FINANCIAL GOALS FOR A SUBCONTRACTOR.
A healthy commercial subcontractor targets 22% to 30% gross profit per project, 12% net profit after overhead, a 9% to 13% overhead rate, cash in the bank as a floor, growing working capital, and zero debt. The owner pays themselves a real salary. These are the numbers that define a business in control, not just a busy one.
Most subcontractors set revenue goals and stop there. Revenue is the wrong target, because a bigger top line just multiplies whatever margin sits underneath it, good or bad. The goals that define a healthy subcontractor are about margin, overhead, cash, and debt, the numbers that say the business works regardless of how much work it wins. The Construction CFO builds toward a specific picture of what a controlled business looks like by the numbers. This page lays out those targets, what each one means, and why they matter more than the revenue number most owners chase.
REVENUE IS THE WRONG GOAL.
Revenue is a multiplier, not a goal. At a 10% net, a million dollars in revenue is a hundred thousand in profit; at a loss, that same million just accelerates the damage. Chasing revenue before the margin is right is how subcontractors grow themselves broke.
The right goals are the ratios and reserves underneath revenue: gross profit, net profit, overhead, cash, working capital, and debt. Hit those and revenue becomes leverage. Miss them and revenue becomes a faster way to fail.
WHAT GOOD LOOKS LIKE BY THE NUMBERS.
The margin that funds everything.
Target 22% to 30% gross profit per project depending on trade, and 12% net profit after all overhead and expenses. Gross profit covers overhead; net profit is what the business actually keeps. Most subcontractors run a net well under 12% without knowing it, because overhead is uncalculated and job costing is missing.
The cost of being open, kept in range.
Hold overhead between 9% and 13% of revenue. Most subs believe overhead is 10% and actually run 25% to 40%. Knowing the real number and managing it down into the target range is often the single largest profit lever in the business, because every point of overhead comes straight off net.
The balance sheet that lets you sleep.
Keep a cash floor in the bank at all times, grow working capital so bonding capacity rises, and work toward zero debt with no maxed lines of credit or stacked advances. For a mature business at the top of the range, the picture is $650,000 in the bank, $1.2M in working capital, and no debt.
Pay yourself like the job it is.
Pay yourself a fixed salary the business can sustain, plus draws from profit, rather than living off whatever cash is left. At the top of the range that salary is around $180,000. An owner who cannot pay themselves a real wage does not yet have a business; they have a job that owns them.
THESE ARE A DESTINATION, NOT A SWITCH.
These targets are where a controlled subcontractor lands, not where most start. The path is the same regardless of size: calculate real overhead, build job costing, fix billing and collections, and track the numbers monthly. Sixty days to install the system, six months to stabilize, then the targets come into reach.
A subcontractor at $3M netting 4% and one at $8M netting 11% are on the same road, just at different mile markers. The goals do not change with size; the discipline to hit them is what changes the business.
AIM AT THE RIGHT NUMBERS.
Set goals for margin, overhead, cash, and debt, and let revenue follow. A subcontractor who hits 22% to 30% gross, 12% net, single-digit-to-low-teens overhead, a cash floor, and zero debt is in control of the business, whatever the top line says.
The Construction CFO builds the system that moves a subcontractor toward these targets, as part of CFOS for businesses doing $1M to $12M.
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