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Running a Seasonal Business
Find out what smart tactics these entrepreneurs use to ensure the success of their seasonal businesses.URL: http://www.entrepreneur.com/management/operations/article175954.html
No matter what industry they're involved in, most businesses have seasonal highs and lows. Yet like Santa, some companies--summer camps, ski schools and Christmas stores, for example--depend heavily on the revenue generated during a single season to carry them through the year.
Typically, seasonal businesses fall into one of two categories: those that can shut down in the off-season and those whose owners have to find another way to maintain cash flow during the rest of the year.
Scott Stillings' business firmly falls into the first category. Owner of Winter Sports School at Nub's Nob ski resort in Harbor Springs, Michigan, Stillings says his business is a model of great cash flow. ''This is such an open-and-shut business," he says. "We balance our books every week, pay every bill and everybody each week, and when we close the door at the end of the season, we know right where we stand. There's no carryover.''
The staff begins preparing in September for the ski and snowboarding season, which begins on Thanksgiving weekend. Stillings says opening day is the school's busiest, followed by the days around Christmas and then President's Day weekend. "Then we stay at a manageable cash flow level [the rest of the season],'' he adds.
Because there's not much inventory and no permanent staff--Stillings hires more than 100 instructors each season--the doors close the second weekend in April each year. ''In April, we try to finish everything for the year and hash out what we should do for next year while it's fresh in our minds," he says. That includes updating literature, brochures and the website, so people can always access the next season's information.
"Then we don't do squat until August when we stuff brochures into envelopes,'' says Stillings. ''Most years, I can take the whole summer off if I wanted to. If it hasn't been a good year, I can always strap my guitar to my back and go off and perform as a soloist or in a band.''
Pinching Pennies
''Obviously, in a [seasonal] business, you need to budget carefully to make sure you don't overspend or extend yourself past your capabilities,'' says Dennis D. Vourderis, who, along with his brother Steve, owns Deno's Wonder Wheel Amusement Park on the boardwalk in Coney Island, New York. ''Maintenance, taxes and equipment financing all need to be based on a 12-month year, so you need to know you'll have enough funding to cover those expenses during the time you have no cash flow.'' Having good credit, he adds, is a necessity in a seasonal business.
For the Vourderis brothers, whose parents purchased the amusement park and the Wonder Wheel--a Ferris wheel built in 1920 and declared a New York City landmark in 1989--the busy season runs from April to October. ''We face the beach, so we're 100 percent driven by the weather," Vourderis says. "If the sun comes out, people come to the beach, the boardwalk and the rides. If it's raining, it's not even feasible to open." Since a year's worth of business gets squeezed into six months, every sunny day counts. Vourderis uses July 4 as a benchmark for being in the black.
During the off-season, Vourderis stays busy, as he, his brother and their trained staff dismantle the seats and other parts of the rides and store them in a warehouse where they're painted and undergo maintenance, repairs and inspection.
Maintenance, repairs and painting also occupy the winter months for Jay Kandle and his family, who run Lake Kandle Campgrounds and Swim Club in Sewell, New Jersey. ''We like to winterize in October, right after we close," says Kandle. "We also take care of the pool, put away the rescue equipment for the lifeguards, do landscaping maintenance, rebuild old picnic tables and so on. We prepare for the coming year like farmers.'' Kandle dedicates his entire year to the business, despite the fact he's only bringing in money from the campsites and swim club for close to eight months of it.
From tax planning to hiring staff, Kandle spends October through March gearing up for a season that will involve approximately 2,000 swim club members and campers visiting the 150 camp sites on nearly 20 acres. One thing that helps keep the Kandles in the black is the additional income they generate from renting out 40 additional acres of farmland, which, along with the campgrounds, have been in the family since 1892.
''My father and mother had the dream of opening a swim club and campground,'' says Kandle, who has taken a slightly different approach to running the campground than his parents did. ''In my parents' day, January would have been a lean time of year. But by marketing the swim club to attract more business and taking deposits now, we're able to increase our cash flow during the off-season.''
The off-season is also a time for seasonal business owners to handle the important decisions that'll affect business the upcoming season. ''From a managerial standpoint, I try to break the business into two interrelated areas, the business side and the operational side,'' says Ron Weinhold, general manager and head of operations at two Cal Ripkin baseball camps and tournament facilities in Aberdeen, Maryland, and Myrtle Beach, South Carolina. "The height of activity on the sales side is between October and June, and the height of activity on the operations side is between March and October. So even though our business is considered seasonal, it's very much a year-round operation, with key decisions made during the winter months."
