How to run a successful seasonal business
A seasonal business will typically have an ‘on’ season, usually mid-spring to mid-autumn, and an ‘off’ season, usually winter. Understanding these two seasons and the differences that will affect business is key to success in a seasonal site. The ‘on’ season is when your business is busiest, and when trade is brisk. The ‘off’ season is when trade slows down, or in extreme cases stops altogether. Typical seasonal sites rely on tourist trade and therefore the tourism season will also define the busy season for the business.
Jim Sloan is the tenanted operations manager for St Austell Brewery who run an estate of 168 pubs across Cornwall, Devon and Somerset. He explains what makes seasonal businesses different:
“Seasonal businesses are predictable. On the whole you know when you are going to be busy and when the quiet times will be. This affords the business owner the opportunity to plan in the quieter times to make sure they operate at maximum efficiency when they are busy and serve as many customers as possible. There is often a misunderstanding that seasonal businesses give huge opportunities for a rest and time off, out of season. Whilst the pace is undoubtedly slower, when turnover drops you can afford to employ less staff and often business owners find themselves working just as hard out of season as in the height of the rush.”
Steve Bellman – The Pandora Inn – Mylor, Cornwall
“I’d say the technology that’s available to people, you just need to grab it and use it. Whether that’s a decent EPoS system or decent software for bookkeeping if you’re a little independent and you’re doing your own accounts. Use the best, because it’s all out there and it’s all relatively cheap these days and you need to use that so you can constantly monitor your business and that’s important in any business but even more so in a seasonal because you have those peaks and troughs of trade and you need to establish that pattern quite quickly so you’ve got a handle on what’s coming in but more importantly what goes out.”
Simon Woplin – Operations manager InnBrighton – Brighton, East Sussex
“Have a hands on manager who is focused and experienced when it comes to staff. Make sure everyone is part time and their expectation is that when it's busy there'll be work, when not then none- do this from the start, and be upfront about it. Always underestimate your income, overstate costs and if it doesn't add up then don't do it!”
Jim Sloan – St Austell tenanted operations manager – West Country
The most important advice is to ensure people opening for the first time is to, do your research. It is so important to understand the area, the customer base, the competition and to have a clear business plan to give customers a differentiated offer from the competition. Secondly I would remind people it is all about the customer. In the first few months of taking over a business many people make the mistake of concentrating on minor cosmetic changes, often because of personal taste, and forgetting the most important thing is to give the customers a great product with fantastic service.
Challenges
Seasonal businesses face two substantial challenges that a standard business does not. Firstly, cash flow. While a standard business will have peaks and troughs of trade that affect cash flow, these are magnified in a seasonal area. Money will flood in during your ‘on’ season but trade will die off and become a trickle in the ‘off’ season.
Staffing is also a major hurdle to overcome, as in the busy ‘on’ season a large staff is needed to keep up with the high footfall, whereas in the slow ‘off’ season only a small team is required, keeping your wage outgoings minimal.
Cashflow
Managing the two extremes of cashflow can be difficult, so we brought in the experts to give us their advice.
Steve Bellman now operates 6 pubs and hotels around Cornwall and Devon and has steered many seasonal pubs through their first year. He recently took over the Waterfront in Plymouth and has turned the struggling pub around.
In 1999 Steve and his business partner John Milan took over the Pandora Inn near Mylor as St Austell tenants. The Pandora Inn takes two thirds of its revenue in six months from May 1 to October 31 and has gone from strength to strength under their stewardship. The Pandora is about 70% food 30% drink led.
The Pandora Inn
“We took over In November so we knew we had a period right though until probably Easter before any money would be made. We had to prepare, going in, to be losing money from day one, which we did. It was a good business because of where it is and people still went there but it was tired and needed some work doing to it both cosmetically for the customers but also in terms of investing in kitchens and the other back of house equipment.
Steve is experienced in managing the peaks and troughs of trade, and his top tip for new businesses is manage your money effectively.
“I would say to people in their first year have two bank accounts, one is your working account and the other you should pay in the money that’s not yours, and what I mean by that is your VAT and your tax. A lot of people in a seasonal business get lulled into a false sense of security because the moneys flowing in and it’s great but when that VAT return is due and you have to pay that money out then suddenly your pot is depleted.
