For Americans, the 4th of July is an epic holiday. Tons of food, beer, explosives, and excessive sunburns from falling asleep outside.

It’s pure Americana.

From this tradition, business empires have been built.

Nathan’s Hot Dog Competition, where grown men (and a few women), bring competitive eating to center stage (​Joey Chestnut recently talked about how he prepared​ and I can’t decide if it’s disturbing or admirable).

Fireworks businesses, where children who never grew out of their piro stage get to come out of hiding light the neighborhood on fire.

Where retailers take advantage of our patriotism and put us in awful clothing.

And last, but certainly not least, where our obsession with grilling bumps sales for food and beverage companies, grocery stores, and the charcoal industry (where Kingsford Charcoal owns 80% of the market).

 ​I wrote about one of them, Kingsford Charcoal, on Twitter​ and how Henry Ford played a part in their founding.

But, while these bumps in sales are sweet, they also come with some huge risks.

Inventory guesses. You need cash for inventory, but you never know how much inventory you need. If you don’t sell it, you might only be able to sell the surplus at a loss.

Logistics problems. When you scale employees and production quickly, it’s hard to do things well. Scaling quickly increases cost and complexity.

Economic & environmental risks. If the economy is down, business could tank at just the wrong time. Remember COVID-19? Everything shut down on a dime, which meant businesses reliant on that particular season struggled. While most aren’t that bad, the risk is still there. Weather also impacts these businesses heavily.

Cash and credit risk. With inconsistent income comes inconsistent access to cash. It makes it hard to predict what’s coming and also means outside parties are less keen to help you fill the gaps.

All of these factors increase the cost and risk structure of the business.

So, how can we combat them?

Diversify

Easy to say right? I know, not so easy to do.

This could come in three forms:

1. Add-ons
2. Off-peak offerings
3. Alternative solutions

Add-ons. With these, it’s key that they’re value add for the consumer while they’re there during your season.

Pumpkin patches offer hay rides. It’s a no-brainer for the primary customer base of the product.

Farmer’s markets bring in outside vendors that sell non-food products and increase foot traffic.

Off-peak offerings. Landscaping businesses do snow removal.

Clothing companies do holiday-themed clothes.

Pool maintenance companies offer hot tub maintenance, too.

Ski resorts regularly offer summer activities such as mountain biking and hiking.

A Christmas business? Try for Easter or Halloween. Fireworks business? Try other parties. I will acknowledge, some of these will be hard.

Alternative solutions. How do you use the space? What are some things you can do to keep your best skeleton crew staff?

Another option is to partner with other brands. Enjoy a brand that has a complementary season to yours? Create a partnership that will keep sales trickling in during your downtime.

Get creative, but don’t get distracted from the main business.

Insurance

Remember that risk I mentioned earlier? There is a lot of risk with seasonable businesses, so consider insuring against that risk.

There are two types of insurance: self-insurance and outsourced insurance.

Self-insurance would be keeping enough cash on hand to assure you could pay your workers and your rent. But, if you don’t have that cash, actual insurance is your only option.

It’ll be expensive yes… but not being prepared is even more so.

Build brand loyalty

Loyalty keeps people coming back and encourages customers to engage with your business outside of peak season.

Use your marketing channels to create a real brand and create fans out of your customers.

If I keep writing about this, you’re going to see how little I know about marketing and branding… so I’ll let your branding expert friend help you with this.

Extensive planning

Planning is an essential part of any growing business and definitely a big part of a seasonal one.

Businesses plan for Christmas year around and your business should be no different.

Consider:

1. Demand
2. Economy
3. Staffing
4. Inventory
5. Cash Flow

By putting together a robust plan, with plenty of contingencies, you can avoid massive losses that can come when product doesn’t sell.

Having a plan for the cash you’ll hold back is important so it doesn’t end up spent. Not planning this is a great way to have capital calls every year.

Conservative management

When risk is high, caution should be high.

I knew a CEO in a low-margin business who had no problem with a lot of risk. The result? A lot of stress and late nights on the phone with the CFO wondering if they’d make payroll.

It’s important to remain lean and flexible. The ability to react quickly to changing conditions will allow you to survive when others in your industry aren’t able to.

Some things to consider:

1. Keep an additional cash cushion
2. Limit contracts to month-to-month terms
3. Maintain excess credit and keep balances low
4. Build relationships with backup vendors
5. Create a cash flow forecast
6. Review financials promptly