The camps are also slightly different from some other seasonal businesses because of increased cash flow during the months preceding the camps. While the official camp season is visibly the busiest, off-season registration generates the bulk of their income.
Switching Gears in the Off-Season
Although many seasonal business owners are able to ride the revenue wave through the off-season months, some owners opt to switch gears. Whether it's to maintain more consistent cash flow, better utilize a retail location or create a little peace of mind, some seasonal business owners have alternate plans for the off-season.
The Christmas Dove stores in Barrington, New Hampshire; Ogunquit, Maine; Boston; and New Orleans, don't close down after the holiday, but instead undergo a transformation, capitalizing on consumers' interest in decorating for other holidays throughout the year.
"Halloween has become huge with people decorating their homes inside and out, going to parties and giving gifts," explains Garth Svenson, who now runs the family-owned business started by his parents. "People also decorate for Valentine's Day and put up lights for St. Patrick's Day and the Fourth of July."
Supplementing the biggest annual shopping holiday without straying too far and losing the Christmas store following has been a balancing act. But by taking advantage of consumer demands, they've been able to turn what was primarily a Christmas business into a year-round celebratory store.
Jan Axel, a long-time sculptor who took to landscaping after moving from Manhattan to South Salem, New York, supplements her Delphinium Design landscaping business with holiday decorating services. ''As a landscape designer, I found it got very slow in the winter, so a colleague and I started doing holiday decorating,'' Axel explains. Together, the two started Cirque de Botanica, a separate holiday design business. ''It was a natural spin-off, and the immediate gratification makes it very appealing. A lot of what we do as landscapers takes so much time; sometimes it's years before we see a finished product mature.
Besides filling a creative niche, Axel's off-season business also bridges the gap between the planning and design phases--which can take place in the fall--and spring and summer, when her planting crews are out in force, sculpting a wide range of residential gardens and landscapes.
The Year-Round View
With 13 stores in seven Eastern states, selling outdoor patio furniture peaks for retailer Patio.com during the spring as warm weather approaches. Then, as the weather cools and entertaining moves inside, there's a drop in sales.
To avoid having to lay off any of its full-time employees during the slow season, 10 years ago the company began offering top-of-the line pool, ping pong and foosball tables, as well as bars, barstools, and bar tables and chairs in their store showrooms during the fall and winter, transforming a seasonal business into a year-round enterprise.
In fact, the off-season pool table business has become so successful that Patio.com has become the world's largest Brunswick Pool Table dealer. ''It's taken a tremendous amount of work and a lot of training, but we've been able to turn Patio.com from a seasonal company into a successful year-round business,'' says the company's co-CEO Mitchell Ross. "All the salespeople have become experts in both patio furniture and pool tables. Our entire delivery staff now knows how to do pool table assembly and repair." In fact, they've been so successful at blending patio furniture and pool tables that Ross has wondered whether they should now call the business ''PatioandPoolTables.com.''
Whether your seasonal business is one that sustains you through the year or requires an off-season transition, it can provide great diversity--and even a little downtime--if you master the art of careful planning, scheduling and pacing yourself for the full calendar year.
Case study: How I manage my seasonal business
WHAT: Poole-based watersports equipment retailer
THE SOLUTION: "We sell clothing and equipment for watersports such as surfing and diving. Our busiest time of year is between April and October, and on a typical Saturday in the summer around 500 people pass through our shop. In the winter, this figure will drop to just 50. We have two permanent members of staff who work all year round, but during the summer we take on a part-time employee to help us deal with the workload.
"We start preparing for the summer months well beforehand. We order stock early to take advantage of discounts and we organise payment plans of between four and six months. Most of the stock has arrived by Easter, but we usually receive our deliveries in three drops because we don't have lots of storage space. Once we've sold the stock from the first drop, we've usually covered the costs of the entire order so everything we make on the next two drops is pre-tax profit.
"We have a good overdraft facility with our bank, which we can dip into before the summer season. We may need it if one of our suppliers doesn't offer a payment plan or if we can make greater margins with a single stock purchase.
"Our rent is the same throughout the year and we put money aside in the summer to cover our rent in the off-months. We make extra money by subletting space to a sail-repair business and a wakeboarding school. We charge them more in the summer and this helps pay the rent later in the year when sales have slowed.
