SCORE Small Business Blog

Planning for Seasonal Sales

This is the second of four articles in a series about how you can better manage your seasonal sales fluctuations. In the first article we discussed Understanding Seasonal Sales Trends. In this second article we’ll talk about Planning for Seasonal Sales. The next articles cover Marketing Plans to Manage Seasonal Sales and How to Manage Cash Flow for Seasonal Sales.

Planning for Seasonal Sales

After you begin to have a handle on your seasonal fluctuations you can start identifying the products that drive the most revenue for each season. These are your anchor products that you can wrap entire marketing campaigns around. You’ll be able to identify a natural sales cycle for your anchor products and gain an understanding of what month, or even what week, sales begin to pick up and what the highest markup might be for each product. You’ll know when to expect sales to peak and then begin to decline. At each point in time you’ll know how to manage pricing the products to take advantage of full retail pricing during ramp-up and peak times, then tapering off with markdowns to get rid of excess inventory.

The issue here is simple:  good planning means good profits. That’s why creating a practical and realistic sales plan is the basis for solid financial forecasting. As with any planning, the outcome is only as good as the data you’ve based the plan on. To correctly plan for seasonal sales fluctuations, you’ll need to develop accurate forecasts, keep the forecasts updated with actual results and then incorporate what that information is telling you about your customers and their buying habits.

For retail businesses, inventory purchases often represent one of the largest cash outlays, your goal is to squeeze as much profit out of your inventory as possible. Your inventory is a major asset that needs to have a strong return on your investment in it. Product that sits on shelves because of seasonal fluctuations doesn’t help your cause. Even worse, products that you sell out of but can’t be replenished represents lost sales revenue. Having items out-of-stock or over-stocked are both equally painful in terms of lost working capital for your company. Learning to anticipate your inventory needs with accurate forecasts is vital to survival.

Managing inventory is critical to your company’s survival, but managing inventory well is critical to your business thriving. You can control your cash flow and maintain more efficient inventory levels by understanding the simple principles of Just In Time, or JIT, inventory management. JIT is exactly what it sounds like – you order only what you need just before you need it. This allows you to manage your inventory and cash flow more effectively and provides a way to stay ahead of your cash flow needs.
That brings us to the next piece in the puzzle: knowing what products to order and when to order them. The best way to understand your JIT needs and manage seasonal fluctuations is to develop a detailed sales and inventory plans based on historical trends, a topic we covered in the first article in this series. You’ll be able to use the information you glean from compiling this data as benchmarks to guide your future inventory purchases.

Check back next Friday for the third part of this series, when we’ll discuss how to make a marketing plan for seasonal sales.

Cynthia McCahonFounder and CEO,
After years of providing business planning and development services for private clients, Cynthia became acutely aware that many entrepreneurs struggled to develop accurate business plans and saw the need for a free tool like Enloop. | Facebook | @cmccahon | More from Cynthia

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