The task of trying to maintain profitability throughout all periods of the year is a challenge for many businesses, particularly those who operate season businesses. Yet, the extend to which seasonality will impact business varies across industries.
One way in which seasonality will impact a business is with regards to labor. When a business enters its peak season, the amount of work to be done will pile up and hence, a larger work force is required, but only until the season ends. This is particular prevalent in retail industries, and the labor issues during peak seasons are likely to be stressful for managers who need to account for the increased work load.
Another way seasonality is likely to affect business is with regards to working capital. During periods of peak productivity, the amount of working capital will need to be higher in order to cover the higher operating expenses. Some specific industries that are affected heavily by seasonality may also have to put some of this working capital in reserve for when the cash flow slows down. Managing these financial changes and dealing with them adequately during a sudden peak season can cause difficulties for businesses.
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