Ep. 44: How to Keep a Seasonal Business Profitable Year-Round

[00:00:00] Charlie: It's a very good way to learn. Seasonal business. Yes, it could be challenging. On the other hand, it also gives you a lot of time to learn functions and actions that you would not be able to learn if you were busy all year long, all the time. So, you take the time to actually reinforce your knowledge and your skills.

[00:00:23] Host: Considering how challenging it must be to stay profitable or to keep your customers coming back during slower seasons, I'm glad we're starting off on a positive note. Let's dive deeper into what it takes to keep a seasonal business profitable and running all year long.

Hi, This is Small Business, a podcast brought to you by Amazon. I’m your host, Andrea Marquez. On This is Small Business we cover all things small business that will help you start, build, and scale your business. We will hear from guests with diverse backgrounds, point of views, and stories, with the hope of hearing from many types of small business entrepreneurs. By the end of each episode, I'll point out key takeaways that you can use on your business journey.

[00:01:00] We’re at the last episode of the third season of This is Small Business. And for the season finale, we decided to talk about a slightly different type of business: a seasonal one. A seasonal business gets most or all their revenue from one season. We’ll be talking to Charlie Weiss, owner of Jummy, an organic hot cocoa company, about how to manage a seasonal business and ways you can stay profitable all year long. Like most of the businesses we feature on This is Small Business, you can find Jummy in the Amazon store. I thought Jummy was the perfect business for this because hot chocolate is sometimes considered a seasonal drink. If you’re like me, as soon as November starts, it’s hot chocolate season. I like to enjoy it best during colder months. For seasonal business owners, it can be worrying to have a product that tends to sell more during certain months.

I was curious to learn about how seasonal business owners can also stay profitable during low selling seasons so I spoke to Charlie. You’ll also hear from familiar experts and small business owners who showed up on other episodes this season. They’ll be pointing out and expanding on some of the takeaways. [00:02:00] So if you have a seasonal business and are looking for ways to stay profitable or keep your customers coming back during the slower seasons, then this episode is for you.

Also, don't forget that if you want to hear your story on This is Small Business, we have a voicemail line where you can ask questions or share your entrepreneurial story. We want to hear from you! Find the link to the voicemail line in the episode description.

[00:02:20] Charlie: Oh, well, Jummy, came from Frozen Desserts. I had initially started a Frozen Desserts company a while back, which had its, uh, trepidations, adventures, and unfortunately, or fortunately, didn't work out as planned. So I was able to get into a few stores, about a hundred stores in the city at the time, but could not sustain somewhat of the growth. So it decided to pivot eventually. Uh, just by simply one night being in my apartment debating what I was going to do and I know my supplier had sent me some delicious cocoa powder because I used to make a double chocolate sorbet and decided to make a hot cocoa and I was like, wow, this cocoa is fantastic [00:03:00] and I made it with some coconut sugar and I was like, okay, hold on. This whole segment of the cocoa world must have changed in the last few years. And I realized that there weren't that many newish brands. So I decided to look more into it and came up with the idea of adding prebiotic fiber a few years ago, reducing the amount of sugar.

[00:03:20] ANDREA: I love that Jummy came out of a pivot. Your initial idea didn't go as planned but something better came out of it. And it sounds like you didn't just want to be another hot cocoa brand out there, you wanted to find a way to differentiate your product. Before we get into discussing the seasonality behind your business, I wanted to know why call it Jummy?

[00:03:40] Charlie: Jummy is Joy and Yummy. People say, oh Jemi, what is that? Oh, it's just yummy with a J. So then they remember that rather quickly. A very versatile name as well, which allows us to, stay in the hot cocoa, but if eventually we want to do chocolate bars, who knows, whatever, it, it's not going to affect the branding as much as my previous [00:04:00] venture that was called Charlie Sorbet. So, Jummy represents the Spirit of the brand and also the message and the feeling we want to convey to the consumer. I just want to make people happy. I just want to share the fact that you're able to have a healthier cup of hot cocoa.

[00:04:17] ANDREA: That’s a little crash course on the importance of branding when you're coming up with your name. So Charlie, can you tell me what makes Jummy a seasonal business?

[00:04:25] Charlie: It's seasonal because of the product that we manufacture. Uh, it's hot cocoa, no matter how better for you it's going to be. It's always going to be a hot cocoa and the consumer will always associate hot cocoa with a warm, comfy, cozy evenings, or, uh, after a long day out in the snow, that's what you think of hot cocoa. So for us, that is mainly, consumer driven seasonality. So our business really starts to pick up towards, let's say beginning of November, and really starts to you know rocket [00:05:00] around Thanksgiving. Now it's a not difficult but a little bit tricky to plan for the start of our season and having said that it is definitely the consumer that drives the seasonality of the business.

