Cash flow strategies for seasonal markets

CCS Influencer Greg Serevetas says it's important to find a way to keep cash flowing, even when the work slows down.

Managing cash flow is one of the most important and challenging parts of running any business, especially a roofing business. Here in the Northeast, where the seasons are not always conducive to performing roofing or any exterior work, it’s difficult to survive them without managing your cash flow. You need to find a way to keep it flowing, even when the work slows down. 
 
First, you MUST plan. Winter might feel far away when you have projects and service work rolling in during the summer, but the work you book in the warmer months can carry you through the slow season. Focus on your backlog during your busy season. My suggestion is to have at least one full-time salesperson dedicated to keeping the backlog up during the winter months. This will alleviate a lot of stress. Also, control your expenses in the winter. Set a reserve of what you need to get through winter, and do not consider spending it on anything but the necessary expenses. It’s tempting to buy new tools or overstock on materials, but trust me, you’ll thank yourself later for being disciplined. For tax purposes, you may want to buy some new “toys,” which is perfectly fine as long as you have the set aside reserve funds needed to get through the winter season. 
 
Your inventory spending should adjust with the seasons. In the summer as a roofer, you’re probably loading up on roofing membranes, sealants, adhesive and other materials to keep up with demand. Come winter, you should reduce the amounts and shift to what’s going to move — cold-weather adhesives, ice and water shields, snow removal supplies and repair materials for emergency service calls. Don’t tie up cash in materials that are going to collect dust until spring. 
 
Stay on top of your receivables. Clients paying late can choke your cash flow faster than you think. If you don’t already, consider offering early payment incentives or being a little firm (but polite) about due dates. We have a great AR manager. Finding the right person for that seat is crucial. 
 
Finally, winter is the perfect time to focus on smaller jobs such as emergency roof repairs, snow removal contracts, preventative maintenance programs and metal work. These are just a few options but spend some time to think about what’s best for you and your company. The two goals are to keep money coming in when full-scale projects aren’t happening and to keep your crews busy. It also keeps your business top-of-mind for clients when the Spring and Summer months come back around. 
 
To close, make sure to plan, adjust your inventory and spending, keep your receivables coming in and diversify your winter work. It’s all about being proactive instead of reactive. Cash flow isn’t something that just happens, you must manage it every day. 
 
“Discipline is the pathway to freedom.”