Why HVAC Contractors Owners Should Care
For HVAC contractors, burn rate matters most during seasonal swings. Summer AC season = flush with cash, burning negative (making money). Spring/fall shoulder seasons = burning $5-10K/month. If you didn't bank summer profits, you're borrowing by October. Knowing your burn rate helps you plan seasonal savings and avoid the credit card debt trap many contractors fall into every slow season.
Industry Benchmarks
$0-6K/month
Healthy Range
$6-12K/month
Warning Zone
Over $12K/month
Danger Zone
Industry context: Small contractors (1-2 techs): $3-6K burn. Medium (3-5 techs): $8-15K burn. Seasonal contractors burn high in shoulder seasons, negative (profit) in peak seasons. Annual average should be negative (profitable).
Source: Contractor financial benchmarks, 2025
How to Calculate Burn Rate
Formula
(Starting Cash Balance - Ending Cash Balance) / Number of Months
In plain English
How much cash disappears from your bank account each month
Example: Comfort Zone HVAC
Cash Start of Month Bank balance October 1st (post-summer) | $78,000 |
Cash End of Month Bank balance October 31st (slow month) | $68,000 |
Monthly Burn Rate Cash consumed in shoulder season | $10,000 |
Months of Runway $68K / $10K burn = 7 months until winter | $7 |
Calculation
($78,000 start cash - $68,000 end cash) / 1 month = $10,000 burn rate
At $10K/month burn in slow October with $68K cash, this contractor has 7 months runway. Good position - can survive until winter heating season. But if they only had $30K (3 months runway), they'd be borrowing by December. Summer savings are critical.
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Get My Free ScoreCommon Problems in HVAC Contractors
Symptom
July banked $60K profit but spent on new truck, equipment, family vacation
Impact
October arrives, burning $10K/month with only $20K in bank. 2 months runway until winter. Now need credit line or scrambling for installs. Summer windfall wasted.
How to Improve Your Burn Rate
How to do it
June-September: set aside 40% of monthly profit in separate "Seasonal Reserve" account. Don't touch until October. If summer profit is $120K, save $48K. Covers 4-5 months of $10K burn.
Expected impact
Eliminate seasonal borrowing. Avoid $2-4K annual interest expense. Reduce financial stress 90%. Smooth cash flow year-round. Critical for contractor success.
Key Takeaways
What it measures
How much cash you're spending each month to run your business
Healthy range for HVAC Contractors
$0-6K/month
Formula in plain English
How much cash disappears from your bank account each month
Most common problem
Didn't save summer profits for slow season
Fastest fix
Save 40% of peak-season profit for shoulder seasons
Related Financial Metrics
Other important metrics for HVAC Contractors
Current Ratio
How much money you have available to pay bills due in the next 30-90 days
Days Sales Outstanding (DSO)
How long it takes customers to pay you after you invoice them
Cash Flow
The movement of money in and out of your business over a specific period
Burn Rate in Other Industries
See how burn rate compares across different business types
Cleaning Companies
Cleaning company burn rate averages $2-4K/month for residential and $5-8K for commercial. See where your cash drain ranks and how to extend your runway.
Salons & Spas
Salon burn rate averages $3-5K/month for small shops and $6-10K for mid-size. Find out if your cash burn is healthy or a warning sign before it is too late.
Restaurants
Restaurant burn rate averages $5-10K/month for small spots and $10-20K for mid-size. New restaurants burn $20-40K. See how yours compares.
Marketing Agencies
Marketing agency burn rate averages $5-10K/month for small teams and $15-25K for mid-size. Healthy ceiling is $8K. See where your agency stands.