The Ultimate Guide for Seasonal Businesses
As a seasonal business owner, you may find yourself asking these two important questions:
- How do you make the most of your busy season?
- How do you keep momentum moving forward in a slow market?
Business owners are constantly looking for new ways to incentivize their customers to spend during the slow seasons to help their bottom line. They should also look for ways to increase their revenue during their seasonal highs to help tide operational expenses during the lulls.
Fortunately, we’ve created this guide to help you get the ideas flowing. With over 6,000 words (that’s 17 pages!), we cover expense management for all seasonal businesses and dive into retail, restaurant, construction and professional service businesses.
We realize it’s a lot of information. That’s why we’ve broken it up into five chapters:
- Expense management
- Retail businesses
- Construction businesses
- Professional services
Better manage your expenses during your seasonal lulls.
A good budget – and sticking to it – can make or break your business. And one way to help your cash flow during seasonal lulls is to better manage your expenses. Check out these four tactics to help manage expenses during the offseason.
- Diversify income streams.
In some cases, cutting expenses too drastically may hamper your growth and ability to gear up for your seasonal high. If you have to let key employees go, you may have trouble hiring them again later because they may have found more predictable jobs. When you can’t reduce expenses, you may have to earn more income.
Some businesses have managed to keep employing their people and their resources by diversifying their offerings during their off-seasons. Here are some examples:
- Construction companies adding insulation to homes during the winter.
- Accountants helping businesses with their payroll or bookkeeping.
- Retailers selling beach-themed products.
It’s prudent to test out new services that you plan to market to make sure you can meet a demand with resources that you have or could easily obtain. While you have a chance to grow your business, you also need to be wary of overextending yourself in an unfamiliar line of work.
- Get help with cash flow management.
Of course, it’s important to consider slow seasons when you budget during peak seasons. When your company is fairly new, you may not have had the chance to bank many assets that you can draw on during lean times. Besides, even if you don’t have many paying customers during the seasonal lulls, you may find that you still have a lot of work to do in order to prepare for the next peak in demand. For instance, you may delay routine maintenance, tax planning and other tasks.
You also may need a small business loan to help you survive a few slow seasons. These kinds of loans can help you keep your equipment and staff in good shape. If you’re a fairly new small business and haven’t had time to establish much business credit, you might consider an online lender. You just need to demonstrate that you run a legitimate business to be considered for a loan.
Of course, you need to have a plan in place to repay your loan. Just consider ways that access to extra cash could help you make larger profits to begin laying out your credit management plan. Your prudent use of that first line of credit can open more doors for financing in the future too.
- Consider a flexible workforce.
You may rely on permanent employees for some skilled tasks. As your business grows, you’ll probably find that good employees are one of your best assets. On the other hand, you might find that a contract or temporary worker can provide you with many services without requiring you to spend as much money on overhead. Since few small business owners enjoy laying off people during the slow season, your flexible crew can free you up from that concern too.
For instance, instead of hiring a full-time receptionist, consider hiring a virtual assistant who can monitor email and phone messages, respond to some and direct the important ones to your attention. These days, freelancers and temporary workers provide work for many businesses with a lower overhead cost.
- Weigh your options of buying or leasing equipment.
If you use a lot of equipment, it might be cheaper to buy than lease your equipment in the long-run. With some kinds of equipment, it’s better to own it because the employees will be familiar with it and your business can control maintenance. In other cases, you may profit by opting to make lease payments instead of buying.
If you spend too much of your reserves on equipment, you could lack funds to pay salaries and overhead if your income drops. This can be particularly true if you only need the equipment for a handful of months during an entire year.
During your slower season, you can try to trim expenses, increase income, or do a bit of both. To tide you over in case of emergencies or when your company is new, you might consider borrowing the money to help sustain your business. In any case, good expense management habits seldom occur by accident, so you’ll need to develop a workable plan.
