Surviving the Seasonal Slump

Q: What do I need to do to get through the seasonal slump my business experiences every year?

A: While there's no way to eliminate the ebbs and flows of a seasonal business, there are a number of things you can do to help you breathe a little easier. Once your business turns a profit, for example, you can go to the bank and apply for a credit line secured by your accounts receivable (the sales you've booked but not yet collected). This way, you'll have the money you need to cover rent, payroll and other overhead expenses during the months when sales are slow.

It's also vital to maintain your sales and marketing efforts throughout the year. You can take advantage of your seasonal "slump" to work on your website, launch a direct-marketing campaign and host seminars to generate leads. Depending on the type of business you run, you may be able to collect advance payments from your customers, bringing in much-needed cash flow.

One entrepreneur who knows how to control a seasonal business is James J. Zabatta, who used to run a company that sold and installed sunrooms. "By maintaining our sales efforts throughout the winter, we were able to keep sales going and collect one-third down on these new projects, which helped alleviate some of the cash-flow crunch during the winter," recalls Zabatta, now a financial advisor for the Northshore Financial Group.

Even if you can't collect advance payments from your customers, you can reduce your overhead by bringing in temporary workers, interns or freelancers during peak periods and letting them go in the off season. "Over my career, I have had a lot of success hiring summer intern college students who are looking more for business experience than compensation," Zabatta says.

Copyright © 2008 Entrepreneur.com, Inc. All rights reserved. Privacy Policy