The 3 Financial Numbers Every Contractor Should Know- Know these numbers — or risk your business
You don’t need a CPA license to run a profitable business — but there are three numbers every contractor must know if they want to stay out of trouble and ahead of the curve:
- Gross Profit Margin – This tells you how much you make on every dollar of work, before overhead. If your gross margin is below 30–35%, you’re already in danger — no matter how high your revenue.
- Break-Even Revenue – This is the minimum amount of sales you need each month just to keep the lights on. Knowing this helps you price smarter, plan ahead, and stop the rollercoaster of feast and famine.
- Cash Flow Projection – This isn’t a report from your accountant. It’s a living, breathing tool that shows what’s coming in, what’s going out, and what your bank balance will be next week — or next month.
If you’re not tracking these three numbers regularly, you’re operating on guesswork. And guesswork leads to cash crunches, burnout, and missed opportunities.
A remodeling contractor came to me with $1.8M in revenue — and constant cash stress. He had a bookkeeper, but no dashboard, no forecasts, and no idea what margin he needed to stay profitable. We built a custom dashboard tracking just those three numbers. He started reviewing it every Friday — gross margin, break-even progress, and projected cash for the next 30 days. Within 90 days, he had clarity, made smarter staffing decisions, and saved $37K in preventable errors. His stress level dropped, and his profits rose.
You can’t fix what you don’t measure. But with the right numbers, you can lead your business instead of reacting to it.
Want to build your custom 3-number dashboard?
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