An online business is no different than a bricks-and-mortar operation in terms of business trends. There are going to be periods of high sales along with slumps, this is just the way business naturally happens. Unless you are a household brand name, you cannot expect sales to be good every month or every quarter of the year.
The key to staying in business is to take proactive steps by controlling cash flow during those sales slumps.
Identifying Sales Trends
If you have been in business for less than a year, you may find it difficult to forecast sales trends – but it is not impossible. Go back to your marketing plan and review your competitive survey. What do competing companies show as far as seasonal trends?
A forecast should also be part of your overall business plan. While you may have projected annual figures for your company’s profit potential, try breaking that number down into month-by-month figures. Create a graph from your monthly forecast and it will clearly show the high points and low dips in expected accounts receivables.
Controlling Cash Flow – Planning For The Dips
Once you have identified where those sales slumps are going to occur, it’s time to take proactive steps of controlling cash flow to ensure you can make it through the tough times.
The truth is that in order to make money, you are going to have to spend money. There’s just no way around it. And when you are making the most money, you are also probably spending the most. This makes it hard to set aside funds but there are some best practises that will help saving become a possibility.
Schedule payments for capital investments or necessary services to coincide with periods of heavy sales. For instance, pay your bill for internet access several months in advance so that you don’t have to worry about this cash outlay when you can least afford it.
If you have employees in your business, see if you can work with them on a contract basis. When it’s difficult to pay your bills, the last thing you can afford to do is pay an employee who is not contributing to your company’s bottom line.
Consider pausing or downsizing online advertising campaigns during slow periods and don’t take on new ventures in terms of spend but do take downtime to plan ahead by preparing content and research material for the busier seasons. Internet marketing and advertising is always important, but it is an extra expense when you are having a tough time paying those bills essential to your operation. Focus on lower-cost promotional techniques rather than expensive campaigns, unless you know you have established ROI.
Of course the best way to plan in advance for dips in cash flow is to do what you can to increase sales. Plan promotions, sales, discounts, and special events to coincide with those periods when you need income the most. This should help smooth out that chart of sales levels you used for forecasting.
The most important thing you can do to stay in business is to be proactive about making it through the lean times by controlling cash flow. The majority of new companies close their doors (both literally and figuratively) due to lack of proper financing. Ensure that you don’t fall into the same trap and set aside as much cash as possible.
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You are correct in saying that in order to make money you need to spend money. It is unfortunate that sometimes we do not spend enough time listing the goals and planning the steps to get there but rather just shoot off trying to make money.
It’s a continuous process and not something that you can always just set and forget.
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