Growth can hide the real problem(s)...
When growth makes things worse...
Many contractors think growth solves all of their problems. It doesn't. If you have leaks that have gone unaddressed, growth just means you're bleeding money faster, on more/larger jobs…all at once.
You’ve probably seen (or worse, experienced) it. An HVAC contractor generates $1.3M in top-line revenue and for the moment, it feels like you’ve finally arrived. Then your tax preparer gives you the shocking news that you’ve cleared $26K. That’s less than you’d make running someone else's crew. That's not a top-line problem. There’s a blind spot somewhere, a leak, maybe more than one. The truth is, you're running the business off gut feel instead of the numbers and missing the real underlying leaks.
Leak #1: Job costing
If you don’t know with certainty which jobs made money and which ones bled you dry, you're bidding blind. Unaddressed this leads to the same losses project after project. One HVAC contractor came to us and when we pulled his job level data and we determined a third of his jobs were losers. As a result, he was able to stop bidding on that type of work. Nothing else changed. $20K/quarter came back, same crew, same hours.
Leak #2: Pricing
You're not running the same margin on a $6K service call as a $50K commercial buildout but many shop pricing like they are. Residential, commercial, maintenance, geography: all come with different risks, different market realities, different labor constraints, etc. If you haven't broken out your margins by job specificity, you're leaving real money on the table (or not enough) without knowing it.
Leak #3: Working capital
You're paying subs in 10 days and then waiting 45 to get paid yourself. This spread means you’re financing the project for your customer. Tighten vendor terms, speed up collections, structure payments smarter and you'll free up cash…this is money that was already yours.
Here’s what’s interesting about these suggestions? None of them require you to “grind harder” or cut corners. They’re business mechanics…they’re creating the procedures that allow you to control the levers of what impacts your business.