[00:05:12] Host: That brings an important topic to mind: because the customer drives the seasonality of the business, it's important to know what the customer journey looks like. We actually went over this topic in the first episode of this season. Here's Amber Murray, founder of Fidget Stickers, with a quick refresher on what the five steps of a customer journey look like:

[00:05:30] AMBER: There's awareness, consideration, then the decision purchase, retention, and advocacy.

[00:05:36] ANDREA: So, Charlie, considering that you're a seasonal business can you tell me a bit about what your customer journey looks like in both on and off seasons?

[00:05:45] Charlie: The consumer starts around the month of October to think about the winter. So all these nice warm feelings driven by some search online. And that's when we come in [00:06:00] and we really start to gear up our advertising campaigns. The imagery that we use of a little something a little bit more cozy, a little bit more comfy, on our social media. To drive that consumer to our listings, and finally to, to purchase, the goal is to get that consumer to repurchase at least a few times during the season, and that journey kind of switches around March, April, where we obviously see sales to slow down a little bit and we see the consumers on this particular journey during the summer using our products more into their smoothies or adding to their coffee. So we've had videos and advertising where people added to their coffee, their yogurts. Actually, the yogurt one is thanks to my nephew. So you end up with a chocolate, yogurt, caramel flavor item and he loved it. I tried it and I was like, yeah, we need to, we need to push this because this will allow us to get out of that seasonality mindset for a cocoa mix or a hot cocoa mix. [00:07:00] And that's really the goal of a seasonal business is to be able and actually any business, obviously, but more so in the seasonal business is to attract the consumer and to keep that customer across the seasons, no matter how hard it is.

[00:07:10] ANDREA: Okay so you get your customers during the high season and then you try to keep them during the low seasons by advertising the use of the powder in other ways that could work during a warmer season -- like putting it in yogurt. What research went into figuring out that your customers can even use your product in the low season in that way?

[00:07:30] Charlie: Competitive analysis basically and this is what a lot of the business do so we look at what other business are doing how they're advertising their products, and we start to notice that people are much more versatile in the use of the hot cocoas of the world. So some other brands may focus more on their hot cocoa and say, oh, you can also use this for baking. We want to see it more as something that you can add to other items such as your coffee or your tea, for example, [00:08:00] or the yogurts. The smoothie is a huge thing. We have people that order quite a bit and that's all they do all year long. They love their smoothies. They want to add a little bit of sweetness with a little bit of cocoa flavor behind or a little bit of hazelnut or caramel flavor, and it's a perfect way to get yourself in the routine of the consumer.

So we did a lot of research on that. We actually tested also the product because nobody wants to put like two scoops of hot, of cocoa mix and not able to, uh, dissolve it correctly. You know reviews are a huge part of the business, whether it's positive reviews or more constructive reviews as we may call them. So those are things we take into account a lot when we review what consumers are doing. So when we look at some of these reviews, and we try to understand where we may have missed the mark, we are able to adjust. Much more efficiently, I believe, and easily than a company or brand that is much larger. That allows us to be much more nimble. [00:09:00] We can, you know, if we want to change the packaging, if we see that, okay, this, this season for a reason, Caramel is not selling, why isn't it sell why is it not selling correctly? It's a great flavor, obviously, but why isn't it not selling? Have we not advertised correctly, for example? Maybe it's a trend, you know.

[00:09:15] Host: And making sure you're constantly staying up to date with your customer is an essential part of your business. Here's what Roshni, Founder & CEO of Prosh Marketing, had to say about it in Episode 12 of this season:

[00:09:25] Roshni: This type of information changes all the time, so you can't just do this and then set it and forget it, because customers are changing. So if you sit on your data and your customer research, and you just build, and now you think that this is the way customers are, you're forgetting that customers and markets evolve over time. So it's something that's always changing, and something that you should, even as a business owner, as a marketer, as anyone in an organization, just have your pulse on the customer.

[00:09:50] ANDREA: But it could get a little tricky when you're trying to stay ahead of trends, so Charlie, what type of research are you conducting to be able to know that something is going to be trendy soon?

