January is when contracting businesses die. Not because the work disappeared — because the cash did, and nobody saw it coming until the truck payment bounced.
Here’s the pattern. October is strong. November is decent. December collections look fine because you’re still getting paid for November work. Then the second week of January arrives, your receivables are empty, your phone is quiet, and you’ve got $6,200 in fixed costs due in the next eighteen days and $2,900 in the account.
You didn’t lose money. You ran out of cash at the wrong moment. Those are different problems, and only one of them kills you.
The fix is a 13-week cash flow sheet. It takes about 90 minutes to build and 15 minutes a week to maintain. Build it in early October and you’ll know by Halloween exactly how much you need to bank — and exactly which week things get tight.
Why 13 weeks and not 12 months
A 12-month budget is a planning document. A 13-week cash sheet is an operating document. The difference matters:
- 13 weeks is one quarter. Far enough out to give you time to act, close enough that your estimates aren’t fiction.
- Weekly beats monthly. Monthly cash flow hides the problem. You can be “cash positive in January” and still bounce a check on January 9 because the insurance renewal hits before the Dec 20 invoice clears.
- You can actually forecast 13 weeks. You know your pipeline, your fixed costs, and roughly what collections look like. Month 9 is a guess.
The whole point is to find the week you go negative while you still have time to prevent it.
The example business
Let’s use a numbers-forward example so the math is concrete. Call it a residential service and remodel shop:
| Metric | Figure |
|---|---|
| Annual revenue | $280,000 |
| Owner + one employee (helper at $24/hr) | 2 people |
| Owner draw | $4,500/month ($1,040/wk) |
| Fixed monthly overhead | $5,800 |
| Typical Nov–Feb revenue | ~55–65% of a normal month |
| Starting cash, Nov 1 | $14,000 |
Fixed overhead breakdown — this is the number you need before anything else:
| Item | Monthly |
|---|---|
| Truck payment | $720 |
| Fuel (reduced in slow season) | $450 |
| Insurance (GL, auto, tools) | $400 |
| Phone + software | $185 |
| Shop/storage rent | $350 |
| Accounting + bookkeeping | $225 |
| Marketing (Google, ads, lead fees) | $600 |
| Tools, small equipment | $200 |
| Health insurance | $680 |
| Loan/credit card minimums | $490 |
| Misc + licenses | $500 |
| Helper wages (fully loaded, 32 hrs/wk avg) | $1,000/wk |
| Fixed total, excluding owner draw | ~$9,100/mo |
That’s roughly $2,100 a week going out the door before you buy a single stick of lumber or pay yourself a dime. Burn rate is the number that matters, and most contractors have never written it down.
Step 1: Build the sheet
Thirteen columns across (one per week), five sections down. Spreadsheet is fine — this does not need software.
Rows, top to bottom:
- Starting cash (last week’s ending cash)
- Cash in — collections from invoices, deposits on new work, retainers. Not revenue. Cash that actually lands.
- Cash out — fixed — the list above, placed in the week it’s actually due
- Cash out — variable — materials, subs, fuel on active jobs
- Cash out — owner draw
- Ending cash = 1 + 2 − 3 − 4 − 5
The single most common mistake: putting revenue in the “cash in” row instead of collections. If you invoice $9,000 on December 18 and your terms are net 15, that money shows up the week of January 5. Put it in the week it hits the bank, not the week you earned it. If you’re not sure what your actual collection lag is, go pull your last 20 invoices and measure days from invoice date to deposit date. That average is your lag. For most small shops it’s 12–25 days, and most contractors guess low by a week.
If chasing payment is why your lag is long, that’s a separate and fixable problem — tightening up invoicing and collection terms is the highest-leverage thing you can do before slow season starts.
Step 2: Fill in the known outflows first
Start with what you can’t negotiate away. Put each fixed cost in the exact week it’s due, not spread evenly. This is where the sheet earns its keep.
Lumpy items that wreck January:
- Annual GL insurance renewal
- Q4 estimated tax payment (Jan 15)
- License/registration renewals
- Vehicle registration and inspection
- Software annual renewals
- Any equipment loan balloon
Say your GL renewal is $2,400 due January 12 and your Q4 estimated payment is $3,100 due January 15. That’s $5,500 landing in a single week on top of $2,100 of normal burn. That week is your crisis week, and you can see it in October if you build the sheet in October.
Step 3: Forecast cash in, conservatively
For each of the 13 weeks, list the jobs you expect to collect on. Three buckets:
| Bucket | How to count it |
|---|---|
| Invoiced, not yet paid | 90% of face value, in the week your lag says |
| Signed, not started | 80% — some will slip or cancel |
| Quoted, not signed | 30–40% at best |
Do not forecast work you haven’t quoted. “Something always comes in” is how you build a sheet that lies to you. If you want a real tool for pulling work forward, the 3-touch follow-up system applied to every estimate from the last 90 days usually recovers more revenue in two weeks than any new marketing spend.
