How to improve your construction company with the right numbers

Problem: you work 12 hours a day, you know something doesn't add up, but you can't figure out where you're losing money.

Solution: a 4-step system to turn your company's numbers into concrete decisions.

Result: you stop deciding based on feelings and start making choices based on real data. Every decision becomes more secure.

The problem isn't that you don't work enough

Those who work in the construction industry don't have a commitment problem. The problem is something else: you make dozens of decisions every day without having the numbers to understand if they are the right ones.

You accept a job because "it looks good". You hire people because "there's a lot to do". You buy a vehicle because "we'll need one sooner or later". But when you sit down to look at your accounts at the end of the year, you don't understand where the money has gone.

It's not your fault. Nobody ever taught you to use numbers to make decisions. The accountant gives you the tax numbers, not the strategic ones. Your management software (if you have one) tells you what your turnover is, not how much you actually earned.

A concrete example: the same decision, two different outcomes

Marco owns a window and door company in Northern Italy. He receives a request for a job site worth NaN €. The customer is in a hurry, he wants to start in two weeks. Marco's team is virtually free. He accepts.

Without the numbers, he reasons like this: "180.000 € in turnover, materials cost about 90.000 €, labour 40.000 €. I'm left with 50.000 €. Great job."

With the numbers, the picture changes. The hours spent on site surveys, quote preparation and order management are worth another 8000 €. The share of fixed costs for a job site of that duration is 12.000 €. Transport and logistics add 6000 €. The real margin isn't 50.000 € but 24.000 €, 13% instead of the 28% he thought. At that point, Marco can decide to: renegotiate the price, reduce the scope of the work or accept knowing exactly how much he will earn. Any choice is better than starting out convinced you are making double the margin.

Why management control is more useful for small companies

There is a widespread misunderstanding: management control is something for large companies, for those with a controller and a finance department. Small companies get by on common sense.

It's the other way round. A large company has a margin of error. If one project goes wrong, there are a hundred others to make up for it. A company with 10 or 15 jobs a year doesn't have that margin. Every wrong decision weighs twice as much. Every job accepted at the wrong price erodes the result for the whole year.

Let's do some maths. If you turn over NaN € with 12 jobs, each job is worth an average of NaN €. If you get the margin wrong on two of these (you think you're making 25% and instead you're making 10%), you are losing NaN € which you won't get back. Out of a net profit of NaN €, that NaN € is 20% of your annual earnings. Gone, because of two quotes done without data.

The fewer resources you have, the more every decision matters. And to make good decisions you need good numbers.

The 4 steps to making better decisions

Step 1: track opportunities

The first thing to know is how many requests you receive, how many you turn into quotes, how many quotes are closed. It sounds trivial, but most of the companies I meet don't have these numbers.

If out of 100 requests you close 15, your conversion rate is 15%. Good, but the data alone is not enough. You need to know which ones close. What type of customer, what type of job, what area, what price range.

When you start to see these patterns, you understand who your ideal customer is. And you stop chasing all requests in the same way. You dedicate more time to those that have a higher probability of closing and that leave you with more margin.

Step 2: calculate costs and revenues accurately

The second step is the most uncomfortable one. You need to know how much doing a job really costs you. Not the cost of materials and labour. Everyone knows that. The complete cost.

When you add it all up, the real margin is almost always lower than you thought. And this is not a problem, it is information. Knowing that your margins are 20% instead of 30% allows you to raise prices where necessary, refuse jobs that don't pay off and concentrate on those that work.

Step 3: monitor the cash flow

You can have an excellent margin on paper and have no money in the bank. This happens when collection and payment times are not aligned. You pay suppliers at 30 days, you collect from the customer at 90. In between, you have to cover salaries, rent and everything else.

Monitoring cash flow means looking every week at what comes in and what goes out in the next 30 and 60 days. You don't need complicated software. A piece of paper with three columns is enough: date, expected income, expected outgoings.

If you see that in 45 days' time you will have a shortfall, you have time to act. You bring forward an invoice, you ask for a deposit on a new job, you renegotiate a deadline with a supplier. If you realise the day before, you can't do anything.

Step 4: keep a grip on the process

The most common mistake is to delegate everything to the accountant. The accountant does their job: keeps you right with the taxman, prepares the balance sheet, manages deadlines. But the accountant's numbers arrive months later. And they are tax numbers, not management numbers.

The numbers you need to decide must be your own, updated every week. Margin per job, expected cash flow, conversion rate, hours worked versus estimated hours.

You don't need to become an accounting expert. You need a simple report, with a few clear numbers, that you look at every Monday morning before making any decisions about the week.

BAU Gest

Your numbers, every Monday morning

BAU Gest collects the data from your jobs and turns them into a weekly report with the numbers that count: real margin, cash flow, quote conversion. You make decisions based on facts, not on feelings.

See how it works

Swiss
Made

BAU Gest

Net margin24,2%

Active jobs8

Hours deviation+12%

What changes when you decide with numbers

It's not that beforehand you always got it wrong and afterwards you get everything right. It's that beforehand you decide in the dark and afterwards you decide seeing the road ahead. Some decisions will be the same. But you will make them knowing why.

Checklist: what to do in the first week

You don't need to turn everything upside down. Start with five things you can do in the next seven days.

1. Count the requests. Open a spreadsheet and note every request that comes in: date, type of job, how they found you, estimated amount. Do this for a whole week without skipping anything.
2. Take a closed job and recalculate the costs. Choose the last job completed. Note all the costs, even those you usually forget: office hours, site surveys, phone calls, material collections. Compare the real margin with what you had in your head.
3. Write down the income and outgoings for the next 60 days. You don't need to the penny. You just need to know how much is coming in and how much is going out, week by week. If you see a shortfall, you have already found the first problem to solve.
4. Ask the accountant for the operating margin of the last year. Not the turnover, not the taxable profit. The operating margin, that is, what you have left after all operating costs and before taxes and financing. If they can't tell you immediately, that's a signal.
5. Decide on a fixed day to look at the numbers. Monday morning, Friday afternoon, whatever you prefer. The important thing is that it becomes a habit, not an emergency.

After a week you will have more information about your company than you have had in the last six months. It doesn't need to be perfect. You just need to start. The numbers improve as you collect them, and the decisions improve as you use them.

From there you can build everything else.

The real point

Improving your company doesn't mean working harder and it doesn't mean taking management courses. It means knowing where you are going and choosing the right direction. Numbers are not bureaucracy, they are the map.

Those who start using them almost always discover two things. The first: they were losing money on jobs they thought were profitable. The second: there were opportunities they were ignoring because they couldn't see them.

If you want to understand which numbers are missing in your company and how to start collecting them, book 30 minutes with us. We'll look at your situation together and tell you where to start.

No obligation, no package to buy. Just an honest conversation about the numbers that count.