Seasonal businesses can learn to save while the sun is shining

jmgiglio@newsobserver.comApril 2, 2013 

  • Seasonal business resources •  U.S. Small Business Administration: •  N.C. Small Business Department of Commerce: •  SCORE:

On a stretch of U.S. 401 between Raleigh and Fuquay-Varina, people are lined up outside eating snow cones and hitting golf balls. There’s a chill to the air on this first day of spring, but no one seems to mind.

The customers are good news to David Kristan and Adrian Johnson. It means that warmer weather is on its way, and business is about to pick up.

Kristan, longtime manager of 401 Par Golf, a driving range and par-3 golf course, and Johnson, owner of Pelican’s SnoBalls, which sells snow cones and ice cream, operate what are known as seasonal businesses.

“Fifty (degrees) is the magic number,” Kristan said. “If you can’t clear 50, people won’t come out.”

Shorter days and cold weather can put a damper on businesses that thrive when the weather is warm and the days are long. Everything from driving ranges and landscapers to outdoor eateries and construction companies are affected.

Now that spring is here, small business owners need to take advantage of the upcoming busier months by planning and preparing for survival during the slow times. Essential steps include proper money management, effective marketing strategies and networking.

Owners also need to be diligent about budgeting, putting away working capital and generating revenue during the offseason.

Dave Powell, certified financial planner with Ameriprise Financial Services in Raleigh, suggests that owners figure out how much money they bring in during the average slow season, then set a target figure for how much they’ll need to have in reserve to balance out that time, and try to double that amount. Powell also says that that capital should be liquid, preferably in a savings account where it’s easily accessible.

“Small business owners should have a planned offseason,” Powell said.

When the cash flow freezes

According to the U.S. Small Business Administration, a seasonal business is one that has “revenue peaks and declines depending on the time of year” or is operated “during a certain season.”

There are 723,365 seasonal businesses in the United States and about 1.5 million businesses that don’t operate for the full year, according to the U.S. Census Bureau’s 2007 Economic Census.

Kristan typically does about 90 percent of his business between the months of March and November. However, that time is unpredictable and can vary because of the weather, affecting his cash flow.

“It’s often very difficult to balance the money,” Kristan said. “You are never really sure how many months are going to be bad. And if there’s an extra month (of bad weather), which isn’t uncommon, you know the bills continue to come in and there’s quite a bit of fixed overhead that you can’t do anything about.”

Kristan does take steps when it’s cold, however, to offset the fixed bills, including cutting back on staffing, reducing the golf course’s hours and working out payment plans with distributors such as golf ball companies.

These arrangements help him keep inventory stocked in the winter without having to pay until spring or fall. He also uses Bermuda grass, which goes dormant in the winter, to cut his maintenance and labor costs significantly.

“We go from maintaining about 40 acres to maintaining about one, one and a half,” Kristan said. “So that reduces the cost and the man hours necessary for that.”

Some businesses simply can’t stay open in the winter because of the lack of demand for their product or service. Johnson owns 18 Pelican’s SnoBalls shops in the Triangle, and opens them only from March to October each year.

“People don’t buy ice in the wintertime,” said Johnson’s son, Austin, co-owner of the franchise on U.S. 401. “It’s not worth being here.”

However, through creative financial planning during the spring, summer and fall, Johnson is able to navigate the winters without problem.

His son says with the long hours they work when they are open it compensates for those long months when they’re closed.

“We are able to make what someone would make all year in that short period of time,” Austin Johnson said. “We don’t go out and spend all our money at once. We save it and do what we need to and then live off of what we make throughout the seven months.”

Kerry Dyer, a certified public accountant who owns Kerry Dyer, CPA, suggests that seasonal business owners save money and put extra cash earned during the busy months back into the business for things such as new equipment, training and advertising.

“Because you have a lot of cash doesn’t mean you should blow it on trips,” Dyer said. “Turn it back into your company. I have to invest in myself by studying. Last year, I invested in more updated equipment. What can you do so that you have the advantage over your competition?

“The biggest thing is to not look at your business as a seasonal business,” she added. “You lose opportunities. If you stop networking and stop continuing to be out in the community, people forget about you.”

Keep customers in mind

For businesses such as Rising Sun Pools, marketing is key to keeping customers coming in the door throughout the year. However, small businesses differ on which times of the year are most effective for marketing campaigns.

Tara Onthank, vice president of retail and marketing for Rising Sun Pools, a 40-year-old pool and spa business with stores in Raleigh and Garner, says that its busy season, which runs from March through October, has traditionally been the time when customers think about having pools or spas installed. However, because of the poor economy, marketing has become more of a year-round effort.

The company uses the months from November to March to beef up campaigns and attract customers by offering pricing discounts on products and renovations.

“The key is to just not get out of people’s heads, to not eliminate our presence,” Onthank said.

But Kristan believes that marketing and advertising his golf course during the offseason isn’t as effective as efforts made during the warmer months.

“When the weather is bad and in the cold weather, we could put a sign out front that said ‘free golf’ and no one would come,” Kristan said. “There isn’t much you can do to bring them out if the weather is inclement.”

Even during the warm months, Pelican’s and 401 Par Golf can be plagued with thunderstorms and rain, Kristan and Johnson said. However, those events are temporary and easier to navigate than the long, unpredictable stretch of winter.

On St. Patrick’s Day, Johnson helped cater a party downtown. The weather was so cold and windy that he couldn’t give his SnoBalls away.

“People are walking by and say, ‘It’s too cold for a SnoBall,’ ” Johnson said.

Giglio: 919-829-4649

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