Sales Systems
21 Feb 24

Stop the Cash Flow Bleed: Why More Work Isn’t Always the Answer

3 min
Read time

As the owner of a Plumbing, Electrical or similar business you’ve likely experienced cash flow issues. 

If you haven’t then you will eventually, it’s just part of business.

But there’s one mistake to avoid when they hit, and that’s the “I can just do more work” mistake.

That’s because cash flow issues aren’t problems on their own, they’re symptoms of other problems in the business. 

In an attempt to build up some cash you try to do more work but end up making things worse.

You might’ve had this happen in your business before. 

You need to find and fix the problem before doing more work, a good place to start is with your pricing. 

When you price a job, you’re picking an amount that will cover your costs (labor, materials, subcontractors), and includes a margin.

The margin is the difference between your costs and your price. 

That margin has to pay your other bills (tax, overheads) and still leave some profit, that’s the reason you’re in business. 

If the margin is too low, then you’re strangling your own business, and the cash flow issues will only get worse. 

It’s almost always the case that where there’s a cash flow problem, there’s a margin problem. And where there’s a margin problem, there’s almost always a pricing problem. 

You have to add enough “fat” in a job when you’re pricing, because it’s not only the costs, other bills, and profit that need covering… 

It’s also about having enough margin in the job to cover your ass if things don’t go as planned. 

You’ll know how easily a job can stray away from how you planned, things like material price increases, mistakes that need fixing, subcontractor rate rises, the job taking longer than expected…

If you’re not pricing with enough margin, then any straying away from the plan will only add to your cash flow woes. 

The margin in your pricing is also your wiggle room, it needs to be high enough that the job remains profitable if things get off track. 

So if you’re having cash flow issues, don’t try to “do more work”.

Look at your pricing and make sure you’re adding enough margin to pay bills, have wiggle room, and leave some profit. 

No doubt once you’ve sorted your pricing and margins, your cash flow issues will disappear.

If you want a free copy of our Pricing Calculator that’ll help you work out the price of a job so you make your desired amount of Gross Profit, every time…

Grab the Pricing Calculator for free here

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