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"Bob Tallent gave me the confidence to run my own business"

Van in FloodDemand for your products is variable dependent upon the weather. 

That’s a fact.  Also, prices vary, availability and transport can be disturbed, even staff performance is affected.  The question here is - how can we prepare for it and even increase business from it?

The bad weather we are having at the moment is having a catastrophic affect on some businesses. Cancelled orders along with potential staff not being able to get into work could mean many businesses will have seen a reduction in orders over the last week or will see a knock on effect over the coming weeks.  If the post is delayed, that could mean cheques may not reach their desired destination on time.  This could be the killer blow for some companies who are already struggling and trying to keep their head above the water (no pun intended).

Up to Christmas, we had an unusually mild and dryish winter.  But that changed towards the second half of January. 

From a business perspective, what goes up must come down.  There are swings.  Nothing stays either good or bad.  We have to ‘weather the storm’ in the bad times and businesses need to prepare for it.  Businesses are affected by both good and bad weather. 

Research

What would you do if you could predict the future? This is not a rhetorical question. Weather forecasters can now anticipate weather with greater accuracy and this allows you, as a business owner, to make more calculated decisions.

Oil companies, supermarkets, Subway, Campbell’s Soup have all done research into the weather so that they can both prepare for it and take advantage from it. This isn't just about doing market research and optimisation. It's also important to understand and identify how much impact the weather has on your businesses performance so you can accurately predict future performance. Just because an ice cream shop had a great summer last year, doesn't mean it will do as well this year. Knowing the difference between real growth and weather conditional performance can empower the owner of the ice cream shop to prepare for adverse weather fluctuations in the future.

Vegware, a small UK business said that unseasonal weather has brought unusual buying trends – instead of the typical summer boom in cold cups, this July they had to double production of double-wall hot cups to meet demand.  Interestingly, frozen yoghurt is still a massive trend, and they are seeing epic sales of their ice cream base and clear domed lids. It may not be sunny but people still love summery treats.

Harvard Business School professor Francesca Gino has found that productivity gets better when the weather gets worse. “On a bad weather day, people are better at focusing on their work, not because the weather makes them grumpy but because they have fewer distracting thoughts about what they might otherwise be doing outside.”

Gino and her colleagues researched productivity at a Tokyo bank over a two-and-a-half-year period and found that employees were more efficient on rainy days. Each additional inch of rainfall correlated with a 1.3% decrease in worker completion time for each transaction. “When accumulated over time for the entire bank of nearly 5,000 employees,” Gino explained, “a 1.3% productivity loss could be judged to be a significant revenue loss for the bank: at least $937,500 a year.” Businesses may be better off locating in areas with inclement weather and might want to consider assigning tasks that take less focus when it’s nice outside.

Price

Some products may vary in price based on the weather and the season.  Oil is one, which can also lead on to natural gas.  Agriculture is another because weather has a direct affect on yield.  Some products and certain raw materials become more expensive to produce when weather conditions are less than ideal. This has a ripple effect throughout all businesses that use and/or sell associated products. Understanding and predicting these fluctuations can be helpful for your business and cashflow.

What the big companies do

Lets look at how some of the bigger guys do it. In the US, Campbell's Soup, for example, keeps a "Misery Index," (an algorithm to coordinate the frequency of its radio ads with meteorological data) in which radio ads are sent to markets experiencing inclement weather. According to Ad Age, when the particular region reaches 5% on the index, Campbell's increases its ads for chicken soup over the next week. Campbell's know that no matter what, you're going to be buying soup. But they want it to be Campbell's soup. They work hard to get that name and logo into your head before you go shopping.

They don’t use weather as an excuse for bad business.  Weather is reason.  If you’re in Cork during the floods and cold weather, do you feel like buying shorts and sandals?  Of course not.  Weather is the reason you’re not buying and businesses have to predict and react accordingly.

If you are a pub or a restaurant selling lunches.  You can do your research to discover what sells well when it’s raining or when it’s cold, for instance.  That will then allow you to sell more of those items.  It’s just a matter of research and preparation.

Scott Bernhardt is the COO of Planalytics, a "Business Weather Intelligence" firm based in Wayne, Pennsylvania.  It supplies weather data to many organisations small and large. He says that Duraflame logs (like the Bord na Mona Firelog) "fly off the shelves" in Los Angeles when the temperature is exactly 55 degrees. "Why do they do that?," he says. "I don't care. I just know it's true and I know it's true by studying the point-of-sale data."

He said, "I don't have the urge for French toast right before it snows, but some people do, and that's where the money is." In other words, if your business can determine that weather is going to be a driving factor in sales, and you can anticipate when that weather event is going to happen, your business will reap the rewards.

Another way weather can influence businesses is with scheduling and consistency. Weather delays can cause some businesses to lose days at a time either directly impacting sales or otherwise cause projects to be delayed requiring expensive catch-up work. It's important to maintain a level of contingency and/or flexibility to limit these effects.

So,
as business people, we have
to learn not only
to react
to bad weather, but
to profit from it.

So what can you, as a small business do?

  • You can keep a close eye on the weather to prepare for it. 
  • You could buy in extra supplies of critical materials to prepare.
  • Simple things, like, in freezing weather, to bring in your machinery, so that it operates the following morning, when others don’t.
  • Allow, even encourage, staff to operate from home in extreme weather.
  • Cross train you staff in other areas of your business so that if some staff members can’t get into work, others can take over critical operations.
  • Staff who have children should have a ‘snow policy’ in place.  How are they going to react when the school or crèche is closed due to snow.
  • Some businesses in flood hit areas of Cork removed carpets last year and replaced them with tiles.
  • When you know there is going to be a flood, lift everything off the floor, have sandbags, build a ‘sluice gate’ for your doors, etc. 
  • Floods can come up though the sewers, so a simple answer is to build a kind of ‘one-way valve’ that only allows fluids to go one way and prevents floods from entering your premises.

In the UK, 37% of businesses reported a drop in business during the big freeze of 2010 and 13% reported being seriously affected.  There is a theory that with climate change, we have to get more used to extremes of weather.  So, as business people, we have to learn not only to react to bad weather, but to profit from it.

On Tuesday last, 2nd February, the Air Corps were unable to get to Kerry in time to fly a heart to Dublin for a transplant operation.  So Aer Arann delayed a scheduled flight for an hour and flew the heart to Dublin.  The Gardai were on hand to escort the heart to the Mater Hospital where the operation was carried out.

Finally, did you know that during nasty weather, there are more mouse traps sold because mice tend to stay indoors.  Sales have increased by 25% for each 1 degree drop in temperature.

 

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