[00:10:00] Charlie: We usually look at, again, what the competition is doing. And we do know that these larger firms are the trendsetters. Regardless if their product comes out and it's a cherry rose flavor hot cocoa, you can be sure that the next year or two, cherry rose cocoa flavor is going to be a big hit. And it's not, the consumer usually does not dictate that, but these larger brands actually do dictate these, these trends somehow, because of such a niche and seasonal business. And it's quite interesting to see that. Now the other one is also, we try to think a little bit outside the box. So the mocha flavor that we have, a lot of other people are making mocha flavors that we all know, but I personally didn't even know it was going to be that successful. So there's also the fact that, okay, yeah, we want to try to see what has worked for others, you may think it's not going to work for you, but it actually works way better than you expected. And others that you think is, are going to work great, don't necessarily work [00:11:00] on the market. For us you know, for a while Caramel was doing great, and you know, sometimes there's a little bit of slowdown of, of the sales, and then it picks back up. It's, that's the nature also of the business and consumer demand.

[00:11:12] Host: It sounds like there's a lot of testing and learning which reminds me of something Trinity, co-founder and CEO of Golde, said in the second episode of this season:

[00:11:21] Trinity: When you are in this entrepreneurial journey, you have to look at yourself as you're sort of a scientist, you're a great experimenter, and so you're gonna try a lot of different things as you try to understand what works, what catches your audience's attention, what drives sales, what creates more brand love?

[00:11:42] ANDREA: Speaking of trying different things and learning as you go, something else I’m wondering is, because of the seasonality of your product, does the price change with it considering how demand fluctuates?

[00:11:54] Charlie: We see myself not only as the owner of the business or the brand manufacturer but also as a consumer. [00:12:00] I'm going to go in the store and I'm going to like something and buy it for 10, I go three months later and it's at 14, unlikely going to buy it. Because my first question is, why have you increased the price by so much? Our strategy is to offer discounts and coupons once we hit more of the summerish seasons. And like I mentioned previously, this is a time where we want to try to also show consumers that they can do more with our cocoa as opposed to just buying it between November and March. So we want to try to keep them. Also, we just want to make people happy and show them they can enjoy a cup of hot cocoa that has a little bit less sugar, has some prebiotic fiber, that's really our goal. We have customers that came back over 50 times and purchased our products. We don't want to lose them just because we're going to hike the price by a couple points. It's not going to work in our favor.

[00:12:50] ANDREA: So, you’re prioritizing customer loyalty through consistency, essentially. So, Charlie, I want to switch gears a bit and talk about cash flow. [00:13:00] Especially since that is one of the more intimidating topics for business owners.

[00:13:05] Charlie: Let me get my accountant with me right now. He will explain everything to you. And the mild heart attacks that we may have.

[00:13:13] ANDREA: I bet it's overwhelming sometimes. So tell me a little bit about what cashflow looks like for a seasonal business like yours.

[00:13:20] Charlie: In order to predict, um, proper cash flow and having enough reserve along the year, if you have too many movements of price with your product, it may be a little bit harder to forecast what your cash flow will be next season. Now what usually happens for us is we're Our year doesn't typically end December 31st It ends around March 30th, April Because that's when really our high season slows down. Once we're done with this high season, we're able to look at what happened During the month of November to March and have a proper forecast [00:14:00] or a proper estimation of what's going to happen in the following year.

[00:14:03] Host: So Charlie is doing something that Ambro Blackwell, a best-selling author and VP and senior business banking relationship manager at JP Morgan Chase said is essential when trying to figure out your cashflow: Forecasting. Here’s Ambro.

[00:14:16] Ambro: You should be forecasting your business. You should know where your business is heading. So you want to be able to anticipate, understand how your cash flow is looking. And yes, there's always going to be some days, some months where businesses, you know, may not be as steady as the month before. But you want to be able to, as much as possible, make sure that you're planning for that. And the only way you can do that to make sure that you're optimizing your cash is to do it strategically.

[00:14:40] Host: And doing this helps Charlie prepare himself for the slower seasons.

[00:14:44] Charlie: Now, we usually start to have cut some expenses and try to be a little bit more cautious and conservative around the month of April to September October. Once we start the October, November, we start implementing a little bit more of [00:15:00] what we would consider profit maximization. So that means going over the ads that worked very well the previous year that had a very good ROAS and that performed quite well. See how we can adjust them and increase actually those budgets in order to get more customers and more people in the door.

So it is a necessity and it could be a little bit difficult at times because as you know the weather is can't really forecast that, no pun intended, but that's why I say around Thanksgiving is usually the time of the year where we see our spike in sale and that continually increases and then decreases slowly into March and so that's how we're able to forecast more or less our cash flows.

[00:15:46] ANDREA: Charlie and what do you work on in the low seasons to prepare?

