A seasonal home service business can break even through its slow months by setting a weekly production floor, capping labor as a share of that production, and cutting marketing before the slow weeks arrive.
Gwen (not her real name) owns a basement waterproofing company and posted a $2,000 loss in October. Yet the company lost $58,000 on the books in December, because the crews finished November's jobs early and few new ones were booked.
Booked sales are the contracts signed in a given month. Production is the value of the work crews finish in that same month. Deposits arrive with the booking, well before the crews do the work. In October, Gwen's bank balance was about $30,000 below what she expected, because fewer new contracts meant fewer deposits arriving that month.
Yet a company can't pay wages from a signed contract until a crew builds the work, so Gwen based her weekly floor and labor cap on production dollars, the value of finished work.
Costs stay at busy-season levels while sales drop, and Gwen's company felt that squeeze after 2 dry years.
Her area received 12 to 13 inches less rain than normal over that time, so in October, her production was on track to fall from more than $200,000 a month to somewhere between $125,000 and $150,000.
How does a company lose $35,000 in a month with little work to do? Marketing was one big piece of the answer. Stuart Trier looked at the previous October through January and found that the company spent $21,000, $22,000, $21,000, and $23,000 on marketing, with the first cut not made until February. Gwen summed up that winter as "we had no visibility." Cutting that line to $5,000 or $6,000 a month would have saved about $15,000 a month, or $60,000 across the 4 months.
"If you don't lose any money and then you come back into a high season, all of a sudden that's all profit."
— Stuart Trier
But cost cuts are one lever, and work that doesn't depend on rain is another. In September, about $50,000 of the lead salesperson's $104,000 in sales was foundation repair, a service customers buy in any weather.
For more on that track, read the blog How to Build Revenue That Doesn't Depend on the Weather.
Break-even revenue is average monthly expenses divided by the gross profit percentage, and the weekly production floor is that figure spread across the weeks in a month. On October 8, Stuart built Gwen's figure from her own books and found that 8 full months of expenses totaled $546,000, or about $70,000 a month, with gross profit near 56%. So $70,000 divided by 0.56 comes to about $125,000, and Stuart and Gwen used $120,000 a month as the working break-even.
A month has about 4.3 weeks, so the weekly floor is just under $30,000 of production. At Stuart's request, Gwen presented the figure to her lead salesperson as a floor because once overhead is covered, every added job's gross profit goes to the bottom line. Stuart's goal for the slow months was modest.
"I could live with you breaking even for three months."
— Stuart Trier
To set the same floor in another seasonal company, work through these 5 steps in order, using only months with complete books:
Gwen used pace math for a quick read between reports. On November 12, she had $64,450 booked. She divided the $64,450 by 12 and multiplied by 30 to project the month near $161,000, well above the $120,000 needed. However, a large contract booked early makes the pace look better than the month will be, as a single $30,000 sale did that November, so Stuart used the figure only to read the direction of the month.
A labor cap is the maximum a production team's payroll can cost in a week, expressed as a percentage of that week's production. Gwen's was set at 20%, so for a week with $25,000 of production, the crews can be paid $5,000, and for a $30,000 week, $6,000.
What does the cap mean on a quiet week? A production manager can't pay a crew for 40 hours when only part of the week is booked.
A cap works only with job-level data. To track it, the production manager began a weekly sheet with each job's name, revenue, dates, labor hours, and labor dollars. He also split multi-week jobs by day (a $20,000 job that takes 5 days is entered as $4,000 a day), so every week's percentage stayed accurate.
Weekly readings Stuart quoted at first were 18.78%, 21%, 13%, and 18%. By the week of October 20, labor was 13.53% of production, below the 14% to 17% range he gives for the industry.
Although payroll had dropped about $10,000 by Gwen's estimate, the crews still produced $37,000 and $38,000 in the last 2 weeks of the cap's first month. Stuart read that crews went from 5 people to 4, or from 4 to 3, while still getting the same work done, because work expands to fill the time available. The production manager agreed that was the goal and added that some jobs had been easier.
The manager reconciled timesheets against each job. When a crew member clocked out at 1:00 and the rest logged 3:00 for the same job, he corrected the sheet.
In most home service coaching, an owner is told to watch labor costs, whereas Stuart gave Gwen a cap and a weekly sheet to test it against. A second contractor's version of the weekly crew scorecard is in How One Contractor Took Crew Profit From $2,300 to $4,367 a Day.
Gwen's marketing totaled $10,404 in the month before the cut, including $8,400 for an SEO package and $1,800 for Google Ads. On October 8, she asked her vendor to cut the line by about 50%, and he agreed by email. Stuart and Gwen set the targets below. Gwen said the cut would give her back about $4,000 a month.
| Marketing line | Before October 8 | After the cut | Reason |
|---|---|---|---|
| SEO and content package | $8,400 a month | About $4,200 | The vendor scales his work down in proportion to the fee |
| Google Ads | $1,800 the month before | $1,000 maximum, at about $150 to $200 a rain day | Homeowners respond to ads during and right after rain events |
A cut becomes real when an invoice shows the lower amount. Because October's bill was about $8,200 for September's work, Stuart expected to see the cut on the November bill. But the November bill was still $7,900, against the $4,100 due.
Stuart caught it on December 4, and Gwen wrote to the vendor that day to ask for no December billing so the difference would even out.
