When summer rolls around, most of us think about how quickly we can get out to the beach or what’s the best weekend to invite friends over for a barbeque.
But many small business owners see the year’s warmest season as a trial—an obstacle to overcome or endure.
And while some entrepreneurs institute new tactics or practices to survive the summer heat, others are waiting for summer, since that’s when business thrives.
Whether or not you’re affected by the summer months depends on what kind of business you own.
Some businesses are not seasonal or are large enough not to worry about the dips from May to August. Small business owners in certain industries always need to plan ahead for the summer—whether they’re negatively or positively affected.
Take Royce, for example, a leather goods company based out of New Jersey. They always have issues selling in the summer, when gift-giving is at its lowest point.
There’s also Uncorked Ventures, an online wine delivery service in California that predictably sees a downturn in orders after the high season of winter and early spring. Both these businesses have developed interesting strategies for how to counter the drop in business or use the time to build customer loyalty instead of pulling in new customers with dramatically lower prices.
On the other hand, Annabelle, a women’s clothing store located in Avalon along the Jersey Shore, is a business based almost entirely on summer sales. In fact, the store closes completely in October, once the last of the vacationers clear out for the season. But it’s the work in the off-months that makes the summer season so successful.
By breaking down how these different businesses handle the summer’s highs and lows, you’ll better understand what you can do to beat the heat.
Let’s dive right in.
Using down time to strengthen the customer bond
Royce, out of Secaucus, New Jersey, has been manufacturing leather goods since the 1880s, though the family business has undergone a serious overhaul in order to keep pace with the changing times.
With some technological breakthroughs—like a wallet that includes a tracker in case you misplace it—the company’s products are now in Brookstone and Sharper Image, as well as Macy’s.
While people certainly buy Royce products for themselves, the company’s niche has long been gift-giving—you can get many of the items personalized and stamped. This specific market is good during the holiday months, but less so in months that aren’t associated with gifts.
“Royce is known for gift giving, which makes December our best month,” says Billy Bauer, the managing director of the company. “We do most of our business in a three-month span from mid-October to mid-January—the summer months of June through September are almost dead for us.”
At first, Royce tried to make money from their inventory any way they could, but Bauer found that this strategy didn’t work for the company in the long run.
“To deeply discount and liquidate in the summer, it can hurt the brand,” he says. “In the short-run, if you have to make rent, I understand, but if you’re not in a position to worry about your overhead during those months, we’ve learned that trying to liquidate your product can’t help in the long-run.”
Instead, Royce has taken to inviting customers to open houses, flying in their best customers and wholesale dealers to give them behind-the-scenes looks into what goes into making their products.
“We wanted to find an innovative way to bring in new customers and to educate our best, long-standing customers as well,” says Bauer “We may never be able to bring in the kind of sales we’re used to, but we can use this time to create long-term value for the brand. While someone may buy $100 or $200 worth of stuff with a summer discount, we’re more interested in them being a lifetime Royce customer.”
The company doesn’t look to break-even with the open houses, which Bauer says includes gift bags, a buffet, and music to give them a fun feel.
But if they can showcase their upcoming products and stay relevant in the minds of their customers, that’s a long-term win.
“Every time they think to buy something, whether it’s small like a passport case or something for a big event in their life, some kind of tangible gift, we want us to be top of mind,” says Bauer.
Bootstrapping when business is slow—and capitalizing when it’s good
Uncorked Ventures is an online wine ordering business based out of El Cerrito, California. Founder Mark Aselstine and his brother-in-law started the business 6 years ago, and he says that you’re as likely to get him on the phone as anyone else if there’s something wrong with a shipment.
He even posts his personal number on the company’s website, for use in case of emergencies.
Like Royce, Uncorked finds that the high season is the winter, especially around the holidays.
“Half of our business is between Thanksgiving and Christmas,” says Aselstine. “Then, for the rest of the year, business is fairly evenly split up. Spring heats up significantly and then there’s a dropoff—July and August are down about 50% from those spring months as far as sheer revenue goes.”
Aselstine cites a couple of reasons for this decline, including the fact that his business is priced at the higher end of the spectrum—not to mention the sheer logistics of delivering wine in the summer.
“I think it’s a combination of people being on vacation and it getting so hot that folks who normally would consider ordering wine won’t because of concerns over the temperature of shipments,” says Aselstine. “We experience both a loss of business during the summer months and an increase in ruined shipments, since bottles will leak during transit, and unfortunately I can’t always count on UPS and Fedex to keep my stuff in an air-conditioned part of the truck.”
