Most contractors come to me with the same complaint: “I’m working like crazy, but I’ve got nothing to show for it.” Then comes the million-dollar question:

“Do I have a profit problem or a cash flow problem?”

The truth? You could have one, the other — or both. But knowing which one you’re facing is the first step toward fixing it.

What’s a Profit Problem?

A profit problem means your business isn’t earning enough money after expenses. You might be pricing jobs too low, underestimating labor or materials, or letting overhead creep up. You could be running flat-out at full speed and still losing money on every job.

Profit problems show up on your P&L. They’re about what you earn after the dust settles.

What’s a Cash Flow Problem?

A cash flow problem means money isn’t coming in fast enough to cover your bills, even if your jobs are profitable. Maybe customers are slow to pay. Maybe deposits aren’t big enough. Or maybe too much cash is tied up in materials, labor, or unpaid invoices.

Cash flow problems show up on your balance sheet and bank account. You’re profitable on paper but broke in real life.

Real World Mistake & Lesson: One of my clients, a home remodeling contractor, was pulling 22% net profit on jobs — a great margin. But he was constantly robbing Peter to pay Paul. Payroll was late. Vendors were pressing. Turns out, his average receivable cycle was 58 days, and he wasn’t collecting deposits upfront. Once we fixed the cash flow mechanics, he finally had breathing room — without changing his pricing or cutting costs.

 Pick up your free copy of my new book, “The 7 Minute Conversation-How to Hear the Story Your Small Business Financial Statements Are Telling You-CONTRACTOR EDITION”.  Go to www.7MinuteConversationBook.com

Ready to find out where your cash and profits are really going? Book your free 15-minute Profit and Cash Flow Call with me. No pressure. Just real clarity. I’ll help you see where your money’s hiding — and what to do about it. Schedule at www.CashFlowCallWithLarry.com