How One Seasonal Company Manages The Full Year The Christmas season is great for many companies, but businesses have to last a full year. The folks at Tipsy Elves explain how they do it.
By Lisa Evans Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
By mid-December, while most companies are gearing down and getting ready to close their doors for the holiday season, the San Diego-based ugly Christmas sweater company, Tipsy Elves, is running at full steam. Seasonal companies face numerous challenges – from managing cash flow to balancing dramatic shifts in workload. In the midst of the company's busiest time of year, co-owner Evan Mendelsohn spoke candidly about the challenges of running a seasonal company and how he and partner Nick Morton have sought to overcome the ebbs and flows of a seasonal business and have achieved success.
Manage the cash-flow dilemma.
While many companies have fluctuating revenues throughout the year and may even have a high and low season, seasonal-based companies are challenged by making nearly their entire year's revenue in a period of a couple of months. Ninety percent of Tipsy Elves' sales take place between mid-November through December. "We're sitting on a pile of cash in January and then the money stops coming in," says Mendelsohn. Having enough cash flow to order new inventory for the following season and pay themselves and staff during the remaining 11 months of the year requires careful financial management.
The off-season doesn't have to be quiet.
After a frantic holiday season, many seasonal companies experience a lull. While you may assume this means a laid-back work schedule for the rest of the year, Mendolsohn says not at Tipsy Elves. "A lot of people think because we sell Christmas sweaters we must go to the Bahamas in the off-season, but we actually do a ton of work year-round," he says.
Tipsy Elves takes advantage of the downtime to focus on product design and development and website updates. Mendelsohn packs his calendar with networking events and meetings during the slow season. The company has even decided to expand its offerings to other holidays, including Valentine's Day and St. Patrick's Day.
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Be present to motivate staff.
"It's easier for people to be motivated when the sales are coming in and things are really busy than it is preparing for something that hasn't arrived yet," admits Mendelsohn. However, he argues setting a good example to the company's 12 full-time employees is key to maintaining their motivation.
Mendelsohn works in the same room as his employees and says keeping himself busy motivates others. "I do think if I was working remotely or in another office, it might be easier for people during the slower days to kind of settle," he says. Maintaining a healthy working environment where employees feel appreciated is also key to keeping them motivated, especially during the off-season.
Carefully grow your team.
Growing a team quicker than you can support is a common mistake made by many seasonal companies who end up having an underutilized staff for most of the year. Mendelsohn says Tipsy Elves has been very cautious when hiring. While the company could benefit from hiring a second programmer during their busy season, for example, Mendelsohn says they've been hesitant to bring anyone aboard yet as the position may not be justifiable after the holiday storm. "No one wants to have a group of people sitting around not doing anything," he says.
The one area where the company does hire many seasonal employees is customer service. "We have a customer service team of seven right now that will go down to one in the off-season," says Mendelsohn. Since these positions don't require a huge investment in training, they're highly adaptable to the seasonal climate.
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