May 28, 2024

7 Steps to Building a Solid Seasonal Business Budget


  • Business Finances

  • Startup Business

Seasonal businesses, like ice cream stands, ski resorts, and swim clubs, hold a smart lesson for all businesses: To keep afloat, they need to keep micro-focused on their revenue highs and lows. By anticipating when their revenue is likely to slow down or rev up, they can ask and answer questions like:

  • When will we need to start minimizing expenses, and by how much?

  • How long will we need to rely on credit or borrowing to get through our slow period?

  • Might we have to do business differently during that slow period, or even year-round?

Secure your business’s fiscal health with these seven seasonal budgeting best practices:

1. List your absolute fixed costs.

How much do you have to spend every month in order to stay in business? Fixed costs like rent, insurance, or business loan payments won’t change. These basics form the backbone of your 12-month overhead budget.

Then there are the bills that may vary: think inventory, utility bills and staff hours. Add up a year’s worth of these costs and divide by 12 to get an average. When you spread out the fluctuations in these expenses, you’re getting a much more realistic vision of your profits and losses than if you just look at the boom months.

2. Plan a year in advance.

Be sure to consider important but less frequent expenses you’re anticipating for the coming year. For example, a bookstore may need to order extra inventory and hire additional staff in early fall to prepare for the annual holiday shopping season. Likewise, a miniature golf course needs to order tickets and hire staff for its Memorial Day Weekend opening during the months when its revenue is lowest. But when you know these amounts and their timing well ahead of schedule, you’re in a better position to make confident decisions about funding them.

3. Track, track, track your statements.

Review your account statements down to every expense you incur. Look for seasonal patterns. For example, a celebration dinner after your busy period or application fees for an industry award could fit into this category. What you’ve thought of as one-offs may actually be recurring for which you can now plan. Your slow-season self will thank your busy-season self for this attention and foresight!

4. Use the busy season to prepare.

Take the opportunity of greater cashflow to pay off bills that you’ve taken on to prepare for the busy season. Maybe you can even put some cash aside to fund the next year’s gear-up costs.

5. Spend smart during the slow season.

When the demands of your busy season ease, you now have an opportunity to get ahead – provided you’ve saved wisely during the boom months. Consider:

  • A campaign to stay in touch with seasonal customers in the off months.

  • Performing maintenance and maybe even renovations for your shop, property and equipment.

  • Renegotiating contracts with your vendors and suppliers.

6. Build more than one budget.

Every business should create these three budgets:

  • Baseline budget: Everything you need to pay, as covered above.
  • Best-case budget: How you’ll spend if you maintain solid cash flow with tidy profits.
  • Worst-case budget: How you’ll manage if things go wrong along or an unexpected incident (like a natural or man-made disaster) occurs.

7. Consider an alternative fiscal year.

Seasonality is one of the most popular reasons businesses trade the calendar year for an "alternative fiscal year" or "short tax year." The IRS allows seasonal businesses to change their tax return schedule and taxable time periods. However, before making this switch, consult with your accountant and owners of similar seasonal businesses in your community for their input.

Seasons change — and so can your business’s fortunes. But when you can use these seven steps, along with an open mind and a willingness to change, you’re ensuring the continued success of your business.

Since 2008, Fora Financial has distributed $4 billion to 55,000 businesses. Click here or call (877) 419-3568 for more information on how Fora Financial's working capital solutions can help your business thrive.