[00:15:50] Charlie: We try and we test new flavors. We see what works, what doesn't work. Like, could we add maybe some, some more cocoa? Or what's going on with this, you know, element in the formula? [00:16:00] So the seasonal aspect of the business also allows you to optimize yourself and optimize the business during the slower month of the year. Including learning a little bit more about accounting. Accounting is, is, is a necessary evil. But once you know and you understand some of these casual concepts, you're able to be like, okay, hold on, my ad campaigns are not performing well. I can see this becoming an issue in six months. As opposed to saying, Oh, okay, it's not going well. Let's see what happens in a week or two. And then, you end up in six months having a very big cash flow issue. So understanding the cash flow, these cash flow concepts, the ad spend, your inventory, how much you're being charged at, for your warehouse and the fulfillment, allows you to really plan a little bit better your profit maximization during the high season and to cut expenses during the lower seasons.

[00:16:52] ANDREA: So it sounds like you can't really know how you're going to perform unless you have a year before to learn from. So I'm curious to know, [00:17:00] what was your first year like?

[00:17:02] Charlie: I started actually selling, I believe it was mid-December. So basically missed the entire season. So I did not have really a lot of data to look at. If you don't have any reviews, if you are not ranked correctly, nobody's going to find you. And this is what I tell people like, yeah, you have a great product. How are you going to tell people that you have a great product or you, or at least that you have a product?

Well to do that, you need to find creative ways. And one of them is, To advertise. The other one is Amazon has a great program called the Vine programs. So you're able to, they select customers or consumers. They're going to send some of your product to them and they will review. So that allows you to build up the review. So we were able to build up from like one or two reviews to 30, then those 30 become 40, and then you start to see your ads converting and then you're like, okay, hold on. I'm now, instead of spending a hundred dollars and getting. 30 in sales, I'm spending a 100 [00:18:00] and getting 250 in sales. So what's going on? Like, what's converting well? And you're starting to look at things like, okay, keywords. What are people searching for? Oh, we're ranking very well for vegan hot chocolate. Okay, let's, let's push that. Coming back to the cash flow. Let's put more money in those keywords and reduce the spending on keywords like hot cocoa, which is so vague that You can spend thousands of dollars and get maybe five sales.

So those are the little tricks at the beginning that takes a lot of time and money to learn. Then comes back to being persevering and pushing and trying to understand the systems. It's like a new language. You need to understand the advertising platform, the tools that are offered, like, you know, um, on the brands aspect, you're able to see the demographics of people purchasing. These are very important, data that you need to look at or someone has to look at. And, yeah, it ties all back to [00:19:00] the questions you had previously regarding the cash flows. Because this allows us to really trim, um, the spending.

[00:19:08] Host: What a great way to end this season by giving us a look into what it’s like to be a seasonal business. That was Charlie Weiss, owner of Jummy, an organic hot cocoa company. And as always, here are some of the key takeaways.

• One. This isn’t specific to a seasonal business but as we learned from Jummy, product differentiation is key. We’ve spoken about this in past episodes. Standing out means thinking about who your competitors are and how your product compares, what are you providing for customers that they can’t really get the same somewhere else?
• Two. When it comes to a seasonal business with low and high seasons that are very clear, it’s important to look at retention. Prioritizing your customer’s loyalty like Charlie does. Once you’ve got a customer during the high season, try to figure out how to make them come back during the slower seasons. It’ll be way easier than trying to get new customers. Charlie suggested giving loyal customers some discounts during lower seasons.
• [00:20:00] Three. If you’re seasonal… leverage that. Use the slow seasons as a way to learn more about how to improve your business during the high seasons. And maybe even try cutting down on marketing and ads that you might be running that aren’t getting the engagement you expected.
• And four. Cash Flow is super important to stay open during the slow season. Make sure you try to forecast any upcoming payments that you’ll have during the slower seasons and set money aside for that. And maybe even try cutting down on marketing and ads that you may be running that won’t work during that season.

I'm curious – Is your business seasonal? How do you get your customers coming back during the low seasons? I'd love to hear about your journey! Reach out to us at thisissmallbusiness@amazon.com to tell us what you're up to. Or let me know what you think of the episode by leaving a review on Apple Podcasts – it’s easier if you do it through your phone. And if you liked what you heard -- I hope you'll share us with anyone else who needs to hear this!

If you’re an aspiring entrepreneur, and I hope you are if you’re listening to This is Small Business. Or maybe you already have your small business up and running and you’re ready for the next step. A super valuable resource that can help you is the Amazon Small Business Academy where you can find the help you need [00:21:00] to take your small business from concept to launch and beyond. Take the free self-assessment on the Amazon Small Business Academy site at www.smallbusiness.amazon.

That's it for today’s episode of This is Small Business, brought to you by Amazon. Until later – This is Small Business, I'm your host Andrea Marquez -- Hasta luego -- and thanks for listening!

CREDITS: This is Small Business is brought to you by Amazon, with technical and story production by JAR Audio. [00:21:27]