Every business has a breakeven point — the dollar amount you must earn just to cover your costs and stay afloat. But you’d be shocked how many contractors have no idea what that number actually is.

If you don’t know your breakeven, you’re making guesses — not decisions. And guessing is dangerous in business.

Your breakeven includes all your overhead: rent, trucks, insurance, payroll, software, debt service, and more. And it also accounts for your job costs — materials, subcontractors, labor. Once you know your breakeven, you know exactly how many jobs you need to stay ahead of the game. You know when you can afford to invest, when you need to cut, and when to push your pricing up.

Without that number, it’s just hope. And hope isn’t a strategy.

I worked with a contractor who was grossing around $85K/month. On paper, it looked like he was winning. But he was still struggling to pay himself and kept dipping into lines of credit to cover cash flow shortfalls. We sat down and ran his breakeven — turns out his business needed $92K just to break even. That meant every month he was effectively losing $7K, even though the jobs were rolling in. He had no idea.

We found the issue: underpriced jobs, bloated insurance costs, and a truck fleet that was draining him. We cleaned it up, and once he got his breakeven below $80K and raised prices on new bids, he saw a real profit — for the first time in over a year.

Want to calculate your breakeven the right way?

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