Many Kenyan businesses live by the calendar: school fees and uniforms in January, harvest in the dry months, tourism in the peak season, festive spending in December. The problem is that costs like rent, wages and tax do not follow the seasons. Planning for the swings is what separates a business that survives a slow quarter from one that borrows to get through it.
Know your pattern
Look at monthly sales for the last two or three years and mark the peaks and the troughs. Even a rough picture shows which months carry the year. The sales forecast and target planner sets last year's months beside a forecast and a target, and the monthly KPI dashboard tracks your key numbers month by month.
Forecast the cash, not just the sales
Put the expected sales, the fixed costs and the tax dates into a monthly cash forecast. You will see which months go negative, and how deep the dip is. The 12-month cash flow forecast does the arithmetic, and how to build a cash flow forecast shows the method.
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Save in the good months
The simplest rule is to save part of every good month for the bad ones. Decide how many months of fixed costs you want in reserve and build it over the season. A savings and sinking fund tracker shows the target, the amount saved and how long it will take.
Plan for tax separately
Tax falls due on fixed dates regardless of season. If your sales peak in one quarter, the tax on those sales still falls due on the 20th of the month after, or at the next instalment. Set aside the tax when you receive the money:
- Turnover tax is 3% of gross sales, due monthly; see turnover tax for small businesses and the turnover tax calculator.
- VAT is due monthly on the difference between output and input VAT; a peak month produces a larger bill. See the VAT return calculator.
- Instalment tax is due in months 4, 6, 9 and 12 of your accounting year; plan the cash with the tax provision and instalment forecast and the instalment tax calculator.
- The annual balance is due by 30 June for individuals; see the 30 June tax deadline.
The KRA filing calendar for small businesses lists the dates.
Manage costs and stock
- Buy stock ahead of the peak without over-ordering; see inventory management basics.
- Use temporary or casual staff in the peak instead of permanent hires. The free weekly casual wages sheet keeps their pay and records straight.
- Negotiate payment terms with suppliers that match your cash cycle, and with landlords for seasonal rent if you can.
Smooth the income
Offer deposits and pre-orders before the busy season, off-season discounts and complementary products for the quiet months. Annual contracts or subscriptions bring in money steadily.
Borrow only for a reason
If you need a loan to bridge a dip, make sure you can repay it from the next peak; see borrowing for your business. Test the repayments in the loan affordability checker and schedule.
Review every quarter
Compare actual with the forecast using the budget versus actual tracker and adjust the next quarter. Read budgeting for a small business for the method.
Forecasts are estimates, and seasons change. Review them regularly.
Common questions
How much should I set aside for tax in a busy season? A practical rule is to move a fixed share of every sale into a separate tax account, chosen from your estimate of the year's tax. Use your tax calculator figures for the rate, and top it up when sales are higher than planned.
How can I cover costs in the quiet months? Build a cash buffer in the busy months equal to your fixed costs for the quiet period, agree longer payment terms with suppliers, and plan promotions that bring forward sales. A twelve-month cash flow forecast shows how big the buffer must be.
Do seasonal sales change which tax route is best? They can. Turnover tax is charged on gross sales whenever they happen, while income tax on profit lets you offset costs across the year. Compare both on a full year of figures, not on the busy months alone.