Winter is here, bringing shorter days and a natural slowdown for many seasonal businesses. Here are some tips for navigating this transition smoothly, ensuring your business stays financially fit through the slower winter months.
1. Cash Flow: Know Your Winter Survival Number 💰
The most critical task right now is getting a clear picture of your cash flow—how money moves in and out of your business. Since your incoming work is likely decreasing, we need to focus on outgoing costs.
- Determine Your Minimum Operating Cost: Calculate the absolute lowest amount of money you need to keep your doors open each month from December through February. This includes fixed costs like rent, insurance, loan payments, and essential payroll. This is your Winter Survival Number.
- Create a Cash Reserve: Look at your current bank balance and compare it to three to five times your Winter Survival Number. If you don’t have this amount saved, your priority this month is to collect every outstanding invoice and minimize non-essential spending to build that reserve.
- Delay Non-Essential Expenses: Hold off on buying new equipment, non-critical vehicle upgrades, or large marketing campaigns until spring. Only spend on what is absolutely necessary for safe and compliant operation.
2. Inventory & Equipment Review: Declutter and Deduct 🛠
The off-season is the perfect time for a deep operational clean-up that has significant financial benefits.
- Year-End Inventory Count: Get an accurate count of all building and work materials or supplies you have on hand. A lower inventory count at year-end often means a lower amount factored into your Cost of Goods Sold (COGS), which can affect your taxable income.
- Assess Fixed Assets: Review all large equipment and vehicles. Are there any assets that are fully depreciated, obsolete, or simply taking up space? Selling or disposing of these items before year-end can simplify your books and sometimes provide a small cash injection.
- Plan for Depreciation: Talk to your tax professional about Section 179 deductions or bonus depreciation for any equipment you purchased this year or plan to purchase by December 31st. These can allow you to deduct the full cost of eligible assets in the current tax year, reducing your tax liability.
3. Payroll Planning & Staff Utilization👨🔧
For businesses with seasonal staff, November is the month to make strategic decisions that keep your best team members engaged and your unemployment costs low.
- Cross-Training and Internal Projects: Instead of laying off skilled employees immediately, utilize them for tasks that are usually pushed aside during busy season.
- Maintenance: Organizing the shop, repairing existing tools, or vehicle maintenance.
- Training: Certifications, safety refreshers, or customer service workshops.
- Lead Generation: Have staff call previous customers for reviews, check-ups, or to book spring-time estimates.
- The 60/40 Rule for Benefits: If you can, keep your best talent on the payroll, even at reduced hours. The cost of a few hours of work a week is often far less than the cost of recruiting, hiring, and training new workers next spring, which can take up to 40% of their annual salary. Retention is an investment.
By taking a proactive approach to cash flow, assets, and payroll this November, you’ll be setting a strong financial foundation for growth when the busy season returns.
