A seasonal business, like a Christmas decorations shop, a ski lodge, or even a tax preparation office, would have their revenue inflow only on a seasonal basis. Thus, they may find it difficult to meet their fixed costs during the off-season, and it takes some serious business and financial planning to meet those costs.
Managing cash flow for a seasonal business is about ensuring that you have enough money to meet your needs when your sales are low. To do this, you have to understand your sales cycle and your market. This allows you to know the impact of your sales cycle on your operations and cash flow, and if there is anything you can do to generate revenue during the off-season.
Steps To Prepare For a Business Downturn
There are several measures you, as a seasonal business owner, can take to ensure your financial security when the cash inflow is low. Here are a few:
- Have An Emergency Fund: It’s always a good idea to have an emergency fund as back up for when you’re down. You should save money for a rainy day, instead of spending all of it.
- Plan Your Future Finances: Try to anticipate any major expenditure you may have in the next couple of years, e.g., upgrading equipment or needing new technology. Have a separate fund for these expenses as well, and ensure to keep adding to it during high season.
- Reward Key Employees: Rewarding key employees who contributed greatly to the company is a great way to retain their loyalty. However, make sure to let them know that the bonus or incentive is a result of the company’s success and is discretionary.
- Make Smart Investments: When you understand the keys to your business’ success, it becomes easier to know what you should invest in to move your business forward. You can find additional services or products to sell in the offseason that will help you generate revenue even then.
If you still have a short-term fund requirement for your seasonal business and are unable to meet your expenses, you can also consider the option of flexi loans which has gained a lot of popularity in the past few years.
How Flexi Loans Can Help
Several Banks and NBFC’s like Bajaj Finserv offer Flexi loans up to Rs. 35 Lakh wherein a person can withdraw money in parts as per the requirement. The interest will be charged only on the borrowed amount and not the entire approved amount. For example, if the approved loan amount is Rs. 35 lakh and the borrowed amount is Rs. 4 lakh, then the interest will be charged only on Rs.4 lakh and not the entire Rs.25 lakh.
The loan also offers flexible repayment options that allow you to prepay the borrowed amount any time before the end of the tenor, at no extra cost. Also, you can choose to pay only the interest as EMI – the principal amount can be paid only at the end of the tenor. Moreover, these loans are unsecured. Hence, you do not need to pledge any secure any security or collateral to avail these loans.
For a seasonal business owner, these features are exactly suited to help you finance your business during the offseason. You may not need the full amount all at once, so you can borrow the amount you need and will have to pay the interest only for that amount. Thus, overall, Flexi Loans give you a very flexible source of funds when you need them.
If you think flexi loans are good for your requirements, you can apply for the same through the following link:-