Budgeting is important for any business, large or small. Here, we’ll break down strategies for seasonal business (retail, restaurants, construction and professional services) to help them manage their cash flow and stick to budget all year long.
5 Cash Flow Tips for Seasonal Businesses
Many entrepreneurs love running very lucrative seasonal businesses. Some of examples of these types of businesses include landscaping companies, costume shops and tax preparation offices. However, many seasonal business owners struggle to manage cash flow because they have some fixed operating expenses that have to be paid throughout the year and only can enjoy peak revenues a few months out of the year. If you run a seasonal business, these tips may help you manage your cash flow during your slower seasons.
- Diversify your offerings.
You might consider diversifying your offerings to allow you to increase revenues during your business’s slow seasons. You should try to choose products or services that can build upon your main business and attract the same kinds of customers. Of course, you also have to make sure that your new side business doesn’t remove your focus from the main business that you rely upon.
Here are some real-life examples of how small business owners diversified their businesses to help increase revenue during slower periods:
- The clever owner of one seashore bed and breakfast needed a way to increase revenues during the winter. She decided to run a promotional offer to sell holiday gift cards before Christmas and special romance packages for Valentine’s day. She also worked with the local Chamber of Commerce to start a fall festival that attracted tourists during a period of the year that was usually slow.
- A landscaping company owner offered snow removal services during the winter. He already had a crew to employ and just needed to invest in different equipment. This solution kept his employees working and his bank account afloat.
- The owner of a Christmas tree farm decided to increase his income during the summer by focusing upon his knowledge of plants and existing base of customers. He added a couple of greenhouses to his property, and he used his existing mailing list to market garden plants and fruit trees to the local community.
- Consider a line of credit.
If your business is quite new, you may not have a lot of reserves to tide you over from one busy season to the next. Even if you have some good ideas to diversify your company’s income, you may not even have the funds to market them. In this case, you might consider getting a small business loan.
A line of credit can prove useful because it can give you ready access to cash when you need it. On the other hand, you don’t have to worry about paying fees on money that you don’t need to spend. You can apply for an online line of credit at every time and then be rest assured that you have funding when you need it.
- Plan expenses ahead of time.
The old adage about cash management is truer for seasonal businesses. You wouldn’t make plans to fail, but you might get caught for having failed to make plans. If you run a seasonable business, you need to create an expense sheet that you need to handle all year and allow for the possibility of unplanned expenses for things that you could not have anticipated.
For instance, your tax office might be especially busy from January through April. However, you may still need to pay your staff, your electric bill and your rent every month. If your computers need replacing or your software needs updating, you certainly need to have cash on hand to handle these emergency expenses too. If you set a budget that takes into account seasonal fluctuations in revenue, you’ll know how much money you have on hand and what you need to spend.
- Close or rent out your shop.
If you’re a new small business and can’t get the funding to diversify your offerings or get a line of credit, consider closing your shop during the slow seasons. Explain to customers that for the slower seasons of your industry, all of your business can be done online or over the phone. Let them know that you’re still around, just not in your store. Closing your store can save your budget on electric bills, general operating expenses and employee costs, as you’d be hiring seasonal employees. You can also consider leasing rather than purchasing. Although you’ll pay more in the long-run, leasing can free up additional cash for your business. If you own your physical location, consider renting it to other seasonal businesses during your industry’s slow seasons.
- Target your consumers the smart way.
Approaching consumers while your competition is quiet can be beneficial. Don’t think that your target audience isn’t accessible because it’s not your peak season. Starting a conversation with consumers as your busy season nears, or even a few months beforehand, can get you a leg up from your competitors. You can reach out to them and offer them exclusive pricing for signing up by a certain date or by offering them a sneak peek at your services/products. You could also create a reward or loyalty program, which can help you manage your cash flow for the rest of the year. If certain customers spend a certain amount, they can reach higher in the program. The extra cash will help you during those slow periods.
