(BPT) - Many small businesses across the country have one thing in common: seasonal highs and lows. While it's common for revenue to ebb and flow throughout the year, many businesses face a lull in the summer. Unfortunately, this seasonal slowdown may cause cashflow to decline.
This can be challenging for businesses, especially since summer is also the time to plan ahead, purchase inventory and supplies, and upgrade equipment in preparation for the holiday season, which is usually the most active part of their sales cycle - and one that often requires the most amount of capital.
'If you're a small-business owner, especially in a business that sees seasonal ups and downs, it is critical to be thinking one step ahead. While summer slowdowns and the associated cash crunch can be daunting, it can also be an opportunity to think about what's next," said Bernardo Martinez, VP, Global Merchant Lending at PayPal.
From exploring new marketing tactics, to alternative lending solutions that allow you to invest in your success, here are some ideas to help you make the most of your summer downtime.
Idea 1: Understand your customers
As the pandemic shifted consumer behavior, many small businesses were forced to adapt and innovate (or create) their e-commerce platforms. Keep thinking of these types of pivots as part of an ongoing evolution of the business. Use time in the slower summer months to look at customer behaviors and identify trends that could lead to innovations. Have certain products gained or lost popularity? Are customers dropping off at a certain point in the sales funnel? Can you leverage market research and customer data to expand your online presence or target certain customers with marketing?
Understanding how your current customers are behaving may help you shape your future strategies. You might find that it makes more sense to invest in customer engagement by strengthening existing customer relationships, rather than trying to attract new ones. The need to evolve never stops, and you can use the extra time to better understand how your customers are engaging with your business.
Idea 2: Refresh marketing
Summer is also great time to take a second look at your marketing mix and plan ahead. See how strategic you can get with your email, newsletter and direct mail. Use the time to make a long-term marketing plan that helps get your business in front of your existing customers and find new ones. Focusing on gaining new subscribers could lead to more sales down the line, but keeping current customers engaged is just as important.
With more time during the summer, this might be the ideal season to start or post more frequently on your blog and social media channels, start an email newsletter or create holiday content in advance. Another idea: Maybe set up automations for when things get busy again. Summer may also bring opportunities to sponsor or involve yourself in community events to build your local clientele and goodwill.
Idea 3: Leverage small-business loans
Don't let cashflow gaps keep you from moving your plans forward. Whether it's kicking off a marketing plan or ordering inventory for the essential holiday season, you may need capital and flexibility to take action and position your business for future success.
'It is normal for small and mid-sized businesses to need access to capital to grow their business, and it is OK to seek financial help,' said Martinez. "Seasonal businesses especially need access to capital with flexible terms to offset their fluctuating cash flow."
He points to recent PayPal research that found SMBs are seeing small-business loans in a new light. Many SMB owners (70%) surveyed say the pandemic reduced the perception that taking out a business loan was only for struggling business. Furthermore, SMB owners are realizing that accessing loans can help with growing their business (34%) and staying competitive (23%).1
Martinez points to two financing options in particular that may help seasonal small businesses, especially during the summer months:
PayPal Working Capital is a business loan primarily based on your PayPal account history. There's no credit check when you apply, so there's no effect on your credit score, and there's one fixed fee. You can receive the funding in mere minutes if approved, and you pay back the loan automatically with a percentage of your sales that you choose when you apply. That means the higher your sales, the faster you repay. On days without sales, you won't pay a thing, but you need to repay a minimum of 5% or 10%, depending on the estimated loan term, every 90 days to keep your loan in good standing.
PayPal Business Loans is a competitively priced, fixed-term loan based on an overall assessment of your business's health. There are no late, early repayment or processing fees,2 and if approved, funds can be transferred into your PayPal Business account as fast as the next business day.3 You choose the loan amount and term that fits your business needs.
Although the summer months can be a struggle for many, the slowdown is normal. By using the downtime as an opportunity to reassess your business needs and plan ahead, you can set your business up for success when things pick up again.
The lender for PayPal Business Loan and PayPal Working Capital is WebBank, Member FDIC.
1Wakefield research, commissioned by PayPal. August 26-September 7, 2021. An online survey conducted by Wakefield Research of 1,000 U.S. small-business owners (ages 18+), defined as businesses with 500 or fewer employees.
2In addition to the Total Loan Fee, the only other cost is a $20 Returned Item Fee that is only assessed if a payment is returned.
3The lender transfers funds as fast as the next business day for applications approved by 5pm ET on bank business days.
The content of this article is provided for informational purposes only. You should consider obtaining independent business, tax, financial, and/or legal advice before making any business decision.