By Joe Mathews, CEO of Franchise Performance Group and author Street Smart Franchising
In over 30 years of helping thousands of people investigate owning a small business, I have heard every concern first-time entrepreneurs have about finding the right business for them. Their concerns fall into two broad buckets: those they should have and those that are unwarranted fears.
Concerns such as “Do I have enough cash?” “Am I financing this business properly?” and “How will employee turnover impact my business?” are very real and need to be properly investigated. Other concerns such as “Is this business seasonal?” should not be a concern at all. Cash flow, not seasonality, is king.
For example, when asked, “Why do you want to start a business?” many franchise candidates say they want more flexibility and control over their schedule, and owning a business can open up many avenues. If that’s you, you want a seasonal business. Working hard in-season gives you opportunities to play hard off-season.
Many people are afraid that seasonality means lost opportunities, but that doesn’t have to be the case. A strong seasonal business allows franchise candidates to make full-time money in a shortened time frame. That affords them more opportunity to enjoy vacation time or family time; to take on other money-making projects in the off-season, such as a counter-season business (think landscaping and snow-blowing or skis and skateboards); or even spend time honing a sharper business plan for their existing seasonal business, allowing them to come back rested and ready to knock it out of the park.
A sprint, not a marathon
For the right person, some seasonality is a real benefit.
The right person possesses financial discipline. They don’t draw more out of the business in-season than they do off-season. While their revenues may fluctuate by month, they budget their income over 12 months, ensuring they have enough cash in-season to cover the business and enough to cover personal needs off-season, like a squirrel gathering nuts for the winter.
The right person may be more of a sprinter than a marathoner. Seasonal businesses require the owner to drive hard during peak times, but give them an opportunity to rest and recharge their batteries in the off-season.
Also, seasonal businesses can often demand premium pricing because customers want the service at the same time, like summer vacation rentals. When demand exceeds supply, prices go up. This creates higher margins and greater peak-season profitability.
A season for everything
A steady, non-seasonal business may never offer their owner a real opportunity to walk away take a break without disrupting the business. Sometimes, overworked owners feel as if the business owns them rather than the other way around.
Seasonal businesses give the ownership opportunity to plan. The one resource a franchisee will never gain more of is time. Owning a small business can be hectic, with owners pulled in many directions at once. Owners can become reactionary out of habit, and they never seem to get the time to think and breathe. The precious downtime afforded by a seasonal business allows entrepreneurs to break their reactionary habits and become more deliberate.
If you are quality-of-life driven and value the opportunity to walk away, unplug and focus on other interests, then a seasonal business may be exactly what you’re looking for.