Enjoy cash flow all year long
Many seasonal businesses can produce great incomes and offer the owners a lot of flexibility. However, it takes good cash management skills to run these businesses profitably. You might consider diversifying your income sources, but that solution won’t work for all seasonal business owners. However, making sure you have access to credit and planning your budget are surefire tips that can benefit almost all seasonal business owners.
The truth about summer.
Summer can be slower for online retailers and other small businesses. Unless you have a storefront located somewhere touristy, your summer marketing campaign would do better to target consumers as they prepare for summer activities. You can do that by:
- Offering summer coupons
- Offering free shipping on key weekdays
- Push summer essential products you’re selling
- Diversify your products to match the season
- Ramping up your marketing strategy
Overall, weekend sales for June-August are lower than the rest of the year, as people ditch the indoors and their computers for weekend getaways and events. However, here are three things to remember as you figure out how to reach your target market and boost those averages this season.
- Not all weekdays were created equal.
People may deal with the Monday blues by doing a little online shopping, which means sellers can capitalize on that by offering free shipping for larger purchases on Mondays. This can encourage even more spending on big-ticket items. Then on Fridays, consider offering promo deals for the cheaper items.
- People like new stuff for beaches and vacations.
Everyone loves the water. Be it the ocean, a lake or the Mississippi, people of all ages and their dogs flock to it to cool off during hot summer months. This usually means a vacation, which gets consumers excited and willing to spend a little extra. Consider selling these products:
- Food/drink accessories (tiny umbrellas, for example)
- Beach toys
- Camera bags
- Camera accessories
- Red, white and blue themed products
- Home and garden goods are top sellers.
With vegetable and flower gardens in full force during summer, people want to show off their yards and enjoy the weather while serving up meals for friends. Even if you’re a clothing retailer and don’t generally sell all this sort of stuff, the casual grill/garden party theme is still something to consider as you build your summer inventory.
Here are some products they may be looking to buy:
- Outdoor décor
- Garden accessories
- Grill items (tools, charcoal, etc.)
- Summer dresses
- Summer hats
As you get your business ready for summer, think about those three types of items and see where your niche is. Even if you don’t think your products fit directly into a category, be creative! Try something new to potentially boost revenue this summer.
Research trends for both seasonal highs and lows.
If you want to boost sales year-round, you may want to take a look at the latest product trends that promise to be big hits for shoppers this year. Here are three ways to identify some of the biggest product trends for your retail business.
- Research product trends on social media.
One of the best ways to find out what products are trending is to browse different social media channels to see what everyone is talking about. Whether it’s the latest wearable wellness device or the hottest toy for kids, there’s a good chance that someone is talking about it online. Here are just a few of the social media channels that you can explore for hot tips on what’s trending.
When you log into Twitter, you’ll see a sidebar to the left labeled “Trends for You.” This shows you what people are talking about most on Twitter, and it’s a great place to start when looking for trending products. Next, try typing in different subjects that describe your niche like “sports equipment” or “wearables”, and you’ll be able to see what others are saying about these topics on Twitter.
Facebook also has a trending section in a sidebar on the right of your dashboard that shows you what’s trending on Facebook. However, you might have more luck looking on popular pages or in groups that your target market frequents.
People often use Pinterest as a sort of visual shopping list to save products that they love and those that they may want to buy for others. Type in something that describes your product offering like “educational toys” or “gifts for her” to see what people are saving to their own shopping lists to get a feel for hot product trends.
In addition to looking at what’s trending on social media, you can also use your brand’s channels to do a little research of your own. Develop a Twitter poll or ask your Facebook followers what products they are looking forward to buying. This will help you get a feel for what your target market wants to buy.
- See what influencers in your niche are saying.
Influencers are another great place to learn about upcoming trends because they are often ahead of the curve when it comes to market demand. These people have earned their reputation by being knowledgeable about the latest news and trends in the industry. People look to them to find out about and understand the latest and greatest products and often hold their recommendations in high regard.
