Many businesses experience a steady cash flow all year round, but the majority tend to be seasonal; some more than others. Real Estate is generally one of those industries that has a peak season and slow season, with winter and Christmas tending to be the quieter times of the year.
As a business owner, you are responsible for putting smart business strategies into place that allow you to maintain a steady cash flow all year round and keep your company profitable.
Here are some tips you can put in place to make sure your business can cope with the seasonal highs and lows.
Understand your cash flow
Knowing the financial intricacies of your business is essential (or at least make sure you’ve got a great accountant who will tell you what’s happening and what to do).
You need to know when money is coming in and when it’s going out, and if the two don’t match up, you need to alter your budget to fit in with the seasonality of your business.
Explore alternative sources of income
Fortunately for Real Estate in particular, there are options available to you such as commission advance. In lean times when you need to pay your staff their commission but don’t have the funds available, commission advance is a perfect solution. It can also be used for bills and every day business expenses.
In boom times you can offset any debts or lines of credit you may have and get back on top of things.
Make the most of quiet times
Quiet periods of work can actually be a blessing in disguise. Make the most of the quiet times by planning ahead for busy periods, catching up on administration and maintenance that you’re behind on, or doing some additional marketing and website updates that you normally wouldn’t have time for.
Then when business picks up and you’re flat out again, you’ll feel organised and on top of things.
Negotiate flexible payment terms from your suppliers
If you’re having trouble paying large invoices on time, it’s sometimes possible to negotiate an extended payment arrangement with your suppliers, or a payment plan. Most suppliers prefer to negotiate something with you than not get paid at all.
Flexible payment options ease some of the financial pain until your busy period kicks off again. You can also improve your cash flow by exploring the options available to you when you’re buying, such as bulk discounts.
Consider a line of credit to help you though slow times
Many business owners have a line of credit established for the slow times. There’s nothing wrong with this at all. It’s not a sign that your business is failing; in fact it makes good business sense to have some credit available. It pays the bills in the off-season, then during the peak seasons you can pay off the line of credit. Paying off your credit within a reasonable period of time also reduces the amount of interest you will pay.
Seasonal businesses will always experience peaks of activity at certain times of the year. The trick to making a seasonal business successful is making sure that you have access to cash flow all year round, and use your quiet times for planning and maintenance.
If you think your Real Estate Agency could benefit from a commission advance service, please give us a call on 1800 003 569 to find out what’s available to you.