Thriving as a Seasonal Franchise
The key to prosperity is to operate as efficiently and effectively as possible during your off season while also using the time to plan ahead for next season’s growth.
While common wisdom indicates seasonal franchises are a challenge to operate, in fact they create a unique cycle of growth and provide rewards not available in conventional businesses. Historically, seasonal businesses do quite well. Many successful hospitality and tourism businesses are seasonal as are certain food establishments, such as frozen yogurt shops, and consumer services such as pest control, lawn care and swimming pool maintenance. The key to prosperity is to operate as efficiently and effectively as possible during your off season while also using the time to plan ahead for next season’s growth.
Create Off-Season Revenue Opportunities
Don’t focus on the loss of revenue during the off season. Rather, get proactive and aggressive in driving new revenue streams. In our industry, we encourage franchisees to drive revenue opportunities by performing annual tune-ups and selling upgrades, such as pool automation and renovations during the off season. Your brand may have to get creative, but the rewards can be significant.
Diversifying is another great way to supplement your income. A common example is a company that landscapes in the summer and clears snow in the winter and yet opportunities exist in whatever industry it participates. Generally, the key is to find another product to sell to your current base of clients or to leverage your skills to perform a complementary business such as repair pool heaters in the summer and home heater/furnaces in the winter.
Although our cash flow is lower in the winter months, the company still manages to keep afloat. Whether it is running a special promotion or diversifying your business, there are many ways to get creative during the off season.
Manage Your Fixed and Variable Costs During the Off Season
Seasonal businesses must keep fixed costs, such as building leases and vehicle leases, to a minimum. Expenses like rent will continue year round (despite lower revenue in the off season) and your business needs to take this into consideration during its prime season to ensure there are funds to cover your costs in the slower months. In addition, it is critical to lower your variable costs such as labor, marketing and administrative in the off season to counter the decreased revenue streams. Many industries have traditional ratios by which they manage the profitability of their business (i.e., labor cost should account for no more than 30 percent of revenue). Manage your business to ensure these ratios can remain as close as possible year round to meet your goals. Additionally, complete a fresh evaluation of your vendor agreements during the off season to ensure your organization is locking in the best pricing throughout the year.
Keep a Strong Base of Dedicated Employees Year Round
Employee management, like hiring, termination, training and so on, is one of the critical challenges faced by a seasonal business. And yet, a seasonal franchise provides a great opportunity to annually assess employee performance and determine whom your business wants to invest in for the years ahead.
Let’s assume your company has six employees working 30 hours a week (180 hours total) during the seasonal rush. Now with the slowdown, there is only enough work to support 90 hours total work. Rather than having each of your six employees work 15 hours a week, consider terminating your poorest performers and instead reward the better employees with more work. By doing so, your business cuts costs and keeps the individuals who truly represent and convey the brand to the best of their abilities. Our company has found this is one of the best strategies for growth in the long run. In addition, the off season is a perfect time to provide in-depth training and development programs that are often not possible to provide during the seasonal rush.
Plan for Growth
When the prime season arrives, one must make sure that to take advantage of every opportunity. Unlike other businesses, seasonal businesses may only have about four to five months versus 12 months to produce the revenue and profit to support the business throughout the year. The key, however, does not start with the season, but rather with your planning and management leading up to your seasonal rush. The off season is the best time to reassess your business model and make any necessary adjustments. In prime months, there is very little time to take a step back and view the situation. However, an advantage of operating a seasonal business is having time to analyze your company.
A business should first determine its goals and metrics for the season. What does success look like after the season is over? What revenue and profit targets must be hit? How many clients does your company hope to acquire? Then your business needs to ensure its operations can execute against the plan. Is your team fully staffed and trained? Does your brand have the right inventory on hand? Does your business have the right marketing strategy and tactics to differentiate your product and service, and acquire new clients at the right cost?
Finally, many larger clients may have an annual budgeting process. The off season is a great time to plan for and recommend improvements to be implemented as part of their annual process. For instance, in the pool industry, our company meets with our large property management clients to recommend major improvements including remodeling, replastering and new pool equipment like heaters. Not only do our clients appreciate the proactive recommendations, but this planning effort helps them meet their cash requirements as well. ⎯
Willan Johnson is the CEO of VivoPools, a pool care franchise. Since its inception in 2009, VivoPools has been the leading provider of pool service and maintenance in California, Nevada, Arizona and Florida. He can be reached at 888-702-8486.