Look at what products they are excited about or promoting on their social media channels and blogs. For instance, if you sell electronics, you might see what products tech influencers are talking about and which products they predict will be big sellers this season. Also, pay attention to which products they are not talking about or have not reviewed positively to avoid stocking these in your own retail store.
Again, you might want to do a little market research of your own. Once you see what influencers are talking about, do a little research to find out what the latest sales look like for this product and what the predicted growth is. You may also want to look at the general customer satisfaction rates by browsing product review sites. Take the pulse of the public by seeing what the influencer’s followers are saying about these products. You may even want to poll your own audience to see if they are interested in these products through email or social media surveys.
- Look at trend publications.
One of the easiest ways to explore new product trends is to look at different trend publications and blogs. Many of these publications are aimed at helping small businesses and retailers better understand consumer demand and what the market looks like. Whether you look at articles that are data-oriented or those that curate information from other sources, these publications can certainly give you a better understanding of what products will be popular in the upcoming holiday season.
Trend Hunter is just one example of a source you may want to look for information on the latest product trends. This site serves as an online community for those who are interested in sharing and learning about the newest trends in a variety of industries.
You may not be able to find a blog or publication that looks directly at products in your retail niche, but with a little research, you should be able to uncover some helpful information about potential product trends.
Some of the recent trends to consider are:
- Phone accessories
- Minimalist watches
- Portable LED projectors
- Night masks
- Makeup brush cleaners
- Fake eyelashes
- Stuffed animals
- Vegetable cutters
- Silicone molds
- Teeth whitening
- Air sofas
The best way to prepare your small business for success throughout the year is by looking at what products people are buying (or wanting to buy). In the end, the only way to do that is through research. Whether you look on social media or dig deeper into market trends, you’re sure to find some interesting information on what consumers want.
Expanding your restaurant for the winter.
If you’re a restaurant owner looking to expand, consider opening a food truck. Food trucks are cost-effective and can help your revenue during your seasonal highs and lows. Many large brick-and-mortar chains have expanded to having food trucks, from Starbucks to McDonald’s to TGI Fridays. On their own, food trucks offer many benefits, and combined with your brick-and-mortar restaurant, they can be great marketing tools as well. Here’s why they’re so beneficial.
- You can broaden your consumer base.
The peak hours for a brick-and-mortar restaurant versus those of a food truck could be dramatically different, as could the buyer personas that represent their best customers. With a food truck, you’re able to reach consumers in areas you couldn’t before. Your trucks can drive all over your city, and if people like your food, they may take a longer trip to dine in your establishment.
Food trucks also make for a great marketing campaign, as they can test out which areas your food will do better in and advertise your business as they drive around the city. Once you’ve found an area that gives you a solid customer build-up, you may be able to open a second physical location there.
- They have cheaper startup costs.
If you want to expand but don’t have the financial ability to open another brick-and-mortar establishment, food trucks are a great alternative. Food trucks range from as little as $25,000 to as much as $125,000, although most experts agree that the average spent on a truck is $80,000.
You can take out a smaller business loan or line of credit to help out with these costs, or, if traditional financing isn’t your thing, you can look into renting a food truck.
- You can better plan for the future.
Food trucks also help you figure out the best area for you the second location of your restaurant. With a food truck, you can see where your brick-and-mortar is most likely to succeed in. Establishments of food trucks make great test subjects.
Launching a food truck business to expand your restaurant also gives you the unique opportunity to create a modified – or even a completely different – brand feel, look and specialty menu items that will be unique for food truck patrons. A food truck’s menu could change often and provides a great format for test-marketing new menu items to gauge customer feedback and perfect them before they become regular fare at your restaurant.
