Summer and sunrise are coming soon. The organization of the first outings begins. But for some entrepreneurs and business leaders, it also means lower activity. This is the popular phone phenomenon that won’t ring as August 15 approaches. For others, on the contrary, the activity begins (in the tourism sector, for example). But then, for a business creator, how does he anticipate this seasonality and copy it into his business plan? Why is it important to take this seasonality into account?
Anticipating seasonality in your business plan is essential
The main reason for this expectation is the cash flows that determine your ability or non-payment of suppliers, your salaries, and your various expenses. It is necessary to monitor the level of cash flow week by week. Thus, not taking into account seasonality in your business plan can be detrimental later on. Example: You are in the gift business. 50% of your sales take place on Christmas. But you don’t take this into account and smooth out your predictions every month. So, you’ll have a lot of stock in June and you won’t have the cash to last until Christmas. The banker will be surprised to notice a cash gap or a sharp drop because you wouldn’t expect it in your business plan.
Unpredictability of sales will result in losing customers due to your inability to get them on time. Interesting example: you run a store that sells a little bit of everything to tourists. If you are able to anticipate the weather (at least from week to week), you will be able to make extra sales from… Umbrellas.
It also amounts to a sense of wonderment when it comes to recruiting. If you open a restaurant and notice a peak in your market research in April, you will have to manage that peak in the kitchens but also at the server level. This should be foreseen in the business plan with a rational decision made regarding the appropriate employment contracts.
Finally, planning for seasonality in your business plan means allowing your diverse partners, and especially your suppliers, to prepare internally. It is essential to share your business plan with them in order to help them organize themselves. They will also be able to share their sectoral expertise to support you in your expectations.
Seasonal forecasting tools and methods
Market research should allow you to discover the seasonality of purchases. Check your drinking habits. Watch your competitors and see how their sales are shaping up. Supplier demand also helps to know seasonality. So it is a must during your market research.
For Internet companies (but also for the so-called classic ones), Google offers an excellent tool called Google Trends. This tool lets you know if keyword searches are more or less important. By taking into account the seasonality of your searches, you will be able to extrapolate them to your turnover but also better forecast your purchases and stocks to meet this demand. So you will be able to anticipate your financing needs month by month. For example, the Google Trend widget shows 50% fewer searches in June for the term “buy box” than in December.
You also need to plan for events that can affect your turnover: the World Cup, the year of Mexico in France, legislative change, etc. In short, anticipate in your business plan any major event with which your activity relates. Thus, in 2006, sales of TVs of the new generation increased by … 106% in Germany, under the influence of the World Cup.
Anticipate seasonality and suggest solutions
Anticipating off-peak periods in your business plan also allows you to suggest solutions to occupy these periods. You have a restaurant and no one is coming in February and March according to your market research? Perhaps the place should be rearranged to rent at that time or organize special events? Do you sell gift boxes but 80% of the activity takes place at Christmas? Provide specific actions for Mother’s Day, Father’s Day, Valentine’s Day, etc. This will make your activity a little easier.
Do you have peak activity but only in July and August? How do you manage the issue of employment? What contracts do you offer to your employees? How do you expect employment? Are you employed part time? seasonal workers? Many questions should be asked to ensure that you do not find yourself in a difficult situation.
Seasonality has a significant impact on the management of many companies. Not expecting this can have serious consequences for the progress of your activity. So try to carefully study the parameters of your sector and anticipate differences in activity in your business plan. However, seasonality and periods of spur or drop is also an excellent way to test your team’s solidity and involvement.