How to build sustainable growth in seasonal industries

Building a growth-focused startup is a significant challenge in any sector. For seasonal industries like tax services, the majority of operations take place in one part of the year. The challenge is to generate customer engagement across seasons and market cycles.

Seasonal businesses always face roadblocks that shape how they maintain revenue. For instance, edtech startups generally experience peak demand when schools and universities are in session, with lulls during student breaks. In contrast, travel technology companies ramp up their sales during major public holidays. To maintain scalability, businesses in both industries must creatively identify value propositions that add user value outside of peak season. This is especially important considering half of small businesses rely on seasonal sales for at least 25% of their annual revenue, according to Constant Contact.

The seasonal problem with the tax industry

For tax services companies, an industry largely unchanged for decades, the key to success is not just about having a large total addressable market (TAM) or the right technology—it’s also about timing and network effects in customer acquisition. Taxes are consistently one of Americans’ largest expenses annually. Yet these consumers often overlook them, as they perceive having no control of the final bill. Taxes live on an island for most, completely separated from a person’s ongoing financial management.

The reality is, most Americans only think about taxes once a year partly because the federal tax system is complex, confusing, and frustrating. This creates an enormous barrier to customer retention and acquisition, making each interaction critical due to the limited engagement window. This is underscored by the fact that in some industries, the average cost of acquiring new customers has risen by as much as 60%.

Build solutions aligned with core services

Beyond tax-specific use cases, the key for founders is to isolate real customer problems and build solutions consistent with their core service line. At april, we used several strategies to break through the glass engagement ceiling and build a business relevant during and after tax season. Here’s how we did it:

• Non-seasonal products: april surpassed traditional tax season constraints by launching services that provide value year-round. We built an embedded system to help Americans estimate, optimize, and file their taxes directly within the apps where they make their daily financial decisions. This not only maintained engagement beyond tax season but also positioned tax management as a regular activity rather than a once-a-year audit process. For other seasonal businesses, developing products and services for 24/7/365 engagement can help stabilize revenue streams and reduce the business’s vulnerability to seasonal fluctuations.
• Invest in consumer research: We undertook large-scale consumer research and messaging testing, unusual for a company of our size. This is especially crucial for seasonal companies to understand consumer behavior when switching services in a sector where engagement is constrained to a certain period of the year.
• Task force for real-time iterations: Using A/B testing capabilities and building a task force for rapid in-season iterations allowed us to make quick adjustments based on customer feedback. For seasonal businesses that maintain a highly limited user engagement period, every campaign, product launch, or customer interaction must be strategically planned and flawlessly executed to maximize impact. If something is not working, it’s vital to immediately identify the issue and rectify it within hours, to ensure the business is reaping the benefits of a high demand moment.
• Leverage AI to bring products to market quicker: Almost every adult American has to file their taxes. While a large TAM is beneficial for startups, it also presents a challenge in building a product that works for a diverse range of tax situations. At april, we used AI to rapidly expand our product coverage, putting us on track to become the first new national e-file provider in over 15 years. This capability allows us to service a vast number of taxpayers efficiently, which is crucial for attracting larger partners with extensive customer bases and maximizing each tax season. Advances in AI are also making an immediate impact on product-based revenues across industries: according to 2023 McKinsey research, AI is anticipated to increase business profits by $4.4 trillion annually.

Scaling in a seasonal industry is a challenge that extends beyond the tax service industry. The strategies, successes, failures, and opportunities that exist remain widely applicable for current and prospective founders seeking to grow a business focused on specific times of the year. By combining non-seasonal product development, rigorous consumer research, agile iteration, and advanced technology, seasonal businesses can achieve sustainable hypergrowth.

Ben Borodach is the cofounder and CEO of april.