It’s like waiting for a bus; no traditional Bank Holiday Monday for over 200 days, and then we get two in one month! I’m not complaining of course, because we all need downtime to re-charge, and to re-connect with others, with ourselves, or with nature.

I read an article about the origin of ‘public’ holidays, back in the time when we were largely an agricultural economy, and rural life centred around family, farming, village life, and seasons.

Livelihoods depended on seasons with the risk of flooding, a poor harvest, or a long winter having a disastrous effect. So, people celebrated the natural cycle of life such as the end of winter, summer solstice, and harvests.

Whilst we may live in a more urban world, with different economic situations and advanced technology, seasonality is still very important in many businesses.

Approximately half of our Private Clients run a seasonal business. At a certain income level, it’s possible to have momentum and get through the ‘quieter’ months, but below seven figures it becomes difficult to carry overheads and staff for the less busy months and see that cash get lower and lower.

So, what can you do? Well, there are three little words:

Gross

Margin

Value.

(BTW - this applies to ANY business, not just a seasonal one).

Every business has set costs they need to fund to deliver sales. These are generally referred to as Fixed Costs. They form the breakeven point of your business.

As an example, if my business has Fixed Costs of £30k per month, as long as I sell £30k of sales (after my cost of sales has been deducted) I will breakeven.

Think about it this way – if your business has six great months but also six bad months; then the six great pay for the six bad. Putting this into figures (after the cost of sales deduction):

• Six months of great business could be £40k per month.

• Six months of poor sales could be £20k, resulting in a business achieving £360k.

• Now if that business had fixed costs of £30k per month it would break even, the great covering the bad.

• But what if the bad months could actually breakeven – not make a profit but breakeven – hit that gross margin value? That would then result in all the bumper months turning into profit.

To give you an example, when I was CEO for a PLC that repaired accident damaged cars, this is the philosophy that I focused on – getting the most out of the bumper times but limiting the liability on the quieter months.

The answer became obvious: what vehicles are literally wheeled out in our quieter times, the Summer? ... Motorbikes! Caravans! Motorhomes!

Yes, we set up accident repair services for motorbikes, caravans, and motorhomes.NOT to make a profit but to actually get it to breakeven, to keep the staff we needed for the busy period, and to turn the bumper months into exactly that.

So, if you have a few quieter days, weeks, months in the year what could YOU do to breakeven during those periods and release the bumper times into profit?

Best wishes,

Martin

Martin Norbury

Investor | Business Mentor at Advocate | Author of I don’t work Fridays