profit, decreased expenses and a significantly better quality of life. Holly heads up the Small Business Book Club at McNally Jackson Books.

Want valuable insight into how to grow your business? Holly hosts free 30 minute strategy sessions at The Yard in Williamsburg. Email her to set up a time or to ask a question for the next Ask Holly How.

And starting Oct. 30, Holly is applying her knowledge and experience in the restaurant industry to a special, four-part course, “How to Open a Restaurant,” that she’ll be teaching at The Yard with guest lecturers from local restaurants like Carolyn Bane, chef and co-owner of Pies ‘n’ Thighs, and Andy Rosenberg, Director of Marketing at The Meatball Shop. Sign up for one or all four sessions, and you’ll get advice on business planning, operations, sourcing a menu, marketing and more. Tickets are $70 per session or $208 for the entire program when you use the 20% discount code, bkbased.

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