Seasonal Startups: Is The Effort Worth The Risk?

Embarking on a startup journey can be daunting. As you enter a ferocious market and battle against company competition, the rise to the top can feel like a slow climb, even for well-funded ventures.

Introducing a seasonal startup to the mix may result in double the profit but also doubles the risk. While some seasonal businesses rake in the same amount of revenue in a month as some businesses do in a year, it can be tricky to maintain profits, staff and engagement throughout.

The question is, is the effort worth the risk? With that in mind, let’s have a closer look at some of the challenges seasonal startups may face in 2023 and reveal how to tackle them like a boss. 

(Image Source: Print Runner)

Are Startups Facing Challenges In 2023? 

It’s no secret that the e-commerce industry has grown in size since the onset of the Covid-19 pandemic. With more people shopping online than ever before, the competition for conversions continues to heat up among a number of industries.

In fact, a whopping 1 in 5 startups fail in their first year of operation. From cash flow struggles to recruitment dips, the fight to match the success of commerce giants like Amazon and eBay is often a tough one.

As we move towards a digitally dominated future, startup entrepreneurs must be prepared to constantly adapt to consumer trends. Whether that is opening a TikTok shop or switching up their products to meet market demands, those who are not able to conform to consumer needs will fall short in the race to the top.

What Is A Seasonal Startup?

Seasonal startups face a different set of challenges to traditional business ventures. Seasonal businesses offer products or services that are only required during certain parts of the year. 

For example, fireworks retailers see a significant boom in business during October/November, but for the rest of the year, sales remain lower as consumers lose interest. While seasonal businesses rake in large amounts of revenue during high periods, the constant ebb and flow of profits and losses can lead to a number of cash flow challenges.

For startup ventures, in particular, getting off the ground can also be tricky. Without a steady cash flow to support the business as it grows, the risks pile up. 

However, sometimes the revenue generated during high seasonal periods can be so profitable that a startup can survive all year round. 

Is The Effort Worth The Risk? 

There are a lot of positives associated with opening up a seasonal business. Seasonal ventures not only offer more flexibility for new entrepreneurs but are twice as likely to be profitable in a seasonal trade.

Some of the key benefits of seasonal startups are: 

• More Preparation: Unlike traditional online stores, seasonal businesses have on and off seasons, meaning that leaders have more time to develop budgets, create products and track demographic trends. 
• Seasonal Labour: Seasonal businesses rely on flexible recruitment, freelancers and temporary contracts. Hiring is much more streamlined, and you are not left with the costs of long-term payrolls. 
• Maximising Marketing Efforts: Seasonal businesses often have a target audience and a narrow consumer base. With large periods of off time on their hands, they have more energy and resources to delve deeper into their demographic and create marketing campaigns that excite their target leads. Better still, if marketing strategies are executed well, seasonal startups can build up a social following and a loyal consumer base all year round in preparation for a spending frenzy during high periods. For example, if you’re a sunglasses retailer, why not heat up your audience for the summer by releasing a social post on how you can look smart in your bestseller frames as the sunny season approaches? 

Managing Seasonal Risks 

While seasonal startups come with their benefits, it’s vital that risks are managed well going forward, especially if a business wants to last the year. 

Dealing With Cash Flow Dips

According to CB Insights, cash flow dips account for 29% of seasonal startup closures. 

While funds may multiply during high periods, finding ways to make that capital stretch over the year is often when business leaders fall short. 

The key here is to form a plan to maximise all assets all year round and set a strict budget for off-seasons. Better still, if you’re new to the game, it’s vital to have a backup plan. Whether this is an energy funding pot, a loan or a range of products/services that can be sold out of season, finding ways to keep your venture afloat during hard times is vital.  

Tackling Recruitment 

There are a number of pros and cons associated with seasonal recruitment. While hiring seasonal employees contributes to lower payroll costs and less commitment, seasonal employees are often victims of less training, workload burnout and high turnover. 

(Image Source: Patriot)

Moving forward, seasonal business owners must be more prepared to train seasonal employees ahead of high periods so they are more prepared to face an influx of customers. 

Going Forward 

Moving forward, seasonal business owners must be prepared to diversify if they want to challenge commerce giants like Amazon. While high periods draw in consumers, the key to staying profitable is to offer your audience incentives to stick around during low periods.

Whether this is a product sale code, or a creative marketing campaign, finding ways to promote your business all year round is essential. 

As the market for e-commerce start-ups continues to heat up, seasonal ventures will face a number of challenges. However, their payoff could be much sweeter if entrepreneurs play their cards right.

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