At this time of year, we see an increase in seasonal businesses eager to make the most of the Christmas period.
Holiday-themed retailers, gardeners, tour guides, and summer holiday clubs are all examples of businesses that are completely seasonal, where their income fluctuations align with the seasons.
Whilst these businesses may seem like a risk, they are often viable, but as with starting any business, there is a lot to consider.
Planning your market
As with any business, knowing your market is vital. You must be certain that there is ample demand for your products and services during peak season.
Simple market research is important for finding potential customers. This will help you understand when best to open your business, how much you should be charging, and what specific goods or services you should be offering.
From this knowledge, you can create a marketing plan.
Having the right marketing for your business can make or break the success.
Irregular cash flow is often the biggest downfall for seasonal businesses. For many, it can be tempting to overspend when profits are high, but this will only lead to you falling short during quiet periods.
Financial planning is vital for ensuring you have enough money all year round. Some seasonal business owners need to have a secondary income for the quieter months if their profits won’t cover expenses all year round.
Consulting an accountant can help you manage your cash flow and expenses.
Supply vs demand
When sourcing stock for your seasonal business, it is important not to overspend.
Having leftover stock in any business can be tough, but when your items go out of season quickly it can be detrimental.
Matching supply to demand is key for making seasonal businesses work, ensuring that you are both able to provide enough stock to sell without risking a loss with what is left over.
Seasonal businesses are required to be registered, even if they do not plan to run for the long term. Meeting your legal requirements is vital for ensuring your business is protected.
Legally, you will need a license, adequate health and safety, and the correct insurance to trade correctly.
It is also important to manage your finances and tax obligations. How you set your business up will dictate what type of tax you need to pay and how it is collected.
For example, if you are a registered business as opposed to a sole trader, you will be required to pay corporation tax on profits and income tax on any wages you pay yourself.
You may also be required to pay VAT depending on your income and your industry.
If you are unsure about tax or cash flow management, it is best to consult with a professional.
Our accountants can help provide you with the help and support you need for starting a seasonal business. Get in touch today.