Why does a school bus contractor’s summer revenue gap matter when I plan my purchase?

Start with the month-by-month picture. Ask for several years of monthly income and expenses, then see how the summer months compare with the school months. What costs continue? Vehicle payments, insurance, parking, maintenance and salaried staff are common examples. If your purchase loan has monthly payments, that schedule will not care that the buses are idle.

Next, ask what else the contractor does in the gap. Some run camps, charters, field trips or summer programs, and some do nothing. Find out how reliable that work is and whether it uses the same drivers. Ask how drivers are kept for the next school year, since the best ones may take other jobs when work stops.

Then build your own plan. Use a cash flow projection that shows the weakest months, not an average, and ask how much cash you would need on hand to carry the business through them. A lender may ask for the same thing. Your accountant can help you stress-test the plan. If the plan only works when everything goes right, treat that as a signal to talk to your advisors before going further.

Key takeaways

• Review monthly income and expenses to see what continues over the summer.
• Ask what other work, if any, uses the buses and drivers in the gap.
• Project cash flow for the weakest months, not the yearly average.
• Ask your accountant to test the plan against a poor year.