1. Financial keys to compensate for the seasonality of the markets
La seasonality it is an inherent feature in all markets. However, some of them suffer from this variability in a very pronounced way.
For example, in the marketing of items such as nougats, skis, swimming pools, laptops or barbecues, it is difficult to sell the same amount throughout the year.
In these cases, alternative business strategies can be promoted to achieve this, but it is not an easy task. Of course, it is necessary to make good decisions financing for companies. Otherwise, liquidity problems will kill your business.
2. The financial dangers of the seasonality of products
The seasonality of the markets is produced by the influence of factors external to your company related to the calendar.
Seasonal sales are those that suffer upturns, peaks, stops and brakes in certain periods of the year.
Most often they occur in summer and winter. Thus, there are items associated with heat and cold that are hard to sell on other dates.
This reality requires taking important measures, such as the financing for companies the flow of income in the business is not continuous. There are times when you have very high income, but also long periods of drought.
Let's go back to the example of the sale of polvorones. Outside of the Christmas dates, your income will be very residual or even non-existent. On those holidays and in the weeks leading up to it, you need to generate enough profitability for the rest of the year.
It is something similar to what happens in certain catering establishments. Do you know that many rural businesses live off tourist dates and patron saint festivities?
However, stopping to enter during a part of the year does not exempt you from paying the usual fixed expenses. For this reason, the administration and financing for companies acquire a decisive strategic role.
3. Expenses and seasonality of the markets
The main cause for concern is that the stream of expenses is independent of the flow of sales. For this reason, factoring and other similar tools acquire great importance.
If 90% of your sales are generated in six months of the year, are 90% of the expenses also concentrated then? The answer is no. Variable expenses do depend on sales, but fixed ones go freely.
For this reason, the economy and financing for companies included in these markets must be analyzed to the maximum.
It is necessary to ensure continuous liquidity to meet all payments. Think, among others, about the payment of payroll and the installments of your business loans.
4. Strategy and financing advice for companies with seasonality
Although there are not many possibilities to counteract the seasonality of the markets, these are the four main lines of action commercial:
– Boost sales on other dates. Maybe we can try selling ice cream aimed at the kitchen good gourmet food during the rest of the year.
– Open new markets. Is there any possibility to sell fishing rods in the winter months? Maybe yes, if you manage to export them to warm countries.
– Expand the product catalog. In your ice cream shop perhaps you can also serve coffees, chocolates, cookies and churros.
– Suspend fixed expenses. The alternative is to close the business when activity drops. In reality, it is not always possible: sometimes reopening is more expensive than staying open.
5. The strategic importance of financing
Trading strategies can help, but they won't fix liquidity problems. Therefore, financing policies for companies acquire a crucial role; They are the key to survival.
Request a Factoring as a Financial Tool for Managing Seasonal Fluctuations in Trucking on time, using adequate sources of alternative financing and managing liquidity well are key decisions.
Make good financial planning of your company is the most valuable tactic. We also encourage you to avoid routine financing solutions. Banks offer loans and lines of credit that can come in handy, but they are not the only way out and, what's more, the procedures are tedious and slow.
In this context of market seasonality, financial creativity is an asset. As a manager, you must be able to anticipate events, anticipate what is to come and fully understand how supply and demand work in your market. But most importantly, periodically control your expenses and income and opt for alternative financing when necessary.
Discounts of promissory notes, lines of Factoring as a Financial Tool for Managing Seasonal Fluctuations in Trucking, private investors and alternative lines of credit are great options.
If you act with good sense and financial rigor, the seasonality of the markets will not be a problem for you.
En workcapital, we are happy to help you by solving your liquidity problems, so:
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