"Our three company vans are leased. Buying them outright would have tied up too much cashflow in the beginning, and leasing gives us flexibility; we can either buy them at the end of the leasing period or upgrade them.
"We earn extra money in the off-months by running watersports coaching holidays abroad. It takes us out of the country for free, which is a bonus, and it's very good for business because lots of customers buy our equipment to use on the trip. The surf clothing business is seasonal, but we also stock regular casual clothing which sells year-round. At the moment we're improving our website, which we hope will boost winter sales."
LESSONS LEARNED: "Cashflow is very important in a seasonal business, so don't get carried away and order too much stock. For some of our larger equipment, such as kites and boards, we'll sell and replace them as we go. Last year, we finished up with a little too much stock, which we had to sell at reduced prices. So be flexible when ordering things, otherwise your cashflow will be as unpredictable as the weather."
For Every Tourist Business There Is A Season
January 28th, 2007All businesses have a seasonal ‘ebb and flow’ to their year, some kind of fluctuation in sales or activity that can be tied to the different times of year.
For those of us with tourism-based businesses located along the Blue Ridge Parkway, Winter is generally our ‘down time’, our slow season. Most Parkway businesses close officially on October 31st each year, although I don’t know anyone who can’t be persuaded to stay open an extra week or so if Autumn leaf season has been long or delayed, due to cold and resulting color changes. Parkway businesses will keep their doors open for, and keep taking money from, the droves of visitors driving our back roads during the Fall - as long as they keep coming. Some with strong holiday mail order businesses stay open through Christmas, and then close down. Still others stay open year round, but with reduced hours.
And then there are other businesses around here that only come to life for Christmas or Winter season only, like the Christmas Tree industry or Skiing. “Pick and Choose’ or ‘U-Cut’ Christmas tree farms are more popular than ever here in western North Carolina in November and December. I can’t say the same about skiing though. Although some areas of Appalachia were at one time historically popular during Winter as ski areas, more recently ’ski season’ has pretty much amounted to a few weekends of weather cold enough to manufacture a few flakes of snow. Any time I mention the movie, ‘An Inconvenient Truth,’ it’s amazing how quickly people seem to change the subject or get quiet. I guess no one wants to consider the affect of climate change on seasonal businesses in the Blue Ridge mountains….so we’ll save that for another time. And another post.
Sections of the Blue Ridge Parkway at the highest elevations are often closed during Winter months due to ice that rarely melts under areas shaded by pine trees. These sections of the Parkway are especially treacherous, all those beautiful overlooks beyond scary curves without substantial safety barriers. So from November through April, most people couldn’t get to their favorite tourist businesses even if they wanted. But since so few families travel the Parkway during Winter months, there simply aren’t that many people inconvenienced by the closings.
And so an economic slowdown is imposed on all of us along the Parkway.
Years ago, when we started our handmade soapmaking business, this slowdown time of year was a time to panic. A time to be fearful. Few people - and few businesses - have to learn to endure months with little (or no) income, and also learn to view that seasonality as ‘normal.’ And it took me a while, because I used to worry and wonder: Would our customers come back?
But after nine seasons, we know that they do come back. Year after year after year. And so we’ve also learned it’s especially important to use our down time to prepare for our customers’ return in the Spring.
These days, slowdown season is really only a slowdown of in-store visitors. We don’t shut down and go to Florida or travel cross country for a few months, like many of our neighboring tourism businesses do. Our website sales are year round, as is our wholesale business, and so packing and shipping of orders is part of our daily routine all twelve months of the year. Although we’re not open daily with regular hours during the Winter months, we are happy to open the shop to customers for appointment shopping.
Without question, the most important part of slowdown season is that it is a time of special projects. A time to focus on making decisions that require careful consideration and time to ’sleep on it’ - like changes in product packaging or price increases. Time for projects that demand concentrated energy and creativity in planning - like getting this Backroads Business blog up and running. Time to offer related services that that can be offered in different forms - like week long and weekend handmade soapmaking workshops. These intensive sessions are impossible to facilitate uninterrupted during busy peak season.
And it’s also a time for property renovations. Because what self-respecting vacationer comes to the mountains to ‘get away from it all’ and wants to deal with all that noise and dust and mess caused by construction and renovation? If they wanted to deal with drywall dust and the smell of stain and paint drying, they could stay home and renovate themselves.
