Profitability review
More Revenue Is Not the Same Thing as a Better Business
A profitability review looks at where money is actually made and lost in your business — by job, by customer, by service line — and what it would take to change the answer.
The difference that matters
Bigger, or better?
More revenue means more jobs, more people, more scheduling, more receivables and more risk. If each dollar of revenue carries thin or unmeasured margin, growth makes the business harder to run without making the owner better off.
A better business earns more on the same work, needs less of the owner's attention, collects faster and can absorb a slow quarter. That usually comes from pricing, margin discipline and customer mix — not volume.
You can have record sales and still run out of cash. Both of those facts can be true in the same month, and understanding why is most of the work.
What gets reviewed
Where profit leaks show up
Pricing
Most underpricing is accidental. A rate set three years ago against wages, insurance, vehicles and overhead that have all moved since. We rebuild the loaded cost per hour and compare it to what you actually charge.
Gross margin
Gross margin is the clearest signal a service business has. If it moves and nobody can explain why, the cause is almost always in labor, materials, subs or pricing — and it's findable.
Job profitability
Averages hide everything. Looking at margin job by job usually shows a cluster of work that's carrying the company and a cluster that's consuming it.
Customer profitability
A customer who generates a lot of revenue isn't necessarily a good customer. Discounts, slow payment, scope creep and demands on your schedule are real costs that never appear on an invoice.
Labor cost
Wages are the visible part. Payroll taxes, insurance, unbillable time, overtime and turnover are the rest. Utilization — billable hours as a share of paid hours — is often the largest single lever.
Subcontractor cost
Sub work needs a markup that covers coordination, risk and warranty exposure, not just the invoice you were handed.
Overhead
Overhead grows quietly: software, vehicles, insurance, an extra office role. It only becomes visible when measured against revenue over several periods.
Cash flow
Profit is an accounting result; cash is timing. Receivables, deposits, inventory, work in progress, equipment and debt payments determine whether a profitable month feels like one.
Service mix
Which services you sell shapes margin more than how much you sell. Mix shifts are usually unplanned and rarely noticed until the margin drops.
Revenue versus profit
Growing revenue with a structural margin problem multiplies the problem. Fix the unit economics first, then add volume.
Related
Margin problems often start in the workflow
Rework, second trips and idle capacity are operations problems that arrive as margin problems. Process improvement is usually how a margin fix stays fixed.
Find the Profit Leaks First.
A Business Wrench Checkup shows where margin is going before you decide what to change.
$500 flat fee. No long-term commitment required.