Understanding seasonality is crucial for several reasons. First, it allows entrepreneurs to plan their cash flow more effectively. For instance, a retailer might experience high sales during the holiday season but lower sales during the summer months. By anticipating these trends, the retailer can manage inventory levels and staffing needs more efficiently.
Second, seasonality impacts marketing strategies. Knowing when customers are more likely to purchase can help in planning promotions and advertising campaigns. For example, a tax preparation service might ramp up its marketing efforts in the months leading up to tax season.