If you're a small-business owner who keeps one eye on the calendar, you're probably familiar with the challenges of running a seasonal business. From uneven revenue streams to varying staffing needs, it takes smart planning and diversification to manage your seasonal business year-round.
To keep his cash flow up and his workers busy, the owners of Eradico Services Inc. in Novi, Michigan, offer a menu of services that includes pest control, lawn care and holiday lighting needs. Co-owner Steve Russell says the push to diversify began in earnest in the 1990s when the company expanded from pest control and lawn care and added tree and shrub services. Offering holiday decor services helped balance out the warm-weather landscaping season.
"Investing in a Christmas decor franchise and taking on holiday lighting has helped us even out the revenue-producing months," Russell says. "But we're still a business that has seasonal ebbs and flows." Russell says the diversified businesses allow the company to provide expanded services to clients, use personnel throughout the entire year and pool other resources.
"As you can imagine, there are times when all the businesses dovetail nicely with each other, but there are also times when it requires a lot of planning and expert execution to have them all functioning as they should," Russell says. "There's a tremendous synergy we get from this diversification."
Getting Customers on Board
David and Carrie McKeegan are the co-founders of Greenback Expat Tax Service, with offices in New York City and Hong Kong and virtual employees around the world. The McKeegans says the second quarter of the year is the busiest time for their seasonal business because U.S. federal tax returns for expats are due June 15.
"Even though it's a seasonal business by nature, we try to do a lot of work to smooth out the ebbs and flows," David McKeegan says. "Most people want to file right before June, but extensions are very common because expats are filing in their home country and don't tend to owe taxes and wouldn't owe interest."
Tax returns that are due June 15 can be extended another three months—to October 15. To encourage people to file during a less busy time, the couple offers their customers incentives to wait.
"For those people who are truly indifferent and would be happy to have a lower price, we'll offer discounts for people who want to file in August so we can keep the accountants busy in August," Carrie McKeegan says, "and for us, that means we even out the work flow throughout the year."
The McKeegans, who hire CPAs and enrolled agents to work virtually for the company worldwide, try to keep the tax professionals they work with busy all year long. "We try to make sure people aren't getting overwhelmed during busy peak season," David says, "and still have some work the rest of the year."
Carrie says having slower times isn't always a bad thing. "In months like November and December," she notes, "the accountants are excited about the fact they have a little bit more free time, and they're prepping [for when they don't] have any free time from January to June."
Learning to Go With the Flow
Businesses that are tied to school calendars also face seasonal challenges. "Since we run after-school programs and offer workshops in schools during the school year, summer was our slow season," says Shaun Tuch, co-founder of Los Angeles-based Professor Egghead Science Academy. "When we generated no income during the summer but still had a cost of rent and salary to run the business, we decided to add another revenue stream during our slow season. To pay for expenses, we turned summer into a fourth session and added a summer camp offering as another revenue stream."
Creating additional services can help smooth cash flow issues, but not every entrepreneur is anxious to fill up the natural breaks that a slower season can bring. In fact, some look forward to the downtime as a chance to take a break.
"I'm a test prep tutor, so I only see students when there's a college entrance exam coming up," says Eulynn Gangana, director of tutoring and test prep for FutureWise Consulting. "While I also offer help for high school entrance exams and other academic tutoring, summers are when most of my clients like to take a break. What I've learned is to take one with them.
"We manage our money in a way so that we have money to spend during those months when we don't have revenue," she notes. "I've really started to enjoy my summers off."
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