If your business is seasonal, it might seem like a good idea to invest in it during your busy months and pull back during your slow months. But does this make good business sense? We had a look at what our clients in sectors susceptible to seasonal fluctuations (hospitality, retail, building and hardware) do with their business cash advances in winter. And what we found is that investing in your business during a traditional downtime has some pretty significant benefits.
Here are some of our key findings.
1 There’s growth. A lot of it.
Investing in your business in months like July and August, which are often considered ‘slow’, can help your business to grow. In the above sectors, we’ve seen our clients experience an average of 200% growth in turnover, month on month, after taking an advance in winter.
2 Bigger isn’t always better
It’s not always the larger investments that make the biggest difference. In many cases, smaller investments (less than R100 000) reaped the greatest rewards, with less pressure on cash flow resulting in greater turnover.
3 Renovations, expansion and stock are a priority
Our data indicates that our clients in these industries primarily use advances taken in winter to renovate, expand and to purchase stock. For many businesses, this is probably the best time to invest in renovations and upgrades, when construction is least likely to inconvenience their customers.
4 An advance can be a cash flow life-saver
Our clients also use their advances to help with cash flow or emergency funding during the quieter months. Easily accessible finance can make all the difference in keeping your business afloat during a seasonal slump.
5 It can also put you ahead of the game
The benefits of taking an advance in a slow period, like growth in turnover, improved cash flow, and the ability to purchase stock and upgrade your business, all help to prepare you for the peak season – and put you in a strong position to reach the profit margins you’re aiming for.
Of course, these aren’t the only ways to invest in your business during a downtime. Here are some other suggestions to help you survive – and thrive.
- Ramp up your marketing. Now’s the time to put up a website or update your existing one, start an e-newsletter to your customer base, step up your social media efforts, or put together seasonal special offers and promotions.
- Get organised. Take a look at what needs to be done and get to it. Small wins can range from cosmetic improvements and clearing out clutter to fixing or replacing faulty equipment.
- Be innovative. Take this time to review your business strategy and try to identify opportunities, from targeting a new market to offering a new product or service.