How do I assess a lumber yard’s seasonal swings from spring to winter?
Ask for monthly sales, purchases, stock levels and cash balances across several full cycles, then lay them side by side to see when money comes in and when it goes out. Pay attention to the quiet months, since a yard has to carry its stock and its payroll through them.
A lumber yard rarely sells at an even pace. Spring and summer build-season demand pulls stock out the door, while winter slows things and may leave the yard holding material. Ask for monthly figures, not only annual ones, so you can see the shape of the year rather than a single total.
Read the cash flow alongside the sales. Stock is usually bought ahead of the busy season, which means cash goes out before it comes in. Ask how the seller financed that gap: a credit line, supplier terms, or savings. Find out whether that arrangement transfers to you, or whether you will need to arrange your own.
Look at what happens to the stock in the slow months. Does it turn, or does it sit and lose value? Ask how the seller keeps crews busy when orders drop, and whether any work, such as delivery or custom milling, evens out the year. Your accountant can build a month-by-month cash picture so you know the working capital you would need before you commit. If the seller cannot produce monthly figures, treat that as a finding in itself and ask how decisions about buying and staffing were made without them.
Key takeaways
- Ask for monthly figures across several full cycles, not annual totals.
- Find out how the seller financed stock bought before the busy season.
- Ask your accountant to model the quiet months before you commit.
Related reading
15 pages on the same subject, grouped by topic.
Due diligence
- Expert answerHow do I judge a supply yard’s rain-dependent sales swings?
- Expert answerHow do I check a farm supply store’s slow-moving seasonal inventory?
- Expert answerHow do I assess a stable’s hay supply and feed contract reliability?
- Expert answerHow do I assess a seasonal business?
- Expert answerHow do I assess the seasonal crew a holiday lighting company depends on?
Buying
- Expert answerHow do I assess a hardware store’s special order and lumber desk business?
- Expert answerHow do I check a cattle operation’s winter feed stocks and hay supply?
- Expert answerHow do I check a convenience store’s seasonal sales swings before buying?
- Expert answerHow do I read seasonal swings in remote starter installs before buying?
- Expert answerHow do I read the seasonal swings in a towing company’s calls before buying?
- Expert answerDo a landscaping company’s seasonal workers come back each spring?
- Expert answerHow do I review a motorcycle shop’s winter storage and spring tune-up bookings?
- Expert answerHow do I judge a pallet maker’s yard space and lumber stockpile?
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat is Cash Flow
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.