Seasonal Business Cash Flow Case Example

This case shows how a seasonal business plans cash so that strong months fund the weak ones — instead of being spent.

The problem

Seasonal businesses earn most of the year's money in a few months. Without careful planning, the high-season cash is gone before the low season even starts.

A small business example

Annual revenue: $120,000, but 70% lands in 4 peak months.

Peak months: ~$84,000 revenue, ~$30,000 profit. Off-season: ~$36,000 revenue against ~$5,000 monthly fixed costs = a $4,000+/month cash drain for 8 months.

Required off-season cash: 8 × $4,000 ≈ $32,000 that must be set aside during the peak.

What the numbers mean

Almost the entire peak-season profit must be reserved to cover the off-season. Owner draws should match average annual, not peak monthly.

Practical interpretation

A seasonal business that pays itself like the peak is permanent will run out of money every off-season.

Action points

Forecast cash by month for the full year.
Move off-season reserves to a separate account during the peak.
Smooth owner pay across the full year, not just peak months.
Cut fixed costs in the off-season wherever contracts allow.

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