What to Consider When Expanding
- Cost of equipment
First, you need to figure out how many trucks you want or need, and from there, look into the cost of the equipment. This, of course, includes the trucks themselves, but it also includes insurance, new employees, additional equipment and more ingredients. You’ll also want to receive a rough estimate of buying and building the trucks.
- Local laws, permits and licenses
Especially if you’re reaching outside of the city where your establishment is, you need to make sure your food trucks are in adherence with the law. Look into the specific insurance restrictions, licenses and permits so you don’t get ticketed, booted or fined.
You need to schedule how, where and when your food trucks should be up and running. If you want to venture to office buildings, see if you need a permit or license to do so. Let those offices know what days and times you plan on being available for employees to come grab lunch from your truck. You can also look into setting up at local parks, especially during festival seasons. Furthermore, if you offer catering services, make sure to specify which trucks will be geared towards that and which will focus on street service.
What to Ask Your Builder
Once you’ve decided on expanding your business to include food trucks, it’s time to find a builder (unless you’re renting). Make sure to bring up these five topics before you commit to a contract.
- How long they’ve been building food trucks.
It’s good to know someone’s experience in building your food truck. You want to make sure they’re experienced and have some level of credibility within the food truck market. Think of it as an interview for a position at your restaurant. After all, you’re hiring them.
- Who will be the main source of contact on their end.
You want to be able to reach whom you’ve hired to make sure things are running smoothly and on schedule. This source of contact will also be necessary to answer any questions you may have throughout the process.
- Any warranty policies they offer.
Most builders offer warranties on their products, so you want to make sure you know which policies your builder offers and find the best one for you. The standard warranty for craftsmanship lasts three years. Make sure to also ask specifics about the warranty (i.e. what’s covered, how to keep from voiding the warranty, expected time of repairs, etc.).
- What financing options are available.
You need to know how you’re going to pay your builder. If you can’t pay them all at once, see if they accept long-term installment plans. If your builder wants the funds right away or in lump sums, try to negotiate splitting that into short-term installment plans (for example, one-third before, one-third during and one-third after the final products have been delivered).
- How long the entire process takes and how it works.
You want to know how they’ll do what they’ll do and create timeline demands. You can tailor your communication with them by asking them to keep you updated on every step of the way or only for the big-picture stuff.
Food trucks offer your establishment many year-round benefits, from cheaper costs to a wider consumer base. They also make great marketing tools by advertising your restaurant as they drive around the cities and test out which areas you’ll be able to open another brick-and-mortar location. There are a lot of factors to consider when opening a food truck, but with these tips, you can take the right steps and better prepare yourself.
Ramp up your food photography to bring in more customers.
When it comes to creating a first impression, Instagram is the place for restaurants. In fact, 93 percent of consumers say the visual appearance of products influences their purchasing decisions. What’s more is that 75 percent of Instagram users will visit a business’s website after seeing their ad on the app.
While the best course of action for restaurateurs would be to hire a professional food photographer with an extensive resume, it’s not always feasible for your budget. The good news is that in a pinch, you can take awesome photos of food for your menu – even without a DSLR.
You’re going to need:
- A reliable camera (if you have a DSLR, use this; however, smartphones now have cameras that produce high-quality photos as well)
- White sheets
- White poster board
- A tripod
- Creative flair
Once you have your tools, you’re ready to start composing your shot. Here are five photography tactics to remember:
A good photograph is all about lighting. Make sure you get a lot of natural light by setting up next to a window. Avoid artificial light sources if you can, and never use flash because it bathes images in a yellow light. Your subject shouldn’t be placed in direct sunlight either because this will wash away all the details.
Use white sheets to diffuse the light from the window if it’s too harsh. Situate your plate in an area that gets indirect sunlight, and use white poster boards placed on the sides of your subject to reflect natural light for a more balanced lighting situation.
Since the star of your shot is the food, context is important, and composition is everything. Limit distractions in the background and don’t clutter the photo. Keep it simple, with one or two secondary pieces (greens, flowers, utensils, etc.) placed either in the foreground or background of your subject. Be sure to keep the secondary pieces out of focus so attention stays on your subject (the food).
