Latest / Cash Flow Conversations with Fexingo: Working Capital, Receivables, and Small Business Finance / How a Landscaper Used Revenue Smoothing to Survive Winter
Transcript
- Lucas: If you run a landscaping business in Minnesota, the calendar basically dictates your cash flow. You make eighty percent of your revenue between April and October. And then from November through March, you're staring at a 60 percent drop — while still paying for equipment storage, insurance, and a skeleton crew. Luna: That's the seasonal trap. And a lot of small business owners I've talked to just try to save enough during the summer to coast through winter. But that rarely works because something always comes up — a broken mower, an unexpected tax bill. Lucas: Right. So in this episode we're looking at a specific case: Jenna Kowalski, who runs a landscaping company called North Star Scapes in the Twin Cities area. She had been in business for about six years, and every winter she'd burn through her savings and then rely on credit card debt at 18 percent interest to make payroll. Luna: Ouch. So what changed for her? Lucas: She decided to try a structured revenue-smoothing approach. The core idea is simple: instead of hoping you saved enough, you deliberately shift some of your peak-season revenue into the off-season — by selling prepaid maintenance contracts and using a seasonal line of credit as a bridge. Luna: Let's break that down. Prepaid contracts — so customers pay upfront for services they'll receive later? Lucas: Exactly. Jenna offered a 'Winter Warrior' package in September. For $400, customers got unlimited snow plowing for the season, plus a guaranteed response time within 24 hours. She sold 450 of those contracts, which brought in $180,000 in cash before the first snowflake fell. Luna: That's smart — it locks in revenue and builds customer loyalty. But $180,000 isn't enough to cover a whole winter if her normal operating costs are, say, $50,000 a month. Lucas: Right. Her winter monthly burn was about $45,000 — wages for a few part-time snow removal crew, insurance, equipment lease payments. So the prepaid contracts covered about four months if she stretched. But she needed a buffer. That's where the line of credit comes in. Luna: And she didn't just walk into any bank. She went to a community bank — First State Bank of St. Paul — that understood seasonal businesses. Lucas: Yeah. The bank offered her a $75,000 seasonal credit line at prime plus 2 percent. That's around 7.5 percent today. She only draws on it during the winter months and pays it down aggressively in the spring. The key is that she had a clear repayment plan tied to her spring contract revenue. Luna: So let's talk about the math. She had $180,000 in prepaid revenue, plus a $75,000 credit line. That's $255,000 available over five winter months. At $45,000 a month, that's $225,000 total. So she actually had a $30,000 cushion. Lucas: Exactly. And the beauty is that the prepaid contracts reduced how much she needed to draw from the credit line. She ended up borrowing only about $40,000 over the winter, and she paid it back by the end of May. The interest cost was maybe $1,500 — versus the $6,000 in credit card interest she would have paid before. Luna: So she saved $4,500 just on financing costs. That's a meaningful chunk of change for a small business. Lucas: And there's another benefit. Because she had the prepaid contracts, her cash flow was more predictable. She could actually plan her winter crew schedule instead of scrambling. She even added a small snow removal route for a local church that paid her a flat monthly fee. Luna: That's a good example of how revenue smoothing opens up opportunities. When you're not constantly firefighting cash flow, you can think strategically. Lucas: Right. And the prepaid model also smoothed her off-season workload. Instead of having zero revenue for months, she had a steady stream of cash coming in from those contracts — which she could use to pay for things like equipment maintenance in January, when business is slowest. Luna: Now, I imagine not every landscaping customer wants to commit $400 upfront. How did she overcome that friction? Lucas: She offered a payment plan — three installments of $135 over the fall. And she emphasized the value: unlimited plowing, priority service, and a discount compared to paying per visit. The average per-visit cost in the Twin Cities is about $50, and a typical winter has maybe 10 to 12 significant snow events. So $400 is actually cheaper than pay as you go. Luna: So it's a win-win. Customers save money and get priority service, Jenna gets predictable revenue. I love that. Lucas: The other thing she did was diversify her winter services. She started offering holiday light installation and removal — which is high-margin and fits the same crew skills. That added another $30,000 in revenue. Luna: So her total winter revenue from prepaid contracts and add-ons was about $210,000. That's nearly covering her costs entirely, with only a small draw on the line of credit. Lucas: Exactly. And the credit line acts as a safety net, not a crutch. She only uses it when she needs to. The interest cost is low enough that it doesn't eat into her margins. Luna: I think the lesson here is that seasonal businesses need to think about cash flow as something they can actively design, not just react to. Jenna didn't just save more — she restructured her revenue model. Lucas: And she did it without taking on expensive debt or sacrificing growth. In fact, her winter revenue smoothed out so well that she was able to hire a full-time operations manager — which freed her up to bid on larger commercial contracts. Luna: That's a great example of how cash flow stability creates a flywheel effect. You solve one problem, and it unlocks others. Lucas: Speaking of unlocking things — you know, conversations like this are exactly why we keep this podcast ad-free. We want to focus on practical solutions without any noise. If these episodes have helped you think differently about your own business, one way to support that is by buying us a coffee — literally, at buy me a coffee dot com slash fexingo. Luna: Yeah, it's a small gesture that helps us keep doing what we do. No sponsors, no ads — just real stories and actionable ideas. Lucas: And we're grateful for everyone who's chipped in. It makes a difference. Anyway, back to Jenna's story — once she had that stable winter cash flow, she started thinking about expansion. Luna: What did she do? Lucas: She bought a small snow plow truck — used, $18,000 — which let her take on a few commercial parking lot contracts. That added another $40,000 in winter revenue the following year. Luna: So the revenue smoothing strategy snowballed. Pun intended. Lucas: Ha, exactly. And now she's looking at offering spring clean-up packages as prepaid contracts too. The model is replicable — she just has to figure out the right price point. Luna: I think the key takeaway for any seasonal business is to start small. You don't need to sell 450 prepaid contracts in your first year. Even 50 contracts would have given Jenna a $20,000 cushion — enough to avoid the most painful cash crunches. Lucas: And pair that with a relationship with a lender who understands your business. Community banks are often much more flexible than big national ones — especially for a $75,000 seasonal line. Luna: Right. Jenna's bank even helped her set up a cash flow forecast template. They wanted to see her projected monthly inflows and outflows before approving the line. Lucas: That's actually a great practice for any small business owner. A simple 12-month cash flow forecast — even on a spreadsheet — forces you to think about the seasonality of your revenue and when you might need a bridge. Luna: And it helps you spot problems before they happen. Like, you can see in August that your cash balance will dip in January, so you have time to arrange financing or push prepaid contracts. Lucas: Exactly. Jenna's story shows that with a little planning and a willingness to try a new revenue model, you can turn a cash flow crisis into a manageable pattern. And that's the kind of practical insight we try to bring every week. Luna: Absolutely. Thanks for listening, and we'll talk to you next time.