3 Ways Retail Business Loans Help Manage Seasonal Changes

Last Updated on December 12, 2017

While much of the business world breaks the annual calendar down into months and quarters, retailers focus on seasons. Surprisingly these seasons are not those that come courtesy of Mother Nature, in fact the seasons that concern retailers are based on spikes and lulls in customer demand.  
Given how vital managing seasonal demand is to the bottom-line — often making or breaking the entire year — many retailers obtain a business loan to “make hay while the sun shines.” Here are 3 ways that the most successful retailers are leveraging the funding to maximize sales and profits:

retail business loan seasonal demand

1. Map Demand Patterns to Borrowing Strategy

While there are obvious seasonal cycles in some retail spaces — such as auto repair shops seeing a customer surge in November and December as cars reveal that they’re not road-worthy for the winter ahead — others are harder to detect, and can be localized to certain geographic areas, or in some cases, specific locations. For example, while many restaurants experience a lull in demand in February/March (due to the messy weather and post-holiday consumer debt), some experience a spike in customer activity during this time.
As such, it’s important for retailers to analyze a few years’ worth of data to understand how seasonal cycles manifest for their specific operations, and map those patterns to their borrowing strategy (if data isn’t available because a retailer has recently opened, then gleaning these insights from secondary sources or primary market research is the next-best option).  

2. Create Additional Business Lines

One of the most effective ways to manage seasonal demand is by creating additional business lines that offset anticipated revenue dips. For example, restaurants can launch a catering or special event division (e.g. weddings, charity auctions, singles nights, etc.), auto repair shops can target their captive in-store customers with merchandising (e.g. car care items, “man cave” essentials, etc.), and so on.
However, it’s critical for retailers to ensure that their lender gives them the freedom to allocate their business loan as they deem fit. This is because some lenders — most notably banks — place restrictions on how funds can be spent, and they’re unlikely to approve of a business line expansion because of the risks involved.
Here at National Business Capital, we believe that our clients — and not us — are in the best position to make smart spending decisions. That’s why we don’t place any restrictions or limitations on when, how much, or for what purpose a business loan can be spent.

3. Use Marketing to Stay on the Radar Screen

Seasonal cycles are called that for a reason — i.e. there is invariably going to be a drop in demand. However, rather than going into hibernation, many smart retailers use a business loan launch online and offline (e.g. postcard mailout, display advertising) campaigns. By staying on their customers’ radar screens, retailers position themselves to be the first and best choice when the cycle shifts, the lull is replaced by a surge.

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Maximizing a business loan in these three ways can help your business take advantage of opportunities that you normally couldn’t. By utilizing extra funding to update your technology, increase your production or ramp up marketing budgets, you can grow your business to new heights! Check out more of these business-building tips in our latest free eBook “7 Profitable Opportunities You Could Miss Without More Business Funding”:

National Business Capital & Services is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

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About the Author, Megan Capobianco

Megan is passionate about helping business owners along their journey - providing them with relevant content they can use in their day-to-day operations.

Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advise from National Business Capital & Services and the author. Do no rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely in this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there maybe errors, omissions, or mistakes.