The challenges of running a seasonal business and how to overcome them

The staycation economy is booming in the UK, with Brits spending around ?22.5bn on holidays in the UK annually. Our recent research found that more than three quarters of UK adults (77 per cent) have been on, or are planning a UK staycation.

There are growing opportunities for small businesses to capitalise on this and rich prospects to seize ? but predominantly during prime staycation season from July to September.

Running a seasonal business is no mean feat. Like any business, there are ups and downs, but with a seasonal business in particular, busy season will deliver most of the year?s business, whilst activity slows right down out of season.

Businesses experiencing extreme seasonality operate in busy marketplaces, where we know there is a demand for service, but there are of course challenges involved.

Our research revealed that turnover for SMEs in the accommodation and food services sector is up 17 per cent since 2009, which was the highest since its peak in 2006.

This sector is the most susceptible to seasonality, experiencing the highest turnover growth of any other sector during staycation season, from July to September ? 7.3 per cent above its annual average.

Of course, while businesses operating in this sector in locations where tourists cluster will naturally experience peaks of activity during the summer months, it may be difficult for them to stay afloat when activity slows during the winter. There are a few tips that businesses of this kind can follow to ensure they survive during this period.

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Make the most of your busy season

The research found that Brits heading on a staycation budget an average ?575 per party, while those over the age of 55 budget an average ?619. With over three quarters of Brits staycationing, the industry is clearly cash rich during the summer months.

Those running seasonal businesses need to capitalise on this in order to maximise income, to stay afloat during the much quieter winter season. This can be done by increasing staff numbers and opening hours; thinking about marketing, perhaps exploring social media, and maximising efficiency where possible.

Diversify your offering

During the winter when it?s quieter, cash-flow is one of the main challenges that seasonal businesses face. Often business owners need to find a way to sustain a low level of cash flow throughout the winter to manage outgoings and avoid falling into debt.

By diversifying your offering to accommodate winter visitors or different types of customers, seasonal businesses will be able to maintain a low but steady level of cash coming into the business.

For example, ice cream stands could look to diversify into other sweet treats such as waffles and crepes during the winter, and shops in areas where high number of tourists fluctuate could make use of their space by completely diversifying their retail offering.

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Manage your cash flow effectively

As the industry is more cash rich during peak season, it?s important for business owners to have a plan in place to manage their cash flow effectively during the slow season. 

By planning ahead and revisiting your business plan regularly, it will be easier to keep on top of where your outgoings are and when you?ll need cash. It?s also worth speaking to your bank about cash flow options that could help you manage slow-season.

Make the most of your time off

Running any kind of business is tiring, and we all need holidays from time to time. But running a seasonal business means that a huge proportion of your annual income is reliant on just three months? worth of business.

When the season is over, make sure you take a well-earned break. Slow season is also a great opportunity to plan for busy times ahead; think about new skills and training days you can implement, and revisit your business plan to ensure you?re completely aligned with where you want to be ? you may not have time to do this during busy season.

Adam Rowse is the head of business banking at Barclays

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