Manage cash flow | December 2024 Thrive year-round: Strategies for building a resilient seasonal business

Understand and capitalize on your seasonality.

You can use seasonal increases in revenue to your advantage—if you know they’re coming. Reviewing your financials and using past performance to determine future strategies can help you maximize revenue opportunities.

Recognize industry-specific patterns. Analyzing historical sales data can help identify regular trends and cycles. For example, the auto industry experiences peak sales in May due to Memorial Day deals and in October when new car models are released.³ Meanwhile, healthcare demand increases during flu season in the fall and winter.

Take your time. Start thinking about your peak season several months in advance of it, using data from the last three to five years to forecast your potential revenue. This proactive approach allows you to plan and identify promotional opportunities to maximize sales during periods of high demand. Your Truist relationship manager can help you determine potential returns on investments made to boost production or increase staffing during peak times.

Combine human expertise with next-gen tools. Almost half of businesses have implemented machine learning in their business practices.⁴ One benefit is that analyzing large datasets can help you identify patterns and unexpected pockets of demand.

Beauty brands like Sephora, for example, are using AI to predict customer preferences and personalize product recommendations. There are numerous machine learning tools that can help forecast and model seasonal patterns. Once you’ve identified them, you can work with your Truist relationship manager to review data-driven strategies to determine the best course of action.

Financial strategies for seasonal stability

Even when your revenue is slower, you may still have operational goals or look to make capital improvements. To ensure you have the available funds, you can consider several financial strategies.

Determine where you need to cut. Businesses can use advanced analytics to get a comprehensive overview of their financial operations, helping identify areas where costs can be reduced without impacting core business functions. By focusing on five key areas, you can better make informed decisions: ⁵

• Funding and capital structure: Find the right balance between borrowing and using your own money to keep costs low while adapting to changes.
• Management of strategic liquidity: Assess how much cash you actually need. One infrastructure company found that it was holding on to too much—$2.2 billion—when it only needed $1.3 billion. By freeing up $900 million, the company contributed to a 15% increase in its valuation over a year.
• Risk-adjusted capital allocation: Invest wisely with risk in mind. Companies that aggressively reallocate resources typically see higher returns. For example, businesses that reallocate 41% to 100% of their resources tend to see 10.2% growth in total returns to shareholders, compared to 7.8% for those reallocating 20% or less.⁵
• Foreign-exchange and interest-rate risk management: Fluctuations in international exchange and interest rates can pose significant risks—and opportunities. A top car company saved $15 million over the course of a year by reducing balance sheet hedging by 50%.⁵
• Commodity price and risk management: If you rely on commodities such as oil, gas, metals, or agriculture products, focus on strategies that examine price fluctuations. Favorable market conditions can help reduce costs and increase your profit margins.

Prepare staffing for fluctuations. During the off-season, businesses need to ask important questions: Can you maintain your current workforce? If not, what does that mean for your culture? Flexible scheduling, temporary hires, and cross-training employees can help efficiently manage staffing levels during peak and off-peak times. This can help manage costs while ensuring that skilled workers remain engaged.

Adopt new revenue streams. Diversifying your income sources can help streamline revenue throughout the year. Think of a ski resort that operates trails for hiking and mountain biking in the warmer months. Another way to diversify is by offering services that complement the products you sell. REI is a good example: In 1987, the outdoor retailer began planning vacations for active travelers through REI Adventures. Other strategies include implementing online sales, ecommerce, or digital services that are less susceptible to seasonality.

Negotiate better deals. No matter the size of your business, you have the power to negotiate more favorable supplier terms. These may include opportunities for volume discounts or extended payment terms. Beyond negotiating, you can explore ways to become more efficient. For example, can you consolidate shipments to lower transportation expenses? If so, how might that impact how much inventory you need to store between deliveries? By weighing these pros and cons, you can make informed decisions with your Truist relationship manager.

Seasonality can have a significant impact on your business. It doesn’t have to force you to struggle during slower times of revenue, however. Working with your Truist relationship manager to develop financial strategies to maintain your cash flow and take advantage of boosts in revenue can help you feel more confident about your year-round operations.