- Plate around
Use plates, bowls and serving trays that compliment and contrast with the subject’s natural colors. Make sure you experiment with your plating to get the best possible look. Don’t use an orange bowl for pumpkin soup, for example, because the soup will blend in with the color of the bowl. Don’t be afraid to use different angles by turning the plate around.
- The hunger factor
If your photos don’t get you hungry, start over. Food photos should be mouthwatering and should capture all the important colors and textures of the dish. Ask other people to look at your shots and ask them how they feel when they look at it. Remember, you’re not taking photos for yourself. You’re taking them for your customers.
- Pro tricks
One trick professional photographers use is dabbing vegetable oil on the food to make it look shiny and extravagant. Freshly cooked, steaming food is also great for photos but hard to pull off. You can work around this by heating water-soaked cotton balls in the microwave and placing them behind your subject to mimic the effect of rising steam
When shooting food, you also have to be quick about it. Ice cream won’t last long out of the freezer, and veggies tend to wilt after a while. One trick is to use a stand-in plate or bowl and take a few shots of it to get the angles and lighting just right. Once you get the perfect conditions, bring on the food.
Remember, a picture is worth a thousand words. Make your food shine by taking great photos that not only showcases your skill in the kitchen but also behind a camera.
Growing your construction business.
During your seasonal highs, you may realize you have enough revenue to grow your construction business. Most small business owners operate by the old saying that if they’re not growing, they’re stagnating. In addition, having the ability to smooth out gaps in revenue will make it much easier to manage cash flow.
This growth can help your slower months, so it’s important to start planning ahead and project how much you can expand with the profits you make in the summer. Here are five tactics to consider for your construction expansion.
- Turn your construction company into a 12-month business.
In northern climates, you may only have eight or nine months a year when you can focus on your main services. You should know that many construction companies have learned to keep crews working and profits rolling in by expanding their services to meet wintertime demands. Some cold-weather services may fit very naturally into your company.
A few examples of cold-season services to consider include:
- Snow removal
- Holiday lights installation
- Inside building rehabilitation
- Home-energy audits
- Adding extra insulation
- Snow removal
- Providing additional services to help customers reduce power bills
The same customers that you work with in warmer months probably need at least some of these services during the winter too.
- Fine-tune your marketing plan.
You might begin to develop a marketing plan that includes attracting more customers, enticing those customers to spend more on additional services, retaining them for future work and, of course, letting their friends know about the good job that you have done. For example, you could set up a referral program or consider services that you could add that would be natural upsells for the good work you already perform.
If your marketing plan hasn’t worked as well as you hoped it would, you should probably also take a hard look at which lead sources haven’t really been worth the effort or money. If you aren’t sure, you might benefit from a marketing consultant who can help you understand how much you spend to attract and keep customers.
- Refine your online business.
You might not think that your construction business has much to do with the internet; however, thinking like that could limit your opportunities. Both consumers and business clients search online for service providers and partners. Make sure your business website looks professional and works well on mobile devices. You might also consider adding your company to social networks that are likely to attract local customers.
Also, some construction companies have used their knowledge of sourcing supplies and tools to set up an online store that offers quality products to consumers. Consider marketing your business website and your online store by producing some how-to videos to distribute on social networks, YouTube and your own site.
You can also attract interested people by sharing your knowledge, but some percentage of them will decide they’d rather have your company do the work. If they don’t, they may still decide to buy supplies or tools from you.
- Consider ways to add equipment to diversify.
Some additional services may not require expensive equipment. For instance, you may be able to use the same machines that you use to move dirt to help you move snow. If you do get a request for work that falls outside of your current equipment, you may consider leasing that equipment at an affordable monthly rate.
