The standard guidance is three to six months of fixed overhead. Fixed overhead means the expenses that hit every month regardless of how many jobs you run. Vehicle payments, insurance premiums, warehouse or shop rent, loan payments on equipment, software subscriptions, and base payroll for the crew members you absolutely cannot afford to lose. Add those up for one month, then multiply by three to six. That’s your target reserve.

Where you land in that range depends on your specific situation. An HVAC contractor with two trucks and a lean team can get by closer to three months. A larger operation carrying 10 or more techs, multiple vehicle leases, and a commercial lease on shop space should aim for closer to six. The more fixed obligations you carry, the more cushion you need.

In the Phoenix metro, the seasonal pattern is pretty clear. Summer is your peak because nobody survives a Valley summer without working AC. That demand runs strong from roughly May through September. Winter brings some heating work but nothing close to summer volume. The real slow stretches are the shoulder seasons, typically October through November and again in March through April, when the weather is comfortable and nobody is calling with an emergency. Those are the months that drain your cash if you haven’t planned for them.

The best time to build reserves is when money is flowing in. During peak season, set aside a fixed percentage of every deposit into a separate savings account that you do not touch for operating expenses. Treat it like a bill you pay yourself. Even 10% of revenue set aside consistently through summer can build a meaningful cushion by October. The key is making it automatic so it actually happens when you’re busy and not thinking about the slow months ahead.

Knowing your actual fixed overhead number requires clean books. If you’re guessing at your monthly nut, you’re guessing at how much reserve you need. A good skilled trades bookkeeper can pull your fixed costs from your financials and give you a real number to work against, not an estimate.

One more thing worth mentioning. The reserve isn’t just for survival. It’s for keeping your best people on the payroll during slow months. Letting a good installer or lead tech go in October and trying to rehire in May is expensive and risky. You might not get them back. Cash reserves let you retain the crew that makes your peak season profitable in the first place.

If you’re starting from zero, don’t try to build the full reserve in one season. Set a target for this year, hit it, and build from there. Even one month of fixed overhead in a savings account is better than nothing when a slow stretch hits and payroll is due Friday. Over time, with bookkeeping that tracks your real numbers, you can refine the target and build toward a position where the shoulder seasons are just part of the plan instead of a source of stress.