In business, seasonal fluctuations refer to the peaks and troughs in demand that correspond with different times of year. Most SMEs will experience this at some point, but certain industries can be subject to greater variations due to the nature of their trade.
The upside is that these shifts are usually predictable, which allows companies to plan ahead and put measures in place to ensure they can fulfil customer requirements. It is prudent to review what your business can do to manage cyclical demand effectively.
Manage cash flow
During peak seasons, try to reserve cash for the quieter months so you have sufficient funds available all year round. Aim to plan at least six months ahead by using historic sales data to forecast levels of supply and demand. This will help you to better recognise trends in consumer behaviour and account for this in your sales projections.
Regularly monitoring levels of stock can reduce wastage and therefore save costs. Coincide orders with peak periods, so your company does not have surplus stock when business is slow.
Identify workforce needs
Establish how many employees you need in any given shift, month or season to maximise efficiency and organise staff contracts to reflect business levels. Employing temporary staff can provide additional support during busier periods and this strategy can also keep costs down during quieter months.
Review payment terms
Long payment terms and overdue client invoices can put a strain on cash flow. Requesting shorter credit periods may prompt customers to pay for goods and services quicker, giving you adequate working capital to continue trading.
Consider Liquidity Plus
If your business is experiencing unusually high customer demand during seasonal periods, Liquidity Plus can provide an immediate cash injection. Once added onto your existing invoice discounting facility, it allows you to access up to 100% of the value of your invoices over a short to medium term period.
Designed to give you the flexibility you require, this sustainable solution can give access to increased funding when you need it most or support commercial aspirations as your SME continues to grow and thrive.