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How to deal with fluctuating seasonal demand

3 Mins read

Seasons come and seasons go, but in the business world, they aren’t always equal.

From Christmas retailers and ice cream vans, to holiday let businesses and tax preparation companies, there are so many organisations out there that operate on a seasonal basis.

Whether they function exclusively during certain seasons or just don’t enjoy high demand all year round, all seasonal businesses need to think carefully about how to keep themselves afloat during fallow periods. Here are some of the best ways they can deal with fluctuating demand.

Get financial relief

There are lots of ways seasonal businesses can get funds to soften the financial impact of their downtime.

Tax credits

Business tax credits work as subsidies that enable businesses to deduce an amount from the taxes they owe. As noted by tax experts Adsum, tax credits are “one of the best business loan alternatives around”, as “you get to advance some money that’s already coming your way”. While not every business will be eligible, they’re worth exploring just in case. Some prominent examples that a business may be entitled to are VAT refunds, research and development (R&D) credits and creative tax relief.

Short term loan

A short-term business loan enables a company to borrow a certain amount of money for business purposes. This must be paid back over an agreed period of time, usually between a month and a year. A short term loan can be a great option for seasonal businesses looking to tide over certain expenses during an off-season, and can be paid off when demand is high again. That said, companies must be wary of avoiding high interest rates and the risks of secured loans.

Crowdfunding

Crowdfunding has massively grown in popularity as a type of financing. It involves taking a small amount of investment from a lot of sources to create a much larger sum, often in exchange for something, like equity or rewards (such as discounts). This can be a good source of funds for businesses with large customer bases, though they should be wary of giving away equity to too many people.

Evaluate operations during the off-season

The off-season is a great time for seasonal businesses to evaluate their operations to help them maximise profits during their next peak period. By evaluating their performance to see what went right and what didn’t, businesses can determine how to better approach things in the future. Some of the main aspects to assess include:

Inventory – By taking notes of which products were popular and which ones weren’t, as well as what competitors did successfully, seasonal businesses can refine their offerings.
Staffing – Seasonal businesses should assess whether they had enough staff or not to help them work out who they need next time around.
Suppliers – The off-season can be used to research vendors to see if there are better deals out there, so companies can either switch suppliers or renegotiate existing contracts.
Maintenance – Instead of addressing shop maintenance or renovation issues when busy, seasonal businesses can take care of them during the off-season, ensuring they’re fully ready for the peak period.

Diversify product offering

If a business’s products or services portfolio is small, they’re much more likely to struggle with seasonality. By developing product or service lines with different peak seasons or no seasonal demand at all, businesses can maximise their profits all-year round. For example, say a company specialises in winter wear, then it would be a good idea to sell summer clothes too. While a Christmas tree business may want to offer other types of plants to bring in customers year-round.

Similarly, seasonal businesses might also want to consider expanding to different locations, particularly if they operate online. For instance, although summer-based companies in the UK can generally only operate between March and September, during their winter it will be summer in other parts of the world, such as New Zealand and Australia. As such, there could be significant opportunities to sell products or services there during a company’s domestic off-season.