This will give your crews a chance to gain experience and training with new equipment. It will also give you an opportunity to test the new service to decide if it is something you want to invest in. Your company might not be suited to every construction service. Very often, it will be hard for you to know unless you run a real-world test first. If you decide you’d rather focus on other areas, you won’t have risked much to learn a valuable lesson.
- Think about expanding through acquisition.
If you’re thinking about expanding your operations into more services, you have probably already considered the cost of training or hiring employees and acquiring different equipment. If you believe your current customers may be open to these new services, the task of marketing might not be that overwhelming. You probably already know your customers; you just don’t have ready access to the right people or tools.
One way to expand without having to start from scratch is to simply acquire a smaller business that already focuses on the new line of business. If they already have trained people, machinery and possibly even a customer base, you might find out that absorbing another business is faster and simpler than trying to begin from the ground up.
Generate revenue during winter and fall.
Winter months often slow or even stall construction work, especially during the holidays when there is so much competing for the buyer’s attention. Here are five ways construction companies can generate revenues during seasonal slowdowns – beyond diversifying your services.
- Attend trade shows and conferences.
Trade shows can be invaluable venues for making contacts that lead to more work and referrals. In addition, exhibitors may inspire ideas or provide solutions that can help you cut costs or make your construction company more efficient, leading to long-term cash flow improvements that make your business less susceptible to seasonal fluctuations.
- Leverage expertise for consulting or speaking revenues.
Construction companies may have in-house experts that could generate revenue by providing consulting services during slower months when doing hands-on work is less available. Expertise in architecture, design, engineering, electrical and even construction business topics like planning, scheduling and financing could be leveraged to gain consulting and public speaking revenues during slow months.
- Hold classes and events.
The professionals employed by construction companies have the technical knowledge and first-hand experience that can be shared in classes and events during slower months. Some of these events and classes could even bring in revenue themselves; others might lead to more work. Classes and events in construction-related courses might include:
- Teaching at a local community college
- Conducting classes for industry newcomers
- Holding events to educate consumers or teach classes for DIY (do it yourself) projects
- Host events for professionals on construction building topics
- Open houses for consumers, brokers or agents
- Community interest topics
- Networking events
- Expand your footprint.
Expanding business capabilities with corporate or franchise offices in different regions of the country could not only help you grow your construction company but also help make it impervious to winter weather slowdowns (since work can be scheduled in multiple marketplaces and adjusted around seasonal changes).
- Join a professional association.
The benefits of reciprocity and the fellowship offered by association memberships can be invaluable in helping you gain new referrals and brand awareness. These associations are also likely to help you network with professionals that could help you with diversification or expansion or who might even be interested in future employment by your company.
Seasonal slowdowns often impact construction companies, especially during years when winter weather becomes especially bad. Strategies to replace revenues during winter months or generate new revenues to lessen their impact can make your construction business more profitable year-round.
Tax tips for self-employed professional service businesses.
DISCLAIMER: This does not constitute professional tax advice; it is only intended to be informational and build awareness about possible tax deductions that business owners might qualify for. Individual tax circumstances may vary. Please talk with your accountant or other professional tax adviser before claiming any deductions.
Quarterly taxes are important to keep up with to avoid potential fines. In fact, the IRS found a 40 percent increase in the number of people who didn’t pay enough in quarterly taxes. So, how can you keep track? Here are seven steps to help you with your quarterly taxes:
- The first thing you should do is review the rules for self-employed businesses. Incorporated businesses should check with an accountant to see how it may affect the self-employed status.
- It’s important to include all estimated taxes you may owe, including income, Social Security, Medicare and more.
- You can always practice filing quarterly taxes, which can help you determine the amount you think you’ll have to pay. IRS guidelines can help you calculate estimated taxes, including covering annual self-employment for Social Security and Medicare. You can practice with Form 1040-ES.
- Review Publication 505. This outlines special circumstances, which may apply to your business.
