Your Busy Season Is Where You Lose the Most Money

The Numbers Look Fine in July

Spring 2008, Smith Mechanical of Worcester had six trucks on the road and twelve guys on payroll. Best revenue I'd ever seen. The phone didn't stop. I was turning down work, which felt like the greatest problem a man could have. I remember standing in the parking lot of a Dunkin' on Route 9 in May of that year thinking I'd finally figured it out.

Then October came. Two builder accounts gone in the same week. Not slow — gone. Receivables that had been running 45 days stretched to 110 almost overnight. I laid off four men. Not a line item. Four guys I'd hired myself, guys I'd shaken hands with, guys whose wives I'd met at the Christmas thing we did at Greendale's. That's what the best spring I'd ever had built.

Revenue is not health. Revenue is volume. Cash is health. If you're in your busiest month and you can't answer "90 days" to this question — if every phone went silent tomorrow, how long could you pay your guys, your truck notes, your insurance — then the season isn't building anything. It's moving money through faster than you can track where it's going.

Busy season doesn't protect you. It hides you.

Busy Season Is When You Hire Wrong

When the schedule is full and you've got three jobs that needed to start yesterday, you don't have time to vet a new hire. You have time to hand him a truck key and a work order and hope he knows what he's doing.

I've watched this happen in my own shop. A slammed June produces desperate hiring. Desperate hiring is slow-motion expensive — you don't see the cost in June. You see it in November when the workers' comp modifier comes in, or in February when a callback shows up on a job that ran in August and you can't remember who was on it.

Here's my position on the skilled trades shortage: there is no shortage of guys who want $32 an hour to ride along and look useful. There is a shortage of guys who will show up on time, every day, for ten years, and give a damn whether the job is right. A slammed June is the worst possible moment to find out which one you just hired. You don't have time to watch him, correct him, or catch his mistakes before they leave the shop.

What makes this worse: busy season is when the working foreman disappears. The guy who runs three men and still gets dirty — catches the new hire's mistakes before they become callbacks, knows a finished job from a job that looks finished — he gets promoted to running four guys with no help because you need coverage. You've removed your quality control layer at the exact moment you're adding your least-tested people.

The working foreman isn't overhead. He's the reason callbacks don't eat your margin. When you're slammed, you gut that layer first and feel it last.

You're Not Booking Jobs, You're Booking Losses

When the schedule is stacked, contractors stop pricing carefully and start pricing fast. Fast means quoting off memory, off habit, off what the last similar job went for — which may or may not reflect what it actually cost. Every job in July has scope you didn't stop to look for, because looking takes time and time is what you don't have.

That's where flat-rate subscription books do the most damage. I'm not against flat-rate — for a shop that's never built its own numbers, it's a reasonable first year. But if you're running someone else's rates through your shop, you don't actually know your cost of doing business. You know someone else's approximation of it. In a busy month, when you're hiring and stretching your foreman and running new guys on jobs, your real cost of doing business is higher than it was when that book was printed. You won't know that until January when the margin math stops working.

Build your rates from your own numbers. If you haven't done that yet, know that you haven't. Because the alternative is running someone else's spreadsheet through a more expensive operation and calling October a good year.

The Bills from June Show Up in January

Most contractors blame the slow season for the January cash problem. Think winter caused it. The phone stopped and the money dried up. Makes sense on the surface. It's wrong.

January is the autopsy. The patient died in June.

The decisions that kill a shop's cash position are made in May, June, July — when you're too busy to price carefully, too busy to job-cost, too distracted by the revenue number to notice it isn't the same as money in the account. Busy season creates the problem. Winter just removes the cover story.

Builder receivables are the clearest version of this. Three GC accounts running during peak season, all paying at 75 days — you are building a liability that looks, from inside July, like a pipeline. You see the work in progress. You feel busy. What you don't feel yet is that every dollar you're spending on labor and materials right now is money you won't see back for two and a half months. And that's assuming they pay on time, which they won't, because a GC running 75-day terms knows you're not going to stop working in the middle of his job.

A GC who pays in 60-plus days is using your labor as a free credit line. You're lending him money. He knows it and he's betting you don't.

I fired Whitman Builders in 2011 over this — they were out of Marlborough, and I'd let their terms slide from 30 days to 75 across a busy stretch when I kept working because the work was there. I walked away from that account and slept better. What I'd already billed and not yet collected was its own problem, but I stopped digging. The busy season made the bleeding feel survivable until I made myself look at the actual aging report.

What Smith Mechanical Learned the Hard Way

I measured success in trucks. Six trucks meant I was growing. Twelve guys meant I was a real shop. The revenue numbers in spring 2008 confirmed everything I wanted to believe. I was not looking at cash on hand. I was not running job costing. I wasn't watching receivables closely enough to notice that a couple of builder accounts had quietly slipped from 45 days to 65 — the early signal I missed entirely.

When the two accounts went in October, I didn't have a reserve problem. I had no reserve. The busy season hadn't built a cushion. It had built payroll, truck notes, and material accounts. Twelve guys expecting to get paid every Friday. Six truck payments. Insurance. And receivables I couldn't collect fast enough to cover any of it.

Four guys laid off. That still sits with me. One of them had just bought a house. I knew because I'd written him a reference letter for the mortgage.

After that I stopped counting trucks. I started asking one question: how long can I pay everybody with zero new revenue? That's the number. Not trucks, not jobs on the board, not what's invoiced. What's in the account right now, divided against monthly burn.

If the answer isn't 90 days, you don't have a business. You have a hostage situation.

What You Do Monday Morning

Pull the last 90 days of job costing. If you don't have job costing — if you're not tracking estimated vs. actual hours and materials by job — you don't know if you made money on anything. You know if you collected money. Different thing.

Go find your five busiest jobs from June and July. Did you make margin on them or just revenue? What did you estimate labor at, what did you actually spend? If you can't answer those questions by job number, you've been running blind during your most expensive months.

Check your receivables aging today. Any builder past 45 days gets a written demand this week. Certified mail, return receipt. State the invoices, the amounts, the dates, give them seven days. Then pull your guys off their open jobs until it's resolved. I know the relationship feels too important. I've been there. I also know that the builders running 75 days are betting you won't do a thing. Prove them wrong once and they'll pay faster for the next three years.

Then sit down with actual cash on hand and actual monthly burn. Not projected revenue, not the pipeline, not what's owed to you. Actual cash, actual burn. If the answer isn't 90 days, you didn't have a good busy season. You had a busy season. October is when you find out which one it was.

Don't wait for October.