Contractor Finances: 6 Numbers You Can’t Afford to Ignore

See what needs your attention in your contracting business:

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Contractor finances are about more than revenue.

You can run a $2 million, $5 million, or even $10 million contracting business and still not know if you’re actually making money.

Revenue tells you how big your business is. It doesn’t tell you how healthy it is.

In this episode, Tom Reber breaks down the 6 numbers every contractor needs to know to understand the financial health of their business: revenue, gross profit, overhead, net profit, cash flow, and owner’s compensation.

These numbers show you what your work is actually producing, what it costs to run the company, how much profit is left, whether you have enough cash to cover what’s due, and what the business is ultimately producing for you.

If you want to get control of your contractor finances, you don’t need to become an accountant. You need to understand your numbers well enough to make better decisions.

In this episode:

The 6 financial numbers every contractor should knowWhy revenue alone doesn’t tell you whether your contracting business is healthyHow gross profit shows what your jobs are actually producingWhy Tom pushes contractors to bid at a minimum 50% gross profitHow overhead affects what your business needs to produce every dayWhy more revenue doesn’t automatically mean more profitThe difference between net profit and cash flowHow accounts receivable can leave a profitable contracting business short on cashWhy owner’s compensation matters when measuring what the business actually produces for you

Chapters:

00:00 — Contractor finances: Is your business healthy?