- When you’ve done all the research, you can pay your taxes through direct pay, via debit or credit card or file electronically.
- If you’ve fallen behind on your taxes, don’t fret. As long as you owe less than $50,000 and filed returns, you can apply for a payment plan. Apply either as an individual or a business through Form 9465.
- Keep track of your quarterly taxes. This helps you better estimate your annual tax bill. Consistent documentation helps minimize accounting fees and the likelihood of giving the IRS a year-end bonus.
Managing expenses as a contract business.
There is a huge demand for all sorts of labor, professionals and consultants that can help other small businesses scale to suit their requirements. To fill this need, contractors and even solo tradespeople offer to do specific tasks on a per-contract basis. In time, many contract businesses can thrive very well if they can manage cash flow when they are first getting off the ground.
However, when your small business relies on contract work, you experience some of the same revenue spikes and dips that seasonal businesses do. It’s even harder to manage expenses with certain kinds of contract work. Contract businesses can’t always count on increased revenue during a certain time of year like a seasonable business can.
This lack of control makes it tough to predict and plan. Still, the opportunity to thrive with contract work is huge and growing. If you can learn to manage your expenses during gaps between projects, you should find that this task gets easier over time.
These six tips can provide a good framework for managing cash flow and expenses when small business owners must deal with an irregular income.
- Keep personal and businesses finances separate.
Small business owners should start out by maintaining business accounts that are distinct from personal accounts. This saves a lot of time because it makes accounting and tax preparation much easier. It’s also easier to demonstrate revenue to potential finance sources, investors and partners. Finally, contractors can keep from accidentally draining too many personal resources as they strive to grow their company. If the owner needs income, he or she should just draw a salary.
- Find good financing sources.
Any small business that can demonstrate revenue should be able to successfully apply for an online loan. A business line of credit can keep the internet and the lights on during lean periods. That way, the company will be ready to roll into action as soon as it lands a good contract job. In some cases, this money might even be used to do the marketing that’s needed to land that next job. It’s always better to have a loan approval in hand before a project ends and revenue stops.
- Set money aside for taxes and other critical expenses.
It’s certainly tempting to spend more when the market is hot. Tested veterans who have run a successful contract business for years keep their expenses level during periods of high revenue because they already know that they might need a reserve to make it to the next contract. Of course, no small business owner wants to get caught with an empty coffer when it’s time to pay the tax man his due.
- Predict revenue and expenses as well as possible.
Obviously, the problem with contract work is that it can be unpredictable. There’s no guarantee of a regular paycheck every two weeks or even every month. However, detailed records usually will display a pattern that might associate certain activities with increases or drops in client revenue. Predictions should improve with time, but it’s important to make a habit out of keeping the right kind of data right from the beginning.
- Consider upselling or expanding services.
Again, it might help to consider the way that some seasonal businesses increase revenues through the year. They add new services that might appeal to their existing customer base or that attract a new customer base at other times of the year. New business owners might choose to focus on their main offerings, but it’s always easier to manage expense with more consistent and higher revenue. It may help to consider related services that may help improve the bottom line.
- Consult the experts.
There’s no harm in asking for help, especially if you don’t have as much experience in finance as you wish. While you could go back to school, consider reading university blogs for advice. You can also find a small business mentor in your local area.
Managing cash flow is especially tougher when revenues are inconsistent. Many contract businesses have problems because they don’t have the resources to always court new business when they are working on current contracts. Then, they might need to spend the most money on marketing and customer engagement during the times when revenue has dropped. Learning to deal with expenses and inconsistent income can help create thriving, successful contract businesses.
As a seasonal business owner, it’s important to continuously think about ways to make the most of your seasonal highs and lows. Going the extra mile during your peak season can help you better manage costs during your quieter months. However, you can also think about ways to earn a little extra revenue during those slow months as well.
Whatever your business may be, we hope this guide has been helpful in spurring your creativity to help your bottom line!