How do you keep your cashflow in check and bank account in the black when your business is dependent on the time of year?
Running a business from home keeps overheads low and allows better control of the finances. Unless it is a business that tends lawns, plans weddings, or sells special gifts, and is prone to seasonal peaks and troughs and unpredictable income. The challenge for the owners of these seasonally-affected home businesses is keeping their cashflow in check and their bank account in the black.
Katherine Hudson set up her outdoor marquee business The Arabian Tent Company from her home in East Sussex in 2004. With peak season running from April to September, she has a lengthy off-peak season, so balancing the finances is a challenge.
"It is a case of budgeting and ensuring that the wash of cashflow is not spent during the summer, but saved for the winter months. Squirrel activities, essentially," she says.
In an effort to counter the seasonal impact, she has launched a second business, specialising in theming indoor venues and furniture hire, and has introduced a deposit system to further streamline her fluctuating cashflow.
She explains: "Events pay a 25% deposit to book, if they are booking a year in advance. On 1 January of the year of the event, they pay a further 25%, so that we have an influx of cash at the start of January, and that really helps.
"The indoor theming business is definitely growing, but is not quite where I want it to be, which is equivalent to the tent business in July. However, with some careful venue partnering this year, we may well have a much busier Christmas period next year."
Harrison hasn't ruled out a third business startup to fill in the seasonal revenue gaps – with chimney sweeping among the ideas mooted.
She says: "I haven't pursued it as yet. I'm holding out hope that the indoor event business will grow enough not to need this. It would give our crew and vehicles something to do. However, even if it was lucrative, I wouldn't be as passionate about sweeping chimneys as I am about making beautiful events for people to enjoy."
Anyone planning to start a horticultural business should be well aware of and prepared for the seasonal nature of the work. But the British weather is so unpredictable and frequently unseasonal that it can blow their business plans and financial forecasts completely off course.
That is exactly what happened to Hew Stevenson, owner of landscaping business Shoots and Leaves, based in west London. During a typical summer season, he would expect to handle around eight client appointments per day, falling to around five per week during the winter months – a seasonal pattern he could plan for.
However, bad weather had affected the business during peak season, causing it to fall to worrying levels. So last year, he came up with the idea of selling Christmas trees.
He says: "You have to prepare for the seasonality, and if clients are flexible, try and book them in for the leaner off-peak months. However, the weather had affected the landscaping side of the business quite badly, slowing it right down, so the idea to rescue it was simple. Every home and business had a Christmas tree. Through my local BNI breakfast business networking club colleagues, who told all their friends and families, I suddenly had hundreds of enquiries and pre-orders."
Of his total £850,000 turnover last year, almost £300,000 came from tree sales in December alone.
"The Christmas trees have helped us deal with the seasonality issues, and in spite of the slowdown in the landscaping business, allowed us to maintain our normal staffing levels. They are more than a sideline. I would say the trees are now an essential part of our business," adds Stevenson.
Juggling finances and budgets and managing cashflow are not the only challenges facing the owners of seasonal businesses. They also have to plan their marketing and advertising strategies around the seasonal fluctuations in trade, which can mean spending money at a time when there is little coming in.
The Hotel Nanny, a provider of high-end nanny services to exclusive hotels, is run by founder and former teacher Angela Roach from her home in the Cotswolds. Peak times for the business are similar to those of the wedding season, predominantly over the summer months, with a smaller peak at Christmas.
There are also opportunities in the weekend break market, as many couples go away for a short spell for wedding anniversaries and birthdays. This year, the company plans to offer a post-baby package to couples who recently had a baby. Success will depend on advance marketing and promotional campaigns.
Roach says: "Revenue is down during off-peak season, so we have to reign in our spend in certain areas, but you also have to keep your nerve. It can be daunting dipping into the savings when business is quiet but the only way to grow your business is to let the world know that you exist.>>>