Step 4: Read the sheet
Here’s the example business, condensed to monthly checkpoints so you can see the shape. Your real sheet has 13 columns.
| Week ending | Cash in | Cash out | Ending cash |
|---|---|---|---|
| Nov 7 | $7,200 | $4,100 | $17,100 |
| Nov 28 | $5,100 | $3,400 | $16,400 |
| Dec 19 | $4,800 | $5,900 | $12,100 |
| Jan 2 | $1,900 | $3,700 | $8,600 |
| Jan 16 | $2,400 | $8,900 | −$1,200 |
| Jan 30 | $3,100 | $3,300 | −$2,800 |
| Feb 13 | $4,600 | $3,400 | $600 |
| Feb 27 | $6,800 | $3,600 | $3,900 |
Two things jump out. First, you go negative the week of January 16 — the insurance-plus-taxes week. Second, you don’t recover until mid-February. That’s a five-week hole, and the deepest point is about −$2,800.
Your slow season reserve number is the deepest negative point plus a buffer. Deepest point is −$2,800. Add 50% for the estimate error you definitely have, and you need roughly $4,200 banked specifically for January on top of whatever operating cash you keep.
That is a knowable number. In October, with 12 weeks of decent collections left, setting aside $350/week gets you there.
Step 5: The cut order
If the sheet says you’re short and you can’t bank enough, cut in this order. Not the other order. The order below protects the things that bring money back.
1. Owner draw, before anything else
This is the hardest one and it’s non-negotiable. Dropping your draw from $1,040/week to $600/week for eight weeks frees up $3,520 — which is nearly the entire hole in the example above. Your draw is the only outflow you can cut instantly with no phone calls and no damage to the business.
If cutting it to $600 means you can’t make your personal mortgage, you have a different problem: you don’t have enough separation between business cash and household cash. The 13-week sheet is also how you find that out in October instead of January.
2. Renegotiate the lumpy bills — in October
Three calls, each worth real money:
| Call | Typical result |
|---|---|
| Insurance carrier: switch annual premium to monthly or quarterly | Converts a $2,400 January hit into $200/month |
| Equipment/truck lender: ask about a one-month deferral | Often granted once a year if you’re current |
| Software vendors: downgrade tier or pause seats for Jan–Feb | $40–$150/month |
Carriers and lenders will almost always work with you in October. They will not work with you on January 14 after a payment already failed. Make these calls while you are current and calm.
3. Cut marketing last, and never to zero
The $600/month marketing line looks like the obvious cut. It isn’t. Cutting lead generation in December is why February is also slow. If you have to trim, trim the paid-lead spend first — the cost-per-job math on Angi and Thumbtack often doesn’t hold up in slow season, when your close rate drops and everyone is bidding the same scraps. Keep the Google Business Profile work and the review-asking, because those cost time, not money.
4. Payroll is nearly last
Letting your helper go in December to save $1,000/week is tempting and usually a mistake. Finding and training a replacement in March costs more than the eight weeks of slow-season wages. Better options, in order:
- Cut him to 24 hours/week and tell him straight: “Slow season, back to full in March.” Saves ~$250/week.
- Push him onto jobs you’d normally sub out.
- Use him on the shop, truck, and tool maintenance you never have time for.
If you’ve already got a good helper, keeping him through the winter is cheaper than it looks.
Step 6: Build demand into the gap
The sheet also tells you how much work you need to find and when. In the example, you need roughly $2,400/week more in collections during weeks 10–13. That’s not a mystery — that’s a target.
Slow-season work that converts:
- Call every customer from the last 24 months with a specific offer. Not “hope you’re well” — “I’ve got openings the week of January 12, and I’m doing [specific job] at [specific price].”
- Indoor work for outdoor trades. Basement, garage, bath, punch lists.
- Maintenance agreements billed in advance. Cash now, work later.
- Offer a modest discount for January scheduling, but only in exchange for a deposit.
Collecting deposits is the fastest legitimate way to pull cash forward. If your deposit terms are thin, reset them before November rather than discovering mid-January that you’re financing other people’s projects.
Maintaining the sheet
Every Monday morning, 15 minutes:
- Enter last week’s actual cash in and cash out.
- Compare actual ending cash to what you projected.
- Roll the window forward one week — drop week 1, add a new week 13.
- Adjust the next four weeks based on what you learned.
After six weeks of this, your projections get good. After thirteen, you’ll stop being surprised by money.
Start here
Open a spreadsheet today and do one thing only: write down every fixed cost you have, with the exact date it’s due, for the next 13 weeks. Pull three months of bank statements and don’t skip the annual and quarterly items — those are the ones that sink you.
That list alone takes 40 minutes and tells you your weekly burn rate. Once you know your burn rate, everything else on the sheet is arithmetic.