Working capital4 min read
Managing working capital in a seasonal business
Seasonality is predictable. The cash-flow squeeze it produces should be too.
Seasonal businesses fail on timing, not margin
A profitable seasonal business can still run out of money, because the costs of the peak land before the revenue of the peak arrives. Stock, staff and marketing are all paid for in advance of the trading that justifies them.
Match the facility to the shape of the year
A revolving facility fits this pattern better than a term loan: capacity is drawn ahead of the peak and repaid out of it, rather than carrying fixed repayments through the quiet months.
Map the year first — when cash actually leaves and arrives — then size the facility to the deepest trough, not the average.