Running a small business can be an empowering experience, but also an unpredictable one. You have to work incredibly hard to make sure new business is walking through the door, but inevitably, you’re going to run into slower periods.
Unfortunately, these are out of your control.
Seasonality affects all businesses. (There’s a reason why unemployment tends to peak in winter!) Whether you’re selling directly to businesses or consumers, there will come a time when the time of year affects your revenue. For B2B businesses, that’s likely to be the Christmas and New Year period when the country tends to shut down altogether.
For retail and contractors? That’s more likely to be in the winter months.
No matter when the slowdown occurs, it’s important to understand that seasonality happens, every business is affected, and your cash flow can take a hit as a result. You just don’t know when the next contract is going to walk through the door, which for microbusinesses or independent contractors can be a trying experience.
That’s why it pays to be prepared. There a few ways that business can take advantage of the slower months and keep a healthy bottom line when work is low.
Firstly, you need to start building up cash.
It’s never too late to get started, and you can never have enough. Your runway needs to be long enough so that if you go six months without a job, you can survive. That may take a while, but it’s crucial to make sure you can ride out the slower periods.
You also need to change your thinking. As business owners, we tend to think about the here and now – it’s how we get things done. But instead of dwelling on having enough cash to reach the next quarter, expand your thinking. Focus on the next 12 months rather than the next few. It’ll get you in gear to find more work.
It goes without saying you should also try and cut down your expenses. If you’re paying subscriptions for things you no longer use, cut them. A lot of independent contractors tend to sign up for small expenses so they can deduct them later. Don’t hang on to costs just because of the tax benefits – if it’s impacting your bottom line, then cut it out when the going gets tough.
Of course, you’ll need to chase your clients for cash. When you’re in the middle of a busy period it can be difficult to get up the energy to do all your invoicing. Consider adopting a digital solution that you can use on your smartphone – you’ll be able to manage all your cash on the move, which will drastically reduce your time spent on admin.
And yes, you may have to send the occasional follow-up email. It can be difficult and sometimes awkward, but if it gets you paid faster then you should do it.
If you’re an independent contractor or running a microbusiness, like personal training, then also consider tech that can let your clients pay on the spot using a credit card. You only need your smartphone and it’ll make sure you’re not chasing people up. Tech solutions like Invoice2go can make it easy handling these tasks for you.
Something else you shouldn’t neglect: contacting old clients. You might think all the work is done and dusted, but old clients can be a huge source of referrals. Get on the phone and ask them how everything’s going. Check up on all the old work you did for them – does it still hold up? Do they need any more done?
Most of the time they may not have work for you right away, but they’ll be an invaluable source of referrals. You’ll be at the front of their minds next time they need something.
And if you don’t have anything coming through the door, use that time for research. Start developing a list of prospective clients, then call them up and start pitching them work. This isn’t an easy task, and you’ll need to perfect your pitch. But if you’re going through a quiet period, then you really have nothing to lose.
The idea of all of these tips is so you can start seeing seasonality as something you deal with through the entire year, not just when the slower periods begin. Summer is coming – if you slow down during December and January, that’s something you want to be preparing for several months beforehand.
Be vigilant with your cash, pursue clients relentlessly and start using tech that makes it easier for you to chase up clients and get paid. If you do all this, you’ll be able to survive any dry season – and more.
About the author
Chris Strode is the founder and Chief Product Officer of Invoice2go, a mobile app for small businesses.