Basics for Seasonal Business Owners

You may depend on a sliver of the year for the bulk of your business. Here's how to maximize the rest of it

By Amy Barrett

Browse Issues

Browse the BusinessWeek Archive

Related Items

• Small Employers Cope with Immigration Crackdowns
• A Seasonal Storm

Ray Ng

Ray Ng

Ray Ng

Story Tools

• post a comment
• e-mail this story
• print this story
• order a reprint
• suggest a story
• digg this
• save to del.icio.us

The Stewart family was scrambling. Last May, Jeff Stewart and his wife, Mary, owners of Back Harbor Marine, bought a second boat for their $600,000 company, which runs dolphin- and whale-watching excursions out of Cape May, N.J. They expected to get it in the water by August, and booked enough trips for two boats in early September. But the Spirit of Cape May needed a lot more work than they'd realized. Canceling some of those group trips would have meant losing about $50,000 in sales—not a good option for a company that earns half its annual revenues between Memorial Day and Labor Day. So the four-person company ran three trips a day in September on its one boat, rather than the usual two. "It was tiring," Stewart says. "But when you see an opportunity, you gotta do it."

No entrepreneur can afford to let business slip away. And that's even more important for seasonal business owners. Whether you are running an inn in a tourist town where vacationers disappear several months a year, operating a quarry with a brief mining season, or distributing produce that is harvested during just a few months, extensive planning and execution are are crucial to protecting your cash flow. "A seasonal business is infinitely more difficult to manage than most other businesses," says Les Charm, who teaches entrepreneurial finance as an adjunct professor at Babson College. "You have short time periods to make very critical decisions."

Seasonal-business owners need to master five key areas—ones that also are important to any business with ups and downs. Use the off-season to strategize, develop marketing plans, and lay the foundation for when things get crazy. You also need to be a pro at hiring new workers each season. When possible, you'll want to find revenue streams to make the off-season as lucrative as possible. And of course, you'll need to create a cash cushion for unexpected events during the off-season, when revenues are scarce, as well as stockpile to fund the start of the busy period, when expenses spike. Finally, you'll need to be hypervigilant when business picks up, tracking sales closely—in some cases hourly—in order to make adjustments quickly.

OFF-SEASON UPKEEP

No matter how little money is coming in, the off-season isn't all about golfing and fishing. It's when you'll need to do long-range planning. First on the list should be preparing for the next busy season, including nailing down product offerings and schedules and doing maintenance work. To line up as much business as possible in advance, marketing should remain in high gear.

John Swanson, owner of All Aboard Yacht Charters in Union, Wash., a $300,000 company with four employees, spends the off-season from mid-September through April doing about 1,000 hours of maintenance on his boat. He also fields plenty of phone calls from potential customers and takes reservations for his weeklong cruises to Alaska. Paperwork reigns supreme: Swanson files environmental impact studies with the U.S. Forest Service, and because some of his destinations, such as Pack Creek in Alaska, limit the number of visitors, he lines up permits in advance. There's no time for any of this once he starts taking cruises out. "From May to September, I am on the boat 24 hours a day," Swanson says. "You can't access the Internet, there's limited phone service. There's no turning back."

When your business ebbs and flows, so does your workforce. "The No.1 challenge of a seasonal business is having a good core labor force you can rely on," says Colon Grandy, owner of Grandy Farm Market, a $1.5 million, 4,000-square-foot open-air fruit and produce store in Grandy, N.C., that employees 30 people during the peak summer months.

Identify those workers you simply can't afford to let go. These are critical employees who would either be impossible to replace or have received so much training that you risk hurting your revenues if new hires can't get up to speed fast enough. It's wise either to help those employees find a job for the off-season or to keep them on the payroll all year.