As the seasons change, so too can your business's profitability. Fortunately, unlike the weather, you can control how your business adapts to seasonal highs and lows.
By Tara Remiasz
When Michael Jones opened his own floral shop two years ago, he expected business to slow down during the summer months. But economic shifts, such as the spike in gas prices, caused the summer lull to become even more painful than he had predicted. “We were prepared for it, but we weren’t totally prepared for it,” says Jones, who is president of Chicago In Bloom Floral & Events. “It seems like it gets worse every year.”
Fortunately for Jones, he already had a plan to turn the summer slowdown into a profitable opportunity. A portion of the store had been transformed into a gallery that features a different local artist’s work every three months. The gallery space is then used to host everything from charity events to weddings.
Recently, Jones was asked to provide weekly flower arrangements to three restaurants after restauranteurs attended a charity event that Chicago In Bloom hosted free of charge, Jones says.
In fact, the “off-season” solution has become so important to the business, that Jones recently increased the gallery space to accommodate 250 people, up from 150. “Portions of the year it’s its own profit making [entity],” he says.
Jones’ business is a good example of how adapting to seasonality can produce unexpected benefits.
Hattie Bryant, producer of PBS series Small Business School, says that when it comes to seasonality, business owners need to ask themselves: Should I go with it, minimize it or defy it? Bryant and her executive producer and husband, Bruce Camber, have sought out the best small businesses in America for the past 11 years, and have a wealth of knowledge on how different types of businesses successfully manage seasonality. Although the operation is based out of Dallas, Bryant and her husband have featured businesses on-location in 35 states.
Go With It
Maximize on seasonal downtime to retool, recharge and retrain, Bryant says. She recalled the small business story of Mo’s Chowder in Newport, Ore., which closes down shop during the slow months and reduces its peak staff from 350 to a core group of about 30 workers. Downtime gives Mo’s an opportunity to take care of details that it doesn’t have time for in the busy months, such as taking apart equipment for deep cleaning.
Like Chicago In Bloom, some businesses choose to minimize the affects of seasonal slow-downs by offering alternatives or shifting their focus. For example, many heating and air conditioning contractors use their four- to five-month slow periods to concentrate on maintenance and indoor air quality work, says Ruth King, CEO of Atlanta-based HVACChannel.tv. “What they do is they search for things that are not seasonal,” she says.
To successfully minimize the impact of seasonality, it is also important to make the most of your finances during the peak season. Create a rainy day account by directing 1 percent of every dollar that comes through the door into an interest-bearing savings account, King says. This account then serves as a financial cushion when business is slow.
One strategy to defy seasonality is to create a product so unique or exclusive that seasonal demand is irrelevant. Bryant recalled the story of The French Laundry, a restaurant in Yountville, Calif., which eliminated soft sale periods altogether. Thomas Keller, owner of The French Laundry, created a fairly small space—only 60 seats, implemented a rule that all reservations must be made at least 60 days in advance and offers patrons their choice between a nine or 12 course meal. Today, Keller’s restaurant is immensely popular—but it took a few tries and more than one bankruptcy before Keller found the most effective way to position his restaurant.
The Opici Wine Group in Glen Rock, N.J., provides an example of another, very different way to “defy” seasonality, according to Bryant. Opici began as an importer of Italian wine. Although Opici gained notoriety for its selection, it was limited to the seasons that Italy produces its wine products. The Opici brand defied seasonality by tapping sources of wine from around the globe such as Chile and Australia. Unlike The French Laundry, which became more exclusive, Opici defied seasonality by broadening its selection and price point.