No, because Stuart had Gwen keep everyone on the schedule by working through a set order for the slow weeks. First, she asked for volunteers to take unpaid time off, and she invited anyone who wanted a week away to raise a hand. Next, she gave the remaining hours to the top-tier crew members first, and she paused hiring. Because nobody knew how long the slow stretch would last, Gwen made the call week by week.
"I'm just trying to keep our guys afloat, keep them busy and working, because if I don't, we're going to start losing all of our core guys."
— The production manager
The volunteers came: by early November, half the crew was out for 1 week, and the other half the next, and the crews took until November 17 to build a $30,000 job.
For 2 months, the plan worked. The company ended October about $2,000 under break-even after 3 payrolls, and Stuart called that "a rounding error" next to a year still $224,000 in the black.
The company earned about $14,000 in November, after losing $35,000 the November before, a swing of almost $50,000.
"No matter what, it's not going to be as bad as it was last year. It won't be because we have visibility. We can turn things off."
— Gwen
| Month | Result on the books | What drove it |
|---|---|---|
| October | Short of break-even by about $2,000 | 3 payrolls in the month, and a marketing bill that was still for September's work |
| November | About $14,000 profit, after a loss the November before | 2 payrolls, plus a large sale on November 4 from an older quote |
| December | $58,000 loss (about $40,000 after yearly charges are spread) | $45,000 in revenue, $21,000 in labor, and $17,000 sold |
Yet the company's December results didn't follow the pattern. Gwen sold $17,000 in new work and brought in $45,000 in revenue, the company's lowest since she took over. Because the company paid the early-December payroll for work the crews finished in November, labor cost about $21,000, nearly half that revenue, and the crews had little left to build.
Stuart said the company hadn't cut labor enough, and Gwen said the crews had worked very little; both statements were true because of the payroll timing. Her operating account dropped from about $120,000 to under $60,000, less than 1 month of her $72,000 average expenses.
After December, the plan needed 3 additions: trimming labor a pay period early, building a cash reserve before the first dry week, and spreading yearly charges evenly across the months. By January 7, sales were on pace for about $200,000 for the month, and leads were returning. For the next winter, Gwen's goals were a crew of at most 12 people working in teams of 3, plus more income from egress windows and foundation repair.
Owners in trades with a busy half-year followed by a quiet one can use the same 3 tools: a break-even target, a weekly production floor, and a labor cap.
Check the date of the last transaction before trusting any month's results. On October 8, Gwen's September report showed a $28,000 loss because the bookkeeper's last entry was dated September 15. At about 50% down, $188,000 of sales should have meant about $94,000 in deposits alone, and according to the production sheet, the crews had built nearly $150,000 of work, so Stuart expected a gain of about $28,000. He called the cross-check triangulating: when sales, production, and the books disagree, something is missing. The 5 weekly figures that make this quick are in the Weekly Scorecard playbook.
Yes, in small doses, and the skills ladder behind that kind of training is in the Path of Progress playbook. On the October 15 call, Stuart asked the production manager to name 1 skill he could teach a crew member on each job. The manager was already doing it: that week, a crew member new to downspout tie-ins did them, and a second came along for a repair only the manager had done. Gwen added paid shadowing of 3 to 4 hours.
Pause or cap pay-per-click ads by the day. SEO and content work can be halved. But dropping it to zero would give up a search position that took months to build (Gwen's reasoning on November 12). Cutting also means reading what is still being produced: on November 5, Gwen stopped a batch of articles about mold and water damage because the plan was about 70% foundation repair topics. Another company's ad-spend decisions are laid out in How a Foundation Company Cut Its Google Ads Budget by $20K and Still Doubled January Revenue.
Hold 1 to 2 months of operating expenses (the reserve in the Why Your P&L Is Lying playbook is about 1 month). Stuart averaged Gwen's expenses at about $72,000 a month, so a sensible reserve is between $72,000 and $144,000 (3 months, about $216,000, is the most anyone would consider). In December, her operating account was below even the low end of that range.
Yes, when the coach works from the company's own weekly numbers. In Gwen's slow season, 3 catches came from reading real documents: a vendor invoice that was still high, a September report missing everything after the 15th, and a $13,000 yearly interest charge entered in one lump. Each catch came on a weekly call where Gwen and Stuart opened the books, and a monthly report that arrives weeks late can't match that.
It's a real loss once you spread yearly charges booked in a single month across the year. December's $58,000 loss included about $13,000 of vehicle interest posted all at once, a Christmas bonus of about $3,800 that belonged to the whole year, and a $4,000 vendor overbilling that Stuart told Gwen to log for her accountant. Once those charges were spread, the loss was near $40,000, so December was a real loss even after the adjustments. For another waterproofing company's similar winter, read How a Cash-to-Accrual Accounting Transition Turned a Feared Winter Slowdown Into $120,000 in Hidden Profit.
Client details in this article have been changed to protect confidentiality. Any resemblance to a specific business is coincidental.
Stuart Trier is the Founder and CEO of Clear Results. Over the past 20 years, Stuart has built, bought, and sold 11 companies across the home service, healthcare, and marketing industries. He built his first company from startup to $8M in revenue in 3 years before a successful exit, then built a chain of 28 healthcare clinics and sold the business to a publicly traded company. Following that acquisition, Stuart spent 3 years working alongside the CEO, helping lead the organization through a take-private transaction before participating in a nine-figure exit to a Fortune 10 company. Today, he's the lead investor behind an electrical services platform operating across 3 U.S. states, and has worked directly with owners through 1,800+ strategic advisory sessions.
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