The Winter Cash Reserve: How Much to 'Squirrel Away' Before December

Here's a number that should scare every roofing contractor: According to JPMorgan Chase Institute research, 50% of small businesses have fewer than 15 cash buffer days.

Now here's the roofing-specific reality: For many contractors, winter (roughly November through March) is the slow season and demand drops hard. But your insurance premium doesn't drop. Your truck payments don't drop. Your key employees - the ones you can't afford to lose - still need to eat.

This is the winter cash gap. And it kills more roofing businesses than bad weather ever could.

The solution isn't complicated. It's just uncomfortable. You need to save money during the months when money is easiest to spend - the busy season - so you don't die during the months when the phone stops ringing.

Call it the Squirrel Strategy. Stockpile your nuts in September, survive on them in February.

The Winter Revenue Cliff

Let's be honest about what winter looks like for most roofing contractors.

In northern states, production can grind to a near-complete halt from December through March. Snow on roofs. Crews that can't work. Customers who won't make decisions. Even in southern markets, the slowdown is real - just less severe.

The revenue cliff typically looks like this: September and October are still strong (everyone wants repairs before winter). November starts dropping. December falls off hard. January and February are the bottom.

Then March hits and suddenly everyone who ignored their roof all winter needs it fixed immediately. The phone explodes. You're scrambling to hire. And you're probably still broke from the lean months.

Here's the trap: During the busy season, revenue feels endless. Jobs are stacking up. Checks are coming in. It's easy to think, "I'll save next month." Then winter arrives, revenue vanishes, and you're using credit cards to make payroll.

The businesses that survive this cycle aren't lucky. They're disciplined about building reserves when cash is flowing.

Why Revenue Doesn't Equal Cash

The roofing industry has a cash flow problem that goes beyond seasonality. Even during your best months, there's often a gap between the money you've earned and the money in your bank account.

Here's why:

The Insurance Depreciation Trap

On insurance restoration jobs, carriers often hold back depreciation until work is proven complete. This is called recoverable depreciation. For example, a 10-year-old shingle roof might be treated as roughly 40% depreciated on some schedules - that's a significant chunk waiting for release.

You've finished the job, paid your crew, bought the materials - and you're waiting weeks or months for the final check.

Collecting that depreciation requires documentation, follow-up, and sometimes multiple conversations with adjusters. Some contractors get lazy and leave money on the table. Others get it eventually, but the delay hammers their cash flow. Consistent follow-up on outstanding payments is the difference between getting paid eventually and getting paid now.

The Commercial Retainage Problem

In commercial roofing, retainage is common - typically 5% to 10% of the contract value, depending on contract and jurisdiction. That money doesn't release until the entire project is signed off. Not just your portion - the whole building. That roof you finished in August might not release retainage until December, when the GC finally closes out the job.

You've essentially become a lender, financing the project at 0% interest for the duration.

The 90-Day Float

On commercial work especially, payment terms run long. According to industry studies, contractors wait 60-90+ days on average to get paid, with some estimates putting average DSO (days sales outstanding) as high as 94 days. Net-30 is optimistic. Net-60 is common. Net-90 happens.

You're fronting materials, labor, and equipment costs for months before seeing payment.

Add these factors together and you get a business that can show $2 million in "revenue" on paper while struggling to cover a $10,000 payroll.

The Squirrel Strategy: A Month-by-Month Playbook

The time to prepare for winter is not October. It's August. Here's the playbook:

August: The Audit

Review your P&L from the last 12 months. What are your actual fixed costs? This includes truck payments, insurance premiums, lease or mortgage, essential software, and - critically - the payroll for employees you absolutely cannot lose.

Calculate the minimum monthly burn rate to keep the lights on and your core team intact. This is your survival number.

September: The Acceleration

This is peak collection season. Every invoice that's outstanding needs aggressive follow-up. That depreciation check you've been waiting on? Chase it now. Commercial retainage that might release early? Push for it.

The goal is to accelerate as much receivable cash as possible before the slowdown hits.

October: The Squirrel Month

This is the critical month. Revenue is still strong, but you should be setting aside reserves as if winter has already started.

Take your survival number (from August) and multiply by three to four months. That's roughly what you need in reserve to cover December through March without panic.

If your monthly burn is $40,000, you need $120,000-$160,000 set aside. Not in "the business checking account" - in a separate reserve account that you don't touch until January. And if you're not sure you're calculating your margins correctly, make sure you understand the difference between markup and margin - it could be costing you more than you realize.

November: The Pre-Book

Start marketing spring installations. Run a "book now for spring" promotion. The key: collect deposits. A 10%-20% deposit on spring work creates cash flow in late November that bridges you through the lean months.

Yes, you're discounting future work. But cash in November is worth more than full-price cash in April if it keeps you alive.

December - March: Survival Mode

Minimize discretionary spending. This is not the time to buy new equipment, run expensive marketing campaigns, or hire. It's the time to stay lean, maintain your core team, and work the revenue opportunities that winter actually offers.

Winter Revenue Alternatives

The roof installation business may slow down, but roofs still exist - and they still have problems.

Emergency Repairs

Leaks happen in winter. Wind damage happens in winter. Someone has to fix them, and customers will pay a premium for immediate response. Make sure your team can handle emergency calls, and make sure your customers know you're available.

Ice Dam Removal

In northern climates, ice dam removal is a legitimate winter revenue stream. It's not glamorous work, but homeowners get desperate when water is pouring into their living room.

Inspections and Estimates

Winter is when homeowners start thinking about spring projects. Offer free or low-cost inspections in January and February. Build a pipeline of estimates so you're ready to hit the ground running when weather breaks.

Gutter Cleaning and Maintenance

This isn't core roofing work, but your crews have the equipment and access. It keeps trucks moving and crews paid during slow weeks.

Pre-Booking: The Deposit Bridge

Here's a strategy that addresses both cash flow and pipeline:

Starting in late November, aggressively market "spring installation" packages. Offer customers a modest discount -5% to 10% - for booking now and putting down a deposit.

The deposit doesn't need to be huge. 10% to 20% of the job value creates immediate cash flow without over-committing the customer.

A $15,000 roof job with a $1,500 deposit might seem small. But book 10 of them in November and December, and you've got $15,000 in the bank plus a full March schedule.

This approach serves multiple purposes: It generates winter cash. It locks in spring work before competitors start marketing. And it gives your sales team something to do during the slow months. For tips on writing proposals faster, the same principles apply to roofing estimates.

The Discipline Problem

The reason most roofing contractors don't do this is simple: it requires saying no to money.

When September revenue is flowing, it's hard to put $40,000 in a reserve account instead of buying that new trailer. When a good deal on equipment appears in October, it's hard to pass because you're "saving for winter."

But the contractors who build real businesses - sellable businesses with consistent cash flow - have figured out this discipline.

They treat the reserve account like a bill. It gets funded first, before equipment purchases, before bonuses, before personal draws. The September and October surplus goes into the squirrel fund, not the toy fund.

And then February comes, and they're not panicking. They're planning. They're quoting spring jobs at full margin instead of taking whatever work they can get just to make payroll.

The roofing industry will always be seasonal. Weather will always dictate the rhythm of production. But cash flow problems are optional.

Start building your winter reserve in August. Your February self will thank you.