“We’re busy but not making money.”
If I had a dollar for every time a builder said that to me in the first five minutes of a coaching session, I wouldn’t need to coach anyone. It’s the single most common thing I hear. And it tells me everything I need to know about where their business is at.
The pipeline is full. There’s work booked out for months. The team is flat out. Revenue is ticking over. And yet the bank account tells a completely different story. Cash flow is tight. BAS is stressful. There’s never enough to pay subbies on time, cover the next materials order, and still take a decent wage. Every month feels like a scramble.
Here’s the reality: if you’re busy and broke, the problem isn’t a lack of work. The problem is how you’re managing the money that flows through the work you’ve already got.
Where the Cash Actually Goes
Most builders can’t tell me, accurately, right now, where their money goes each month. They know roughly what comes in. They know roughly what goes out. But “roughly” is the enemy of profit.
Here’s what I typically find when I sit down with a builder and actually look at the numbers:
Jobs are underpriced from the start. The markup isn’t covering fixed overheads. The margin between cost of goods and contract price is thinner than they think, especially when they’ve confused markup with margin. A 25% markup is not a 25% margin. It’s 20%. And that difference, compounded across multiple projects, is often the entire gap between profit and just breaking even.
Variations aren’t being captured. Every undocumented variation is money walking out the door. The client asks for something extra on site, the builder says “no worries, we’ll sort it out,” and it never makes it onto an invoice. Across a 12-month build, those add up to tens of thousands in work you delivered but never got paid for.
Stage payments are misaligned with actual costs. The progress claim schedule doesn’t match when costs actually hit. You’re paying subbies and materials suppliers before the corresponding stage payment arrives. That gap – the timing mismatch between money out and money in – is what creates the cash flow crunch. It’s not that the money doesn’t exist. It’s that it’s always in the wrong place at the wrong time.
How to Fix It
This isn’t complicated. It’s just disciplined. And discipline is what separates the builders earning a wage from the builders earning a profit.
Know your breakeven. Before you quote another job, work out what it costs you to run your business for a year, every fixed overhead, including your own salary at market rate. Divide that by your gross margin percentage. That’s the minimum revenue your projects need to contribute just to break even. Anything below that and you’re literally paying to work.
Track job costings weekly. Not monthly. Not at the end of the project. Weekly. Every cost against every budget line. If a job is drifting, you need to know while you can still do something about it. By the time you find out at project completion, the money’s gone.
Align your stage payments to actual cost flow. Review your progress claim schedule against when costs actually land. If your heaviest cost period is in the first third of the build but your biggest stage payments come in the back half, you’ve got a structural cash flow gap. Fix the schedule.
Capture every variation immediately. No undocumented variations. Period. If the client asks for a change, it gets scoped, priced, and approved in writing before it happens. Not after. Not “we’ll sort it out later.” Now. This is not about being difficult. This is about running a real business.
Price properly in the first place. 33.33% markup minimum. That gives you 25% gross margin. From there you cover overheads and land at a 10% net profit target. If your current margins are below that, increasing them is not optional, it’s survival.
The Mindset Shift
Most builders I work with are exceptional at building. They take enormous pride in the quality of their work. But they’ve been so focused on the craft that the business side has been neglected… not deliberately, just by default. Nobody taught them this. They came up through the trades, built a reputation, started a business, and figured they’d work it out as they went.
The problem is that “working it out” without a framework leads to exactly this: plenty of work, plenty of revenue, and not enough profit. You deserve to have an avalanche of money flooding into your bank account, not watching it trickle through gaps you can’t see.
Cash flow isn’t fixed with more work. It’s fixed with better systems, accurate pricing, and knowing your numbers cold.
If cash flow is the thing keeping you up at night, let’s have a conversation about it. This is fixable. I’ve seen it fixed hundreds of times.
Kurt Hegetschweiler is the founder of Builders Coach and author of the internationally best-selling Million Dollar Builder. He has coached thousands of residential builders since 2004.
