Seasonal demand. It’s one of the greatest challenges for any business.
Both feasts and famines have their issues. Either your business can’t keep up with demand, or there’s not enough work to pay the bills.
Almost every business experiences seasonal fluctuations in sales and cash flow.
Some fluctuations are predictable—certain holidays, popular vacation times or weather seasons. But others—like a crisis that suddenly cuts sales—are unpredictable.
The key is knowing how to manage these seasonal cycles.
You want to maximize sales during the good times and minimize losses during the slow times. You also want to protect your cash surpluses so you can rely on them when times are tight.
These sales strategies can help you spread the impact of seasonal demand:
Flatten the seasonal demand curve
Use your sales and marketing tactics to spread demand across the year.
Promote either side of the peaks (especially if you lose customers because you’re too busy). If you can, encourage customers to buy sooner (or later) to even the sales bumps. During the valleys, you’ll want to encourage more customers to fill the gap.
These tactics can help:
- Change your price. If demand is high, you could increase prices to help decrease demand just enough to remain busy. If demand is low, offer discounts or incentives to encourage purchases.
- Allow customers to pre-purchase in exchange for a discount, free product, service or other high-value but low-cost item.
- Set up an annual payment plan or subscription model that encourages customers to pay monthly.
Spreading sales can be harder with perishable products and services. But there might be new products you can introduce to help with that.
Diversify your offerings
Can you diversify what you deliver during quiet periods? This might provide additional opportunities to redirect resources and be more resilient to fluctuating demand.
Here are some ways to diversify:
- Launch new products or services outside your usual sales high.
- Consider partnering with other complementary businesses (you sell their products when you’re not busy, and they sell yours in return). Or sub-contract and supply to larger businesses.
- Import or export non-seasonal products or investigate becoming a supplier to non-seasonal businesses.
- Look at new sales channels, like moving parts of your business online to sell in other regions that don’t suffer wild seasonal swings.
Don’t forget to search online, subscribe to industry news, visit business association sites and talk to suppliers and experts to validate your ideas.
Here’s what to consider with a business partnership >
Keep your ear to the ground
If possible, take advantage of events that occur out of the ordinary. (Think sports or cultural events hosted locally.) Can you stay open longer during those times?
Also, consider opening pop-up stores in other regions or creating events in partnership with other businesses to generate demand.
Manage the off-season
Think about what you can do to scale down efficiently for expected drops in sales and when customers might still need support.
This might mean:
- Closing parts of the business.
- Using the time to prepare for the next season.
- Doing something else.
It’s not unusual for some businesses to have separate parts that open and close with the seasons.
Manage the on season
If you experience a sudden increase in demand, remember to expand or manage customer service levels.
The last thing you want is unhappy customers waiting for delivery or an out-of-stock product.
Identify and establish a plan to access surplus products or services to satisfy the temporary high demand. To help do this:
- Arrange backup suppliers in case your existing providers run short. And buy in volume before any expected increase so you don’t run out. If you can buy inventory on consignment (only pay for what you sell), even better!
- Use inventory management software linked to sales so staff doesn’t order too many of the wrong items. And be prepared to offload spare products or materials at the end of the season.
- Your staff supply is also critical. So, plan to add people quickly when busy and reduce when you’re not.
- Investigate contracting parts of your operation to other businesses if demand explodes.
Next steps
- Audit the type of seasonality your business experiences. Then, develop contingency strategies to manage its impact.
- Ask for the event calendars of local sports clubs and cities to build a sales campaign for one-off occasions.
- Form partnerships with other businesses that either have different seasonality cycles or are in different industries that don’t experience fluctuations.
