Improved seasonal profits can be the black swan of local retail at a seaside town that relies on tourism and is dedicated to on-peak times. However, it isn’t feasible to shut up shop for most of the year and expect to stay profitable, unless you are very lucky. So what can you do as a business? From dynamic pricing to training employees, here are some profit-boosting ideas.
Maximizing inventory capacity is one of the best secrets to avoid tying up cash in stock you don’t need or can’t shift. Rather than crossing your fingers for increased sales volume, it is smarter to focus on “just-in-time” inventory practices. This involves using inventory management software with AI tools for forecasting the stock you need with predictive analytics. The system can then order stock to a level that will sell based on real-time demand instead of luck.
It is traditional to just keep prices static and expect customers to pay what you advertise. This works well for most cases, and customers like knowing what to expect. However, dynamic pricing can be the difference between closing for good and surviving the off-season. It is becoming more common for seasonal businesses to adjust prices based on demand. For example, prices will increase by around 20% when demand is high, to maintain profitability.
It is possible to make a decent profit by relying solely on peak seasonal sales. However, it isn’t feasible for most product or service-based establishments. In fact, 82% of small businesses fail because of poor cash flow during seasonal fluctuations. Suppose you own a boutique florist, then embracing seasonal flower arrangements is your bread and butter. However, it can help to find products that work well off-season, helping with a consistent income throughout the year.
Having trusted employees with the skills and competencies your business needs is invaluable. However, it is common to be overstaffed off-peak, and staff still need to be paid. To get around this, well-trained workers who can do more than one or two tasks can be a massive advantage. You can then assign employees to multiple roles for increased efficiency. However, well-trained staff also increased customer satisfaction while helping to balance the books each season.
Most adults are aware that they need an emergency fund at home, but the importance of emergency business funds can’t be understated. Just like home, your business will benefit from a cushion of cash reserves to fall back on when times are hard or something terrible befalls the business. It is recommended that you dedicate a high-yield savings account that holds at least 20% to 30% of operational costs to deal with unexpected seasonal expenses at the company.
You can use AI and software to manage inventory and avoid overstocking for improved seasonal profits. It also helps to diversify the products and services you offer instead of relying on one or two, and your business can avoid unexpected expenses with an emergency fund.
