Managing Seasonal Cash Flow
Who is this for?
This is for you if you have just started, or you are planning to start your own Tourism & Hospitality business and there is a seasonal nature to the products/service that you provide.
Perhaps you have peaks and troughs that coincide with the seasons or the calendar or even based on your own availability or limited resources.
The following checklist will help you understand your own seasonality and what you might be able to do about it.
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Notes/Actions |
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A. Identifying your “season” and the reasons for it |
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1. Do you know exactly when your “seasonal” cash flow occurs? |
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2. Do your peaks and troughs coincide with one of the four seasons e.g. winter, or does do they last longer or shorter? |
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3. Have you looked over previous years month by month to see when the peaks and toughs occur precisely? |
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4. Is it due to simple demand or do you not offer enough products/services at this particular time of year? |
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5. Are your competitors in exactly the same position? If not, why not? |
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6. Is the seasonality due to your own lack of availability, or the availability of others or a lack of products/services at that time? |
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7. How severely does the off-season affect your business income – reduced by 25%, 50%, 75% or 100%? |
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8. How severely does the off-season affect your business costs – stay the same, reduced or increased? |
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9. Have you completed a forecast cash flow to see what the impact of the seasonality is over the next 12 months? |
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10. Have you sensitised your cash flow so you can see the impact of different scenarios? |
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B. What actions you can take to address seasonal cash flow |
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11. Can you build reserves in the peak periods and set these aside for the leaner periods? |
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12. Can you develop and provide new products/services to bridge the gaps? |
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13. Can you rely on savings or secure funding to bridge the gaps? |
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14. Can you generate income from other sources to bridge the gaps? |
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15. Can you provide packaged products/services from your own range or with other providers to generate extra income? |
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16. Can you “extend” your peak season by offering innovative products/services so as to reduce the off-season period? |
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17. Can you “upsell” during your peak season to add extra income to cover the off-season? |
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18. Do your customers pay you on time and can you ensure that you aren’t spending valuable time chasing cash that you need off-season? |
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19. Can you negotiate with your suppliers to pay more off your bills in the peak periods when you have more available cash? |
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20. Can you move people to pay you online in advance in the off-season by offering “advance discounts”? |
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21. If you have stock, can you reduce it during the off-season to assist cash flow? |
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Click the image below for a downloadable version
Useful Sources
Forecasting Template
Terms of Business Sample Template
