If you’re running a construction company, you know how tough it can be to stay profitable. The construction industry is a brutal game of tight margins, unpredictable cash flow, and rising costs. But here’s the thing: Your accounts aren’t just a bunch of numbers your accountant hands over once a year. They’re packed with valuable insights that can help you keep more money in your pocket, if you know where to look.
Here are five things every construction business should be looking at in their accounts to stay on top of their game.
1) Margins, Margins, Margins
Your gross margin is the single most important indicator of profitability. If your margins are dropping, it’s a clear sign something’s wrong. And if you’re not reviewing them regularly, you could be haemorrhaging profit without even knowing it.
Comparing estimated vs. actual costs on jobs is key. Did labour costs overrun? Did material prices rise? Or was the job just underpriced from the start? Even small changes in gross margin can seriously hurt your bottom line.
Action Point: Review your margins monthly, not just at year-end. Track which jobs are profitable and which aren’t—then adjust your pricing or processes accordingly.
2) Balance Sheet Value
You might feel like your business is growing because you’ve got more work coming in. But does it actually show up in your balance sheet?
A strong, growing business should have a steadily increasing balance sheet value. That means assets are growing, debts are under control, and the overall wealth of your business is increasing over time.
If your balance sheet isn’t improving, you’re either not retaining profit, or you’re being dragged down by unnecessary costs and debts.
Action Point: Compare your balance sheet from one year to the next. Is the value increasing? If not, figure out why.
3) Overheads Analysis
Overheads are one of those things most construction companies either underestimate or ignore entirely. But if you’re not factoring them in properly, you’re setting yourself up to lose profit.
From insurance and software subscriptions to office rent and marketing, every expense needs to be reviewed regularly. But remember, not all overheads are bad—some are actually investments in your future success.
For example, cutting marketing costs might save you money now, but it’ll hurt your pipeline later. Same goes for cutting down on project management software or training your staff.
📌 Action Point: Review your overheads quarterly. Decide what’s essential, what’s waste, and what’s worth investing more into.
4) Debt & Financing Costs
Debt can be a useful tool when it’s managed properly. But if you’re not reviewing your finance costs regularly, high-interest loans or overdrafts can silently eat into your profits.
How much are you paying in interest each year? Are there opportunities to refinance or pay down debt? If you’re not actively managing this, you’re probably wasting money.
📌 Action Point: Review your debt and financing costs annually. Shop around for better rates or consider consolidating debts to reduce your costs.
5) Reserves & Profit Retention
One of the biggest mistakes construction companies make is taking all the profit out of the business at the end of a good year.
Sure, it’s nice to have money in your personal account, but if you drain your business of cash, you’re left with nothing to deal with slow periods, unexpected costs, or big opportunities when they come up.
Building up cash reserves gives you the flexibility to grow your business when you want to, not just when the market allows it.
📌 Action Point: Keep enough profit in the business to cover at least 3-6 months of operating expenses.
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Final Thoughts
Your accounts are telling you a story about your business. If you’re not taking the time to actually read them, you’re missing out on vital information that can keep your construction company profitable and growing.
It’s not just about revenue. It’s about knowing your margins, growing your balance sheet, managing overheads, controlling debt, and keeping cash in the business.
If you would like help understanding how your accounts can elevate your business, book a call here.
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