How Cash Flow Forecasts Help Seasonal Businesses Thrive

Cash is a business’s lifeline. Without a predictable cash flow a business can find it hard to pay vendors on time, meet payroll and buy inventory.

Seasonal businesses may face more challenges than year-round businesses in managing cash flow, due to extended periods of little to no revenue.

If you own a seasonal business, cash flow forecasts can greatly assist  in managing your cash reserves so that you don’t find yourself in a sticky situation during the off-season.

Cash Flow Forecasts

A cash flow forecast is a financial tool for business owners that shows the company’s projected movement of cash.  The forecast estimates the amount of money that will flow in and out of your business over the course of 12 months, including your estimated expenses and income.

Cash flow forecasts for seasonal businesses are recommended as a way to project your expenses and income during the off-season, which will therefore help you to make more well-informed decisions regarding how to allocate funds all year long so that you never run into the red.

7 Cash Flow Tips for Seasonal Businesses:

1. Create a line of credit with your lender. Doing so may assist you during the off-season or other periods of low revenue.
2. Understand your variable and fixed costs. Once you know your fixed costs, you can more accurately create a cash flow forecast. Cutting back on variable costs is an option when cash becomes tight.
3. Create a budget that mirrors your company’s seasonality. Save money during your peak season to then be able to meet business expenses during the off-season.
4. Develop cash flow forecasts. Budgeting and forecasting will assist you in looking ahead to prepare for changing revenues of a seasonal business.
5. Hire someone to manage your cash flow. If you are unable to manage your own cash flow, then hire a financial analyst to do so. Knowing your income and expenses is vital to maintaining a successful seasonal business.
6. Lease business space. Rather than purchasing your business or retail space, consider leasing. Although you’ll pay more in the long term, leasing will free up more money upfront, therefore adding additional cash to your accounts.
7. Close down completely or scale back during the off-season. You can drastically cut operating expenses and variable costs by closing your business during the off-season.

Starting a Renovation Project in the Off-Season

If you’re searching for information about cash flow because you want to start a renovation project during your next off-season without putting yourself at risk for going into the red, a line of credit is a great fit for you.

A line of credit through ARF Financial will:

• Put $725,000 at your disposal
• Give you access to 5 separate loan drafts over 4 months
• Allow you to invest in upgrades to your business without worrying about cash flow

If you would like more information on setting up a line of credit or more information on cash flow forecasts, contact the finance experts at ARF Financial today. We’re here to help!