Copy of The Top 3 Financial Problems Contractors in Washington Face (and How to Fix Them)

2. Not Knowing True Job Profitability

Another major issue is not knowing which jobs are actually making money.

On the surface, revenue may look strong. But when labor isn’t tracked properly, materials are coded incorrectly, and overhead isn’t accounted for, the numbers don’t tell the real story.

This leads to:

underbidding jobs
repeating the same mistakes
growing revenue without increasing profit

The fix: clean job costing systems and regular job profitability reviews so you can price work correctly and protect your margins.

This is a huge issue for my contractors that are scaling quickly. Moving from an owner-operator model to hiring employees results in a way different picture of job overhead costs.

Recently I worked with a contractor that was paying their commission salespeople based on job profit. When I asked what they had in the calculation for overhead, they looked like a deer in headlights. Not only were they not accounting for overhead, but they had cash flow issues and often paid late fees on vendor invoices or had call back issues on jobs that were never accounted for. They were doing a substantial amount more dollars in sales, but the profit wasn't supporting their growth.

Want to see where you stand? Book a free consultation today and we can look at if you are building a profitable business, or just doing more work.

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