Understanding seasonality for your business

Seasonality refers to changes in a sales cycle based on the seasons in one calendar year. Because of different retail and business trends, seasonal businesses encounter a variety of sales highs and lows and demand for services and inventory stock.

Unfortunately, seasonality can be paradoxical. If you’re anticipating a dip in your winter sales, you might not take advantage of your downtime, and, ultimately, be unprepared for a sales growth in the summer. Fortunately, with the correct seasonality forecasting, you’ll be maximizing your leads and capitalizing on your strong cycles in no time.

Annual seasonality

There are many factors that cause business seasonality, including the time of year, weather, and holidays.

Some industries, such as real estate, are significantly impacted by different time periods in a calendar year. For example, buyers and sellers with children typically don’t move in the middle of a school year and wait until summer when they have more free time. People who invest in real estate also wait until summer to buy and sell for tax purposes. And, in the winter, homeowners delist their properties to avoid a stagnant market.

Changes in the weather can also seriously affect the demand for your product or service. When temperatures spike or drop, consumers change their buying habits, and that has a direct effect on retail sales. A company that sells sunscreen and tanning products might experience a sales surge in the summer as demand for their products increases. On the other hand, that same company will likely see a significant drop in sales during the winter.

Finally, a strong holiday season can make or break your entire sales year. The NRF, or National Retail Federation, defines a holiday season as the months of November and December with winter holidays such as Thanksgiving, Christmas, Hanukkah, and Kwanzaa. Even with 40 percent of consumers kickstarting their holiday shopping by the end of October, that’s still a small window for businesses and retailers to compete for sales. 

Monthly trends 

Businesses can use seasonality to their advantage. Downtime is a great opportunity to focus on referrals, grow your brand awareness, and stockpile inventory. For B2B businesses that experience frequent end of the month peaks, like financial services, it can help to focus on employee engagement during the slow periods to avoid burnout.

Forecasting your sales goals around seasonality will also help you prepare for a peak season and survive any sudden events, like COVID. For example, some of the biggest companies in San Diego, such as Lockheed Martin, Bristol Myers Squibb, and Qualcomm, have forecasted robust earnings outlooks post-pandemic. With the right data, you can use monthly business trends, marketing and forecasting to drive weekly sales, no matter the season.