One of the many great things about Colorado is that it has four distinct seasons. Whether you love the smell of flowers in bloom, hot days by the pool, the crunch of crisp autumn leaves beneath your feet, hitting the slopes or all the above, Colorado has something for you.
Seasonal changes also offer commercial opportunities — and challenges. If you run a business when all or most of your revenue comes in just a few months of the year, how do you manage your cash flow? A business loan might be the answer.
What Is a Seasonal Business?
Seasonal businesses experience fluctuations in demand and revenue that correspond with the changes in seasons. Such organizations earn most or all of their income during a specific time of the year, often over the course of just a few months, or even weeks.
Some businesses are only open for brief periods of time, such as:
- Pop-up Halloween stores.
- Pop-up Christmas stores.
- Annual fairs and festivals.
- Tax preparation businesses.
Other businesses remain open for all or much of the year, but generate the majority of their revenue in just one or two seasons. Examples include:
- Drive-in movie theaters.
- Lawn care/landscaping businesses.
- Bicycle repair shops.
- Service businesses near summer destinations, such as a restaurant by Jackson Lake.
There’s often overlap between these businesses. For example, a personal accountant probably works year-round, but does the majority of their business in the first four months of the year delivering tax services. Likewise, a ski resort might be open all year, offering different services in summer, but winter is still its busiest season by far.
How To Manage Cash Flow as a Seasonal Business
Should seasonal businesses stay open year-round? Closing in the offseason means not having to pay operational costs, such as wages, energy bills (at least for anything more than minimal usage) and maybe even rent if they utilize a pop-up model. However, this also guarantees no income during these months, so such business owners often need other revenue streams.
Whether it makes more sense for your business to close for several months or you just work through the lean times, how do you stretch the income you make in the busy months? A business savings account is a great resource to have. In this account, you can safely store your business’s money and earn interest. But that’s often not enough.
And it might make more sense to leave the money in the savings account earning interest while your business pays for utilities and other contracts with another source of money — a business loan*.
Explore Your Business Loan Options
If your business reliably generates income in one or two quarters every year, a bank might loan you the necessary money to pay expenses during the lean months. For newer businesses, these loans can be vital investments. For more established businesses, paying off the loans as soon as revenue picks up can allow for greater overall profit as the funds in the savings account accumulate interest.
Want to learn more about business loans* and accounts? Contact a Vectra Bank professional and discover how we can help your Colorado business.
*Loans subject to credit approval. Terms and conditions apply. See banker for details.
