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Anyone Hurtin' Yet?

Discussion in 'Lawn Mowing' started by Tom-N-Texas, Jan 23, 2005.

  1. Tom-N-Texas

    Tom-N-Texas LawnSite Senior Member
    Messages: 370

    You know I prepare myself all year for the upcoming winter lull. Financially, winter time has always been challenging to me.

    A few years ago I started realizing the importance of stacking your customer base full of people who are most likely to want services throughout the year. It may be leaves. Or fertilizer. Or odd jobs. Or whatever. But each year I take notice on who completely cuts off service in late October, and who continues to need things throughout the winter. There's a BIG difference in the bottom line.

    Usually my goal is to stay afloat in winter and pay all my bills w/out having to dip too much into savings. Going in to winter, it always seems feasible. However, inevitably I end up taking several thousand dollars out. This year I'm pretty lucky because I have a several big commercial accounts, so it's a little easier. But this is a first.

    So my question is: How does everyone do it? Especially the smaller LCOs.
    Do you live off your savings? Or pick up the slack with leaves? Or fertilizer? What keeps you afloat financially in the winter?

    Good luck. March is just around the corner.
  2. YardPro

    YardPro LawnSite Gold Member
    Messages: 3,570

    you can set up your accounts on a 12 month payment basis. this will even out your cash flow and lessen the "feast or famine" nature of our business.
    this is where good business savy comes into play.
    i used to make sure i had enough 12 month contract accounts (commercial and residential) to live through the winter.
  3. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Messages: 2,128

    I have also started signing clients to 12 month contracts. it really helps in the winter

    PMLAWN LawnSite Gold Member
    Messages: 3,534

    12 month contracts!!! If you are a solo try to advertize handyman work in Oct. and you should work you butt off all winter.
  5. kdbetters

    kdbetters LawnSite Member
    Messages: 70

    I had to get a job this winter(just moved out the parents house) to pay my bills, however it will be a little bit different this next year. Not only will I be stacking up my savings for the winter, I will also take my biggest bills like rent, insurance, phone and pay them in advance. Every three months starting in March, I will pay those one month in advance. By the end of the season(November) I will have them paid three months in advance and that should carry me through the winter.
  6. 1MajorTom

    1MajorTom Former Moderator
    Messages: 6,073

    2005 is the start of our 7th year, and we have never worked a day in the winter. We are by no means a large business, and we have no customer payments spread out by 12 months. All it takes is same basic planning and budgeting on your part. You need to sit down and really know the exact number that it takes to run your household. I'm talking mortage payment, any vehicle payments, all insurances, all utilities, monthly food allowance, etc. Ok, so lets just say it cost you 40 grand to run your house for 12 months. Then add in a Christmas fund, and enough money to have fun with, eating out fund, clothes allowances etc. Say all total your spending for the year will be around 50 grand (all extra money can be saved/invested), so we'll use this nice round number for simplification. So basically you need about $4200 a month to live. If you don't work in Dec, Jan, Feb, and most of Mar, then you would need to walk into winter with about 17 grand which you will need to save up for during the work season. For 6 winters we have been very fortunate to have been able to prepay all of our bills in December, then we sit back and relax and never worry.
    I prefer this method better than having to worry about getting customers to pay their 12 month payment plan in the dead of winter. Getting the customers money sooner than later, in my opinion is much better. I know I wouldn't want to have to track down pyaments in January that were late.
  7. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Messages: 7,547

    This is the approach that actually solves the problem. 12 payments of $80 is the same as 6 payments of $160. It sounds like a budgeting problem.
  8. YardPro

    YardPro LawnSite Gold Member
    Messages: 3,570

    i agree with major tom 100%.
    the 12 month payments is just a way to keep from overspending when you have alot of $$$ coming in.
    I had to have $15K in the bank in november ( even with 12 month commercial accounts bringing in $5K/month) to make it through the season AND STARTUP next year.
  9. Tom-N-Texas

    Tom-N-Texas LawnSite Senior Member
    Messages: 370

    I never got into the year-round payment thing. It doesn't make you any more money. It's just phsychological. I'm a good saver. That's not the issue. The issue for me is I hate taking money out of savings. I'd be happy if I could just "coast".
  10. lawnguyland

    lawnguyland LawnSite Bronze Member
    Messages: 1,108

    If it's getting tight and close to spring clean-up time you can offer a "discount" on spcu if it's prepaid and this might help with cash flow in the middle or end of winter. I offer it to all customers, only about 1/3 do it, which is good for flow and I still get to bill the other 2/3 "full" price and get going in spring. notice the "s

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