How To Calculate Seasonal Variation -

He drew four boxes on the napkin. "First," Leo said, "write down your total sales for each season for the last two years."

Elena calculated: Last year's total = $70k + $25k + $12k + $35k = $142,000. Plus 10% growth = $142,000 × 1.10 = total for next year. how to calculate seasonal variation

"I know," Elena sighed. "But the seasons aren't the same every year. Last June was cold, but the June before that was a heatwave. How can I predict anything?" He drew four boxes on the napkin

And every year, she recalculated the indices using the latest three years of data, because seasons shift. A new boardwalk hotel opened, boosting spring sales. Her Spring Index crept up from 0.99 to 1.10. "I know," Elena sighed

Leo grabbed a clean napkin and a pen. "You need to calculate seasonal variation. It’s how you separate the 'normal rhythm' of your business from the 'random noise' of life. It takes four steps. Let's use your sales data."

For two years, she ran her business on pure instinct. She’d order extra sprinkles in July and pray for a warm February. But she always seemed to run out of chocolate fudge right when the autumn leaves fell, or get stuck with 50 gallons of pumpkin spice mix after Thanksgiving.