September 09, 2016
7 Steps to Building a Seasonal Business Budget
If when building out your business budget you start noticing trends of highs and lows throughout the year, it’s time to adjust your financial strategy. Here are the 7 essential tips your business should use to compensate for seasonality:
Budget Best Practices Seasonal Businesses Can Rely On:
1. Create a baseline of basic expenses
Start with what you know you’ll be spending each month (your fixed assets). These costs—such as rent, insurance, or business loan payments—will not change so you’ll know you need to budget to have enough to cover them. You should also include the average amounts of variable or semi-variable costs (ones can fluctuate based on use) such as inventory, utility bills and routine fees. From there you can plan accordingly to cover at least this amount each month.2. Plan a year in advance
This is important for two reasons: First, a seasonal business needs to think about performance on an annual level because it is harder to judge performance month over month. Second, because expenses you can anticipate throughout the year help you plan what you need to save during busy season.3. Don’t get derailed from your budget during busy season
As I just mentioned, your busy season is not indicative of what you can expect year round. This is the time to be a saver and spend conservatively. Your budget should allow for smart spending when seasonality peaks and cushion to survive when it valleys. Give yourself something to look forward to in the off season when you’ll have time for identifying the absolute best way to spend your income.4. Track, track, track as much as you can
Take advantage of tools like Excel and Quickbooks and start tracking each and every expense you incur. While it may feel like overkill, once you have documentation you can evaluate your spending and identify what recurring expenses you need to build into your budget. Your slow season self will thank your busy season self for this attention and foresight!5. Take advantage of your slow season
Don’t think about your slow season as a negative time, this is your opportunity to get ahead!- Start planning for next year
- Pay attention to your buyers and see how you can engage with them in the off-season to instill customer loyalty
- Use this time to barter with vendors. You’ll be in a much better negotiation position when you don’t immediately need them than when you’re hoping to fulfill last minute orders.