The construction industry has always been a tough place to make money, but right now, it’s even harder. Rising material costs, labour shortages, unpredictable cash flow, and growing competition mean that keeping your margins intact is more important than ever.
The truth is, it’s not just about winning more work—it’s about making sure the work you do is actually profitable.
Many construction firms are leaving money on the table without realising it. If you’re not tracking your costs properly, negotiating better deals, or planning ahead, you could be working harder for less.
Here are five practical ways to protect your margins and ensure your construction business stays profitable in 2025 and beyond.
Check out our one page guide on getting control of your margins here.
1️⃣ Know Your Margins—And Track Them Religiously
Most construction businesses focus on getting the job done, but few track whether the numbers actually add up. You might think a job is profitable, but once you factor in material overruns, extra labour, and overheads, the reality could be very different.
If you only review your profits once a year, you’re flying blind. By the time you realise a job lost money, it’s too late to fix it.
How to Stay on Top of Margins:
✔ Track job costs in real-time – compare estimated vs. actual costs for every project.
✔ Review margins monthly – waiting until the end of the year is too late.
✔ Adjust pricing based on real data – don’t just guess; make informed decisions.
💡 Pro Tip: If you’re not sure whether your projects are actually making money, an accountant who understands construction can help you get clarity.
2️⃣ Control Material Costs – Negotiate & Buy Smarter
Material costs are one of the biggest threats to construction profits, and they’re only going up. If you’re not actively negotiating and reviewing your supplier costs, you’re losing money.
Many firms accept price increases without question—but small savings on materials add up over time and can make a huge difference to your bottom line.
How to Keep Material Costs Under Control:
✔ Negotiate with suppliers – loyalty is great, but are you getting the best deal?
✔ Bulk buy when possible – locking in prices early can save thousands.
✔ Standardise materials – using the same materials across projects helps reduce waste.
✔ Compare prices regularly – don’t assume your usual supplier is the cheapest.
💡 Pro Tip: Some suppliers offer discounts for early payment. If your cash flow allows, this can be a great way to cut costs.
3️⃣ Manage Subcontractor Costs & Efficiency
Subcontractors are essential in construction, but they can also be a major drain on profits if not managed properly.
Late deliveries, poor-quality work, or inefficiencies can cause delays and increase costs, hurting your bottom line. If your subcontractors aren’t delivering value for money, it’s time to reassess.
How to Improve Subcontractor Performance:
✔ Set clear expectations – deadlines, quality standards, and budgets must be agreed upfront.
✔ Benchmark their rates – are you paying fair prices for the quality and speed of work?
✔ Regular performance reviews – monitor their efficiency and reliability over time.
✔ Build a reliable network – the cheapest option isn’t always the best in the long run.
💡 Pro Tip: Sometimes, it’s more cost-effective to bring certain skills in-house rather than relying on external subcontractors. Crunch the numbers to see if it makes sense for your business.
4️⃣ Keep Overheads Lean – Don’t Waste Money
Direct project costs aren’t the only thing affecting your bottom line—your overheads can quietly eat away at profits too. If you haven’t reviewed your business expenses in a while, now is the time.
How to Cut Overhead Costs Without Cutting Corners:
✔ Audit all subscriptions and services – are you paying for software or tools you don’t use?
✔ Review insurance and finance costs – compare deals annually to avoid overpaying.
✔ Consider leasing instead of buying – for equipment that’s only needed occasionally.
✔ Watch unnecessary office expenses – small costs add up quickly.
💡 Pro Tip: Many businesses waste money on unused software, expensive finance deals, and high-cost suppliers simply because they’ve never reviewed their options. A quick cost audit can free up cash fast.
5️⃣ Keep Cash in the Business – Don’t Take It All Out
A lot of construction business owners make the mistake of taking all the profit out at the end of the year.
Yes, it’s tempting to reward yourself after a good year, but if you drain your cash reserves, you leave your business vulnerable. The construction industry is unpredictable—one slow quarter, a late payment, or an unexpected cost could put you in financial trouble.
How to Keep Your Business Financially Secure:
✔ Build a cash reserve – aim for at least 3-6 months’ worth of operating expenses.
✔ Pay yourself a structured salary – rather than taking out large, one-off sums.
✔ Plan for tax liabilities – so you’re not caught off guard.
✔ Use profits to invest in growth – upgrading equipment, hiring key staff, or marketing.
💡 Pro Tip: Having cash in the business also gives you the flexibility to grab opportunities—whether that’s bulk-buying materials at a discount or investing in new projects.
Final Thoughts: Take Control of Your Numbers & Protect Your Profits
The construction industry will always have challenges, but staying on top of your numbers is the key to success.
By tracking margins, negotiating better deals, managing overheads, and keeping a healthy cash flow, you can ensure that your business not only survives but thrives in 2025 and beyond.
If you’re not sure where your business stands financially—or if you suspect you’re losing money but don’t know why—getting the right financial advice could be the best investment you make this year.
📞 Need expert accounting support for your construction business? Let’s chat. We specialise in helping construction firms like yours protect their profits and plan for a stronger future. Book a discovery call here now.
Check out our website to see if the common frustrations construction businesses face with their accountants sound familiar to you.
