Being prepared for any seasonality is an important part of the work of entrepreneurs and managers in a wide range of market segments. But is this concept clearly understood by professionals across all areas of a business?
After all, it's not just the sales department that needs to know when sales are low and high so they can adjust accordingly. Other departments within the business also need to address this to maintain both financial and operational stability.
See below what to do in this situation and more!
Seasonality in business refers to the variation in demand for products or services at certain times of the year. This occurs due to factors such as holidays, seasons, or consumer trends. For something to be seasonal, it must occur at specific intervals, alternating periods without occurring.
An example is the increased sales of certain products associated with holidays and festivities, or drops in demand due to extreme weather. Therefore, it's important to understand that businesses may encounter both positive and negative situations associated with this. However, both require the operation to adapt.
Seasonality is viewed from the perspective of the commercial sector, as it can increase or decrease sales. However, it's important to understand that this context affects other departments within a company.
For a product to reach the customer, the business must purchase inputs for its production or the finished item. Therefore, the purchasing department must be aware of when these variations occur to avoid shortages or surpluses.
The financial sector is also affected by both revenue declines during downturns and the need for investment to meet peak periods. As a result, it is important to consider reservations to cover fixed expenses when the market is low and avoid liquidity problems during periods of high demand.
The marketing team is another team that must anticipate these circumstances, developing campaigns and strategies accordingly. In turn, HR has the opportunity to use new hiring models—such as intermittent hiring—to regulate the workforce.
Many aspects are affected by seasonal fluctuations, requiring companies to implement strategies to respond to them. Learn how to deal with seasonal changes!
Composing a company's solutions portfolio is an extremely strategic activity. On the one hand, aligning with the customer profile and marketing positioning depends on focusing on what truly aligns with the brand. On the other, it must be varied enough to accommodate seasonality and increase sales opportunities.
That is, to contain options that maintain ongoing interest and make others available as the market fluctuates and varies. In practice, this idea requires monitoring the sales per item and a comparison between equal time intervals to plan your training.
It's no coincidence that finance is the department in companies that receives the most attention from managers and entrepreneurs. After all, it's where many of the situations that can break a business occur.
One example is a lack of liquidity. Both low revenue and a significant need for investment can lead to this situation. However, it can be avoided with proper planning, especially in the most common scenarios that lead to a lack of liquidity.
Starting with purchasing. Essentially, this department signals in advance that expenses will increase due to high demand, indicating when resources will be needed to supply production or the point of sale. From there, the department responsible for payment must set aside funds capable of covering this estimate at the right time.
Alternatively, if the commercial indicates that certain months have a lower cash inflow, it is also appropriate to make reserves for these times with the profits resulting from positive seasonality.
The success of a diverse portfolio depends on its effective marketing, as some items may attract more attention, leading to the brand being associated solely with them, leaving others to languish in inventory. Therefore, if only one of the options represents a large portion of a business's revenue and is subject to seasonality, profits will decline.
A marketing department that is prepared for fluctuations can work with campaigns to focus on other products or services, reducing the drop in interest rates during periods of lower interest in the main product or service.
Another point is balancing the sector's budget between peaks and troughs. The idea is to allocate more resources when there's an expectation of greater returns, as well as to anticipate these actions so they reach a wide audience.
The success of the financial and commercial areas in periods of seasonality depends on the execution of a proper inventory management.
The logic is simple: you can't miss any item, which could lead to customers being turned away or lost. Likewise, you don't want to overspend without seeing a return. In other words, you need to accurately analyze the history, the indicators and trends to ensure the required quantity arrives at the right time.
Therefore, receiving deadlines are also the responsibility of this department and influence the management and promptness of deliveries. In light of this, a useful measure is to map the entire logistics cycle with the suppliers to anticipate orders or apply fines in case of delay.
Implementing measures to address seasonality involves ongoing, integrated strategic planning, ranging from anticipating trends to ensuring each party performs the tasks they need to.
Its importance is more than evident. It's enough to realize that in times of high or low demand, prior action is necessary to ensure the company doesn't suffer the negative impacts of seasonality.
All links in the production chain can be negatively affected by seasonality. Therefore, strategies must be implemented to minimize its effects, based on continuous and integrated planning across the company's various departments.
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