What is a common challenge regarding cash flow in seasonal businesses?

In seasonal businesses, inconsistent customer demand is a prevalent challenge regarding cash flow. These businesses typically experience fluctuations in revenue due to seasonal trends or specific times of the year when customer patronage peaks or dips. For example, a ski resort may generate significant income during the winter but very little during the summer months. This variability in demand creates uncertainties in cash flow, making it difficult to maintain steady operations or meet ongoing financial obligations throughout the year.

While high operational costs, sudden regulatory changes, and fixed lease commitments can impact various types of businesses, they do not capture the essence of the cash flow challenges unique to seasonal businesses as directly as inconsistent customer demand does. Seasonal fluctuations make it essential for these businesses to effectively manage their cash reserves and possibly seek alternative funding sources during slower periods to sustain operations and meet fixed costs.