And so what’s one way we can show our customers how much we love them?
We can schedule our renovation projects during OUR vacation time!
Tomorrow we begin renovation to expand our web order packing and product packaging area. This will also allow a ‘re-assigning’ of other rooms’ to various business functions. As any business grows, your procedures and processes change. In order to stay efficient (and sane), the physical layout has to change too. And in our case, as our web & mail order operation has grown, we need more space to store product, pull and pack orders, and ship. Yet we still need enough retail space for our drop-by customers to browse and select products when we are open full time during tourist season, May through October.
Next month we’ll see a reshuffling of the current retail area. I’m thankful all the soap is still made out in The Soap Shed, and we’ve got plenty of room out there to continue expanding as needed. But in the meantime, I’ve got two rooms of displays and furniture sitting out on our wraparound deck, taking the place of all those rocking chairs that customers were lounging in just a couple months ago. When it was about 40 degrees warmer!
I think we’ve got it rough sometimes juggling our seasonal business, but then I read about a fireworks factory whose product is only in demand certain days of the year! I don’t usually find much discussion about running a seasonal business and coping with its challenges. But I did find an interesting article on learning to budget year round and survive seasonal sales slumps.
Downtime or slow time for a seasonal business can also truly be a wonderfully creative time. What about thinking of how you might diversify the products you offer? How about brainstorming to see what other markets might be able to use what you make? Maybe there’s a new niche out there that would be able to use your product, if you made minor or cosmetic changes to ‘fit’ that new niche?
Asking these questions makes me realize that there is much, much more to say about running a seasonal business. So I will explore more - but in another post!
Seasoned Pros
Operating a seasonal kiosk keeps these partners on their mistletoes.URL: http://www.entrepreneur.com/magazine/entrepreneursstartupsmagazine/2004/september/72328.html
Everyone knows the crazed nature that takes over gift givers during the holiday season. No one knows it better than Michael DeAcosta and his three partners, who staff their Santa's Pen kiosk from November 1 through Christmas Eve at the Park City Center in Lancaster, Pennsylvania. For seven weeks, their seasonal kiosk, offering personalized ornaments, stockings and frames, opens for business inside the mall and takes full advantage of the shopping frenzy that erupts every year.
Running their business during the busy holiday season requires staffing the kiosk during the mall's extended holiday hours. That makes Santa's Pen an extremely time-consuming commitment for the partners of Diversified Investment Group—DeAcosta; his wife, Theresa; and Rick and Shelley Bortz. Rick, 45, owns a construction company, and Shelley, 40, owns a hair salon, so they're already juggling entrepreneurial ventures. Theresa, 36, a stay-at-home mom, must balance caring for her children and working at Santa's Pen when the holiday season rolls around. Michael, 36, a full-time teacher who also has a DJ business, finds that during the time Santa's Pen is open, he's putting a total of 110 to 120 hours per week into all his jobs. "[The holiday] time of the year is when most people are gearing down and goofing off," says Michael. "We don't get to do that until Christmas is over."
Despite the long hours, the partners feel strongly that it's important to their success to have one owner at the kiosk with the employees at all times. In addition to staffing the kiosk during the seven-week sales season, the four partners begin preparing for the holiday season in October, ordering stock and gearing up. The actual holiday rush can be hectic, yet Michael points out that when it's over, "we can take a deep breath, relax, do inventory, and close the doors till [next season]."
Diversified Investment Group, which began operating its Santa's Pen kiosk in November 2002, had approximate sales of $85,000 for the 2003 holiday run. Their kiosk carries some 500 personalized ornaments that span hobbies, sports and professions, as well as personalized stockings.
In deciding to launch the business, Michael and his partners relied on their gut. Michael knew the company's founder and trusted her instincts. That trust has paid off, and today, the company is expanding beyond merely seasonal sales. This past year, when someone approached them about attending a big cheerleading competition, they attended as vendors. They were a huge success, ringing up sales for their large assortment of cheerleading items, as well as other sports-themed and Christmas items.
"Every woman who heads up a cheerleading competition was throwing cards at us and saying, 'We want you to come to ours,'" Michael recalls. Now they've been asked by a T-shirt silk screener to accompany him to a soccer tournament and sell their soccer-themed items.
That success has proven to Michael and his partners that demand for their products isn't limited to the holidays. "Depending on what you're selling, with a kiosk business, there are so many opportunities if you're willing to put forth the effort and time."
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