Every operator knows the feeling of waking up to rain on the roof and a site too boggy to dig. The machine sits in the yard, the crew sits in the ute, and the repayment still comes out on the first of the month. Downtime is not a surprise. It is a cost, and it can be planned for.
This is general information, not tax or financial advice.
Fixed costs do not take days off
Start by listing what you pay whether or not the machine turns a wheel:
- Loan or lease repayment
- Insurance
- Registration, if applicable
- Scheduled servicing allowance
- Storage or yard costs
Add them up as a monthly figure. For illustration, suppose fixed costs for a mid-sized excavator come to $3,400 a month. That is an example, not a benchmark.
The break-even hours sum
Now take your hourly rate. If you charge $120 an hour, divide the fixed costs by the rate.
$3,400 ÷ $120 = 28.3 hours
So you need about 29 billable hours in the month just to cover those fixed costs, before fuel, wages, repairs or profit. Check the arithmetic on your own figures, and remember that wages, fuel and tracks or tyres push the real number higher.
Seasonal patterns in your own records
Pull out last year's invoices and count billable hours by month. Many operators discover that two or three months carry the year. The number to focus on is not the average month, it is the worst one. If your worst month produces 40 hours and break-even is 29, you have a buffer. If it produces 20, you have a gap to fund.
Build a downtime buffer
A simple approach is to hold a cash reserve equal to one or two months of fixed costs. It will not feel exciting, but it turns a wet fortnight from a crisis into an inconvenience. If building a buffer is slow going, you can start by putting a fixed percentage of every invoice into a separate account.
Spread the risk
- Diversify work. A mix of civil, rural and residential jobs reacts to weather differently.
- Negotiate terms. Wet-weather clauses in contracts can set out how standing time is treated.
- Keep the machine useful. Wet days are good for servicing, greasing and fixing the things you have been putting off.
Talk to the lender early
If a long wet spell is going to hurt, contact your lender before a payment is missed rather than after. Lenders often have options, and early contact generally gives you more of them. business.gov.au also lists support and information for small businesses facing disruption, and what is available changes over time.
Consider the structure you chose
If the same four months are always quiet, a repayment structure that mirrors that pattern may suit better than a flat monthly one, although it usually costs more in interest overall. We cover the trade-offs in the seasonal repayments chapter of the guide.
Keep records
Record the hours worked, weather days lost and reasons. They help with quoting, with talking to your accountant, and with showing a lender that you understand your own business. The ATO publishes guidance on keeping business records.
Bottom line
Machines earn when they work and cost when they do not. Know your fixed costs, know your break-even hours, and know your worst month. With those three numbers, a week of rain becomes something you have already budgeted for, not something that lands on you.
A worked month
Picture a wet month where the excavator only bills 18 hours at $120. That is $2,160 against $3,400 of fixed costs, a shortfall of $1,240 before fuel or wages. A buffer of two months' fixed costs ($6,800 in this example) would cover that gap for several bad months. The figures are illustrative only, so substitute your own.
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