
How to manage cash flow year-round
For business owners operating in seasonal industries, cash flow management can feel like a roller coaster. Revenue often pours in during peak months and slows to a trickle during the offseason. But expenses? They tend to keep coming, whether it’s a busy week or a quiet one.
Effectively managing cash flow during these ups and downs is critical. With a few smart strategies, seasonal business owners can ride out the leaner months and set themselves up for long-term success.
Forecast your cash flow with accuracy
One of the most valuable tools in any seasonal business owner’s toolkit is a detailed, realistic cash flow forecast. A 12-month forecast helps you understand when money is coming in and going out, allowing you to plan ahead and avoid surprises.
Start by using historical sales data to identify patterns in both revenue and expenses. Be careful not to overestimate peak season income or underestimate slow-season costs. Update your forecast monthly to keep it relevant and aligned with your business activity.
Clear out inventory before the slowdown
Unsold inventory ties up cash, especially when it sits untouched during the offseason. Moving products quickly can boost liquidity and make room for new stock when the busy season returns. Consider running a clearance sale or exploring opportunities for tax-deductible donations.
Trim expenses in the offseason
With revenue down, it’s time to get lean. Focus on reducing fixed expenses wherever possible. While certain costs, like rent or insurance, can be difficult to adjust, you may be able to negotiate more flexible terms. For example, ask your landlord about paying higher rent during peak months in exchange for reduced offseason payments. You could also explore prepaying operational costs when cash flow is strong to lighten your financial load later.
Secure a line of credit before you need it
A business line of credit can act as a financial cushion during slower periods. Unlike a traditional loan, a line of credit gives you flexibility. You borrow only what you need and repay it as revenue returns.
It’s also useful for covering unexpected expenses or seizing new opportunities. The key? Don’t wait until you’re in a cash crunch to apply. By establishing credit now, you’ll be in a stronger position when you need it.
Keep one eye on the horizon
While managing month-to-month cash flow is essential, long-term planning is just as important. Think one to two years ahead: What will demand look like? Will your inventory needs change? Are there opportunities to grow, expand or take on major projects? Planning for growth requires capital, and understanding your future cash flow can help you build reserves or secure financing in advance.
Running a seasonal business has its challenges but with proactive planning, accurate forecasting and the right financial tools, it can also offer tremendous opportunities. For more information, reach out to your local Alpine Bank branch. We can be a key partner in helping you stay ahead of the curve, no matter what the season brings.
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Alpine Bank Staff
Alpine Bank is an independent, employee-owned organization with headquarters in Glenwood Springs and banking offices across Colorado’s Western Slope, mountains and Front Range.
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