In order to combat this period of sluggish sales, Aselstine takes a two-pronged approach: Bootstrapping by cutting costs during the summer and saving money on shipments when business is booming.
“We keep our costs as low as possible during the summer: low enough that we’re profitable solely based on our subscription revenue alone,” says Aselstine. “For a small business like us, it’s about time versus money.”
“For example, to have a good article written for a website you’re paying many hundreds of dollars, so you’ll see me writing most the content on our site. Also, most wineries have a facility that does all or some of their shipping, very professionally done—and the cost of that would mean virtually no profits for our entry-level wine club. So we pick and pack everything ourselves.”
Then, when business picks up in the fall and winter months, Aselstine knows that’s the time to approach shipping companies about discounts for larger orders.
“Shipping rates for us are maybe 15% of our net revenue. I think, if you’re seasonal, it’s about knowing when to approach asking for better rates. We could ask in the summer and we’d get the answer that we’re not moving enough to justify that. You need to be smart about when you ask,” he says.
Aselstine thinks that as the online wine industry grows, this dip may become less of a burden. An “unbelievable amount” of wine is still sold across the counter, says Aselstine, and that plays a role as well.
“We’d probably have to deal with this less if we were selling dollar wine, like the big boys do,” he says. “It’s partially who the market is for, and that’s changing quickly.”
Spending all year preparing for the summer crush
In the beach resort town of Avalon, New Jersey, Debra Klebanoff runs a women’s clothing store that is, in her words, “1,000%” impacted by summer—since the business is only open from about May to October.
“Seven Mile Island pretty much shuts down in the offseason,” explains Klebanoff. “I would have no business if not for summer.”
Annabelle sells an eclectic mix of spring and summer clothing for all ages, including sundresses, bathing suits, rompers and jeans, as well as jewelry, home decor items, and vintage fixtures.
And once the store opens for the season, these fun summer items practically sell themselves.
“The nice thing about a summer business at a beach resort is that, even though you have the downside of the business disappearing in the offseason, in the on-season you have a readymade customer base. Shopping is part of a vacation—they’re here, they’re in a great vacation mood, and browsing the stores is part of the experience,” says Klebanoff. “Ideally, at the end of each season, my racks are empty.”
But the business of running Annabelle doesn’t end when the store shuts its doors come fall. In fact, planning and buying for next season—and dealing with the logistics of essentially reinventing the store each year—begins right away.
“The way it works in the clothing industry is that the manufacturers sell by delivery,” Klebanoff says. “I’ll go to my first trade show in September for the 2017 spring and summer season. And from the end of September through the end of April I’ll go to trade shows, show rooms, wherever I can see the offerings of the various manufacturers.”
But if Klebanoff wants to buy spring or summer wear far in advance of her opening day—like if she finds something she loves in September—the balancing act of getting manufacturers to hold off on delivering their products begins.
“The vendors aren’t getting revenue from me until they ship the items. I can’t have things delivered to my store in January or February when my store won’t open until May. Some vendors are willing to hold off on shipping until April, but if it’s something I really want, I’ll have them deliver it to my home in Philadelphia,” she says.
Then in April, the preparation for summer switches into high gear.
“I’m surrounded by boxes—it’s a mountain of boxes here at the store,” she says. “And I’ll be here around the clock until opening day: opening boxes, steaming all my inventory, tagging it, hanging it, and getting the store in shape. Unlike a store that’s year round—where you do a little bit of that every day, a delivery here or there—with me it’s all at once.”
So while Annabelle is only open a few months out of the year, it’s a year-round effort to make sure the store is ready for the summer crush.
The only thing left for Klebanoff is to make sure she’s maximizing her market’s potential.
“For years, we pretty much let people find us,” says Klebanoff of her marketing strategy. “We still have a lot of people who come in and say ‘Oh, we didn’t know this was here.’ So we’re going to try some marketing—issuing a press release about our opening, an updated Facebook page, a new Twitter account, things like that.”
Summer poses unique challenges and opportunities due to the weather, as well as the culture surrounding the season.
For some small businesses, the summer season means reinventing the model.
For others, it means using the time constructively to build the brand.
And if you’re lucky, it just means your business is about the entire the high season. Be sure to take advantage of it while it lasts.
The post How These Small Businesses Survive the Summer Heat appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/2016/05/19/how-these-small-businesses-survive-the-summer-heat/