Running a business is a marathon, not a sprint. While we strategize for growth periods, slow periods are inevitable. Understanding and navigating these slow periods with careful financial planning and operational preparation is critical for the long-term success of your business.
What are some reasons for a slow period?
There are certain signs that suggest an upcoming slow period. These signs don’t guarantee hard times, but they’re worth paying attention to. Learn to recognize them early so you can secure your business success when sales aren’t through the roof.
Your business is seasonal
Seasonal businesses, like landscapers in colder climates, holiday-season retailers, or tax preparation firms, experience predictable slow periods based on when demand for their services is high.
There’s economic uncertainty
Natural disasters or economic policy changes are not always predictable, and can create economic uncertainty for both your business and the wider economy.
Your sales pipelines are inconsistent
While consistent sales numbers and predictable revenue flow are the goals of every business, reality is often different. Sales or marketing team performance, as well as varying budgets, can impact sales numbers and cause them to fluctuate.
Competition has gained market share
New competitors can disrupt the market and affect your sales and pricing strategies. It could also lead to layoffs or budget cuts. Expect competition to challenge you at some point.
Supply chain issues
Even if your business isn’t directly affected by political or economic events, your supply chains might be. This can affect the cost of raw materials, shipping, or labor in your field.
How to set your business up for success during a slow period
Once you’ve identified the problem, it’s time to explore solutions. Some setbacks are beyond your control, but there are opportunities you can prepare for.
Find ways to cut costs
Cost-cutting should be embedded in your company culture, and not something you do only when faced with economic challenges. Review your costs regularly and have your purchasing teams looking for better deals.
Free up cash flow
Seasonal businesses often use credit to cover offseason expenses and improve cash flow during slow periods. It’s also a good idea to use an online payments platform to stay on top of outstanding invoices and bills, ensuring that you won’t pick up any late charges.
Upsell current customers
You’ll want to upsell your current customers with new products and services, but without oversaturating their email and social media with sales pitches. One good workaround is to create a loyalty program that gives them an incentive to spend more with you.
Experiment with your offering
Businesses often slow down because their offer grows stale. Try turning your service into a product or your product into a service, or package similar offerings to increase sales. Experiment to see how you can pivot into a new model which sustains profits better, like a subscription model.
Boost your online presence
Hire employees who can boost the power of your social media advertising, retargeting, search marketing, and organic SEO. Regularly update your website visuals and functionality to increase online sales.
Look for higher returns
Make the most of your money with a business checking account that gives you the opportunity to earn high-yield interest on your operating balances. If you’re in a busy season and have some idle cash, try investing it in a treasury bond or money market account for short-term gains. Check with your bank to see what’s available.
Consider applying for a business line of credit
Unlike a business loan, a business line of credit gives you the flexibility to take only what you need and pay only for what you use. You can draw on a credit line when cash flow dips and pay it back as cash flow increases.