“When we start off we always have normal business account running day to day and savings account that we can transfer into and that’s our pot of money that’s not ours and isn’t a part of the working capital of the business. It belongs to HM Revenue and Customs, we just put that away, and when you’ve got that return due, which can be substantial, the money is always there.”
Sloan says: “The two biggest challenges for seasonal business owners are staffing and cash flow.
“A new publican should never be afraid to ask for advice and help from us. It is a daunting task taking on a new business and we are willing and able to offer support advice and assistance in all areas of their business. Never be too proud to ask.
“Do your forecasts, whether it is by using the information from I-draught or trading patterns from prior years we can provide a lot of information for business owners to help them plan for the seasons and forecast the patterns.
“Lastly do not spend too much money too soon. Wait, trade the business and make sure every piece of investment directly impacts on improving your offer to customers.”
Simon Woplin was an operations manager for the InnBrighton group and managed several venues on Brighton seafront including the Fortune of War and Gemini.
He says: “You're in the lap of the gods if your business is related to the weather- hard to predict and build a business plan for- if this is what you're doing then always underestimate your income, overstate costs and if it doesn't add up then don't do it!
Google data showing searches for "Pubs in Cornwall". Search volume in January falls to 30% of June volume.
Staffing
As Sloan says, the second major issue that seasonal businesses face is staffing. The ‘on’ season requires high numbers of staff, and reducing this staffing level to ‘off’ season levels while still retaining a core of trained high quality employees can be a difficult proposition.
Woplin says: “With Gemini we'd clear £15,000 a day so we’d have staggered staff coming in in summer and lists of people 'on call' then run the rota hour by hour. Send people home each hour as the day winds down - again be upfront. Have a small core team of more regular guys and a minimal winter staff. Top of this list is a strong hands on GM focussed on staffing levels.”
Bellman explains how the Pandora Inn recruits on a seasonal basis:
“We actively recruit students during the summer holidays. Students always have a lack of money so when they come back home during their long university holidays the we grab those people to boost our numbers because they want work at a time that we’re busy and they go back to university when we start to get quiet.
“We have a core team of people that we employ throughout the year and actually some of those we don’t need in the winter months but we know as soon as the turnover picks up round about Easter so we bite the bullet and we run our wage percentage on a seasonal basis. We aim for 31% wages including everything, so 31% is our aim for the entire year but we weight that quite heavily. In the summer months we aim for about 26 or 27% wage target which allows us to go up into the 30’s and 40’s in the winter months when the turnover is low, so it’s about managing those swings of expense and income. That’s what’s just so vital I think.
“People may set their objective of a 31% wage target and they may be trotting along quite nicely in the busy summer months and they may be slightly below plan at 30% but of course you won’t hit that in the winter if you want to keep on your core people. It’s managing that and understanding how you need to get the productivity up when you’re busy so that you can pay the wages when you’re not busy.”
Rewards
While seasonal businesses do create unique challenges, they can also be extremely rewarding.
Sloan gives the example of Alex and Tanya Williams who took over The Polgooth Inn in 2010.
“Within a year they had taken a mature business with a good reputation and almost doubled the turnover. They did this by understanding the needs of the existing customers and fully immersing themselves in the community in which they operate, opening up a whole new customer base with energy , innovation and a 100% commitment to customer service.”
Bellman says the rewards are not necessarily all about the money.
“I think it’s probably Easter by then we’d done the bulk of the renovations that we wanted to do. We wanted to make a show we wanted people to know it was different and improving and at Easter when all of that was finished and we were able to show the customers what we’d done because they were back with the holiday season, that was quite a proud moment when people start to notice the difference.”
Going forward
The first year is a crucial period for any business, but in a seasonal it can be make or break. A good first ‘on’ season can be the foundation for a hugely successful business. Taking the time to invest in your brand is time well spent, as if you make a good impression, tourists are more likely to return to you and tell their friends to visit. Managing your ‘off’ season well is also key, planning your finances accordingly and using the period constructively is fundamental to maintaining the business in the quiet months. Planning and patience are key, persevere to succeed.
Operating a thriving and expanding pub estate in South West England, St Austell Brewery holds the title of the Tenanted and Leased Pub Company of the Year (up to 200 sites) in recognition of its unrivalled levels of support offered to tenants and lessees, including marketing, training and of course ongoing investment in its excellent pubs.
