Change in the Weather —What Does it Mean to your Business?

A change in the weather could cause a change in business climate. Is your small business prepared?

People joke about the weather all the time. Wait a few minutes, it will change. This year, El Nino is giving more people reason to talk about the weather. Basically, El Nino, which means Little Boy, is the name that describes a warming of ocean currents in the equatorial Pacific Ocean. It lasts about a year, but can go on longer. But usually, it occurs every five or seven years.

In North America, El Nino causes warmer than average temperatures, making it drier in some places, and wetter in others. It affects the oceans, fisheries, and global weather patterns—it’s a big deal.

In November the weather service at the United Nations warned that the current El Nino event is contributing to extreme weather patterns, and it could get worse. So you don’t need a heavy coat, and you are watching the rain fall, instead of the snow. Does that affect your business? You bet it does.

Change in the weather means a change in sales and service

I talked earlier about how changes in weather systems could impact your business. That is what is happening this year.

If you think about it, the weather has a huge impact on small and big business. Temperatures, or extreme weather, affect a lot, including:

• Don’t need a coat? Well, the retailer who wanted to sell you the coat, gloves, scarves, and winter recreation gear is going to have an oversupply. If the weather keeps up as it has, big discounts are going to be the only way to blow out winter overstock in just a month or two. From Macy’s to the small business that sells specialty boots—that’s a problem.
• Bad weather slows business: While poor weather helps the coat seller, a spike in extreme storms slows everybody down. Along the supply chain, power outages and transportation troubles influence the movement of raw materials and finished products. Inability to get products to market dims a bottom line pretty fast. Flooding? Let’s not go there.
• The cost of everything: Difficulties with raw materials, or agricultural products, can alter the costs of production—and your profit margin—quickly.

Planning for the weather is important. From anticipating weather trends, to altering your product line, weather instability is another factor to consider in your business plan. Let’s talk about some ways that you can weatherproof your revenue:

• Know your business: No one knows your business better than you. When I work with clients, we evaluate business and marketing plans, along with what it takes to get the right revenue. Plans need to change when you cannot make the money you need. Take a hard look at your product, or service, and ask some tough questions about where your industry is going. Winter tire sales in a location that is seeing warmer winters is a problem. Highly perishable foods in a location subject to frequent power outages could ruin your inventory. Plan ahead for downturns caused by weather, or storm.
• Evaluate shipping: When you need to get your product to market, evaluate distribution chains, incorporate weather alerts, and use targeted logistics to keep freight moving when transit conditions are poor. Larger retailers like Target use in-house weather and economic specialists to analyze weather patterns and provide invaluable advice for inventory control.
• Roll with it: Zara, the Spanish fast-fashion retailer, uses Agile management processes to create, manufacture, and distribute clothing in just over two weeks to respond to customer buying patterns. Sound crazy? The retailer suffers less loss than those with a commitment to large inventory. Better able to scale services, small business owners could take a page from Zara and provide in-demand products and services—whatever the season.
• Big data: Predictive weather analytics help entrepreneurs make smart, data-driven decisions about supply, services, and personalized marketing.

Down the road, predictions say rain from El Nino will increase the corn crop this year. While water has been lacking lately, it could mean lower corn prices. That is good news for those who use raw materials from corn. It is bad news for farmers and anyone who sells to them.

Weather is a business factor that matters. When you are ready to take a hard look at business planning in this unstable climate, I can help. Let’s put plans in place to make you the revenue you want and deserve. Contact me at 585-633-7563.

Yours in profit,

Bob Britton