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  • Writer's pictureYvonne Root

5 Strategies Discerning Construction Subcontractors Use to Prosper – Part 2




This is the second part of a five-part series; if you haven't read the first part yet, you can go here.


Discern Your Numbers

I asked Tonya, owner of The Profit Constructors (and known as the Construction Accounting Guru), this question, “What is the minimum contractors should know about their numbers?” She immediately answered, “At a minimum? They should know if they are profitable.”


I responded, “Good! That will be the first thing on the list; what else?”


What follows is her list of what contractors should know about their numbers.


1. Are you making a profit?


2. Once you know whether you’re profitable, you should start setting some targets for profitability.


3. Learn what percentage of income is the industry standard for you to spend on your Cost of Services (aka Cost of Goods Sold) and on your Overhead.


4. Make some goals for your business – bringing it into line with that standard or even surpassing it.


5. Then monitor closely at least monthly to see if you hit the target and adjust your business practice when necessary.



Getting in Touch with the Numbers

Just as your GC depends on you to fulfill your part of the contract, you rely on your accounting professional to take care of the financial aspect of your construction business. And just as your GC must have a fundamental knowledge of what you provide, you must understand how your financials flow, what they mean to your ability to prosper, and how you can use the information to guide decisions.


Knowing your numbers helps you:

  • Realistically assess risks

  • Cleverly stay on budget

  • Strategically plan ahead

  • Reasonably deal with problems

  • Professionally interact with peers


When construction business owners know their numbers, they know their business.


The Basics

Below are some of the statements that will help you better understand your construction company’s financial health. Use the links for more information.

“Your construction company’s Balance Sheet is a breakdown of what you own and what you owe. It is a tool for helping you assess where you are and where you can be. It is also a part of the picture lenders need to have when determining whether to provide funds.”


“A Profit and Loss statement tells the story of a construction company’s ability to generate sales, manage expenses, and create profits.”


“Envelope-style cash management isn’t something new or unproven. It is a long-time trusted method for controlling the flow.”


“Using WIP reports moves you from being reactive to being proactive. They allow you to make more intelligent day-to-day decisions.”


Need Help Discerning Your Numbers?

When you need help figuring out all this “number stuff,” remember (here comes the shameless plug) that we’re good at introducing our clients to their numbers and helping them discern their numbers – so they can know their business.



Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:


  • Clients and customers

  • Employees and subcontractors

  • Vendors and service providers

  • Governmental entities


Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:


  • Remain informed

  • Avoid hassles

  • Reduce risks

  • Be future-ready


Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735


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