You grew. You won more work. You hired more people. You should feel better about the business. Instead you're more stressed about cash than when you were half the size.
Construction growth creates a cash problem because every new job requires you to fund 75–90 days of operations before the first payment arrives. At $2M you might start one job per month. At $5M you're starting three. You're now funding three simultaneous 75-day cash gaps instead of one. The cash required to carry those gaps multiplies with revenue — but the pay app doesn't arrive any faster just because you're bigger.
At $2M you carry one or two active jobs at a time. Each requires 75–90 days of upfront cash. At $5M you carry four or five simultaneously. The total cash gap — money spent that hasn't come back yet — is 3–4x larger even though revenue only doubled.
Growing from $2M to $5M usually requires a PM, estimator, admin staff, more trucks, higher insurance. Each is legitimate. But each adds to fixed overhead — and the rate in bids probably hasn't been updated. You're bidding at the old rate on the new cost structure.
At $2M you might have $40,000 in AR over 45 days. At $5M that same percentage is $100,000. If the collections system hasn't scaled with revenue, the backlog grows faster than the collections. By the time you notice it, $200,000+ is sitting uncollected.
At $2M you accepted the GC's standard SOV because the stakes were lower. At $5M you're starting $800K–$1.5M jobs. A poorly structured SOV on a $1M job is $80,000–$150,000 in cash timing you're eating unnecessarily.
Every time you add an employee, buy a truck, or expand the yard — recalculate. The overhead rate in bids needs to reflect the current cost structure. Most fast-growing contractors are 6–10 points below actual overhead by $5M because the rate was set at $2M and never updated.
Before signing any contract at this scale, negotiate the schedule of values. Ask for a mobilization line item (5–10% of contract value), a material procurement line item, and front-weighted milestones on early phases. This reduces the upfront cash gap on every new job before it starts.
Map not just current jobs but every job in your backlog likely to start in the next 13 weeks. Each one represents an upcoming cash outflow before the first payment. Seeing them all on one timeline lets you sequence starts strategically — starting two jobs two weeks apart instead of simultaneously can mean the difference between one 75-day gap or two.
At $5M you're generating $400,000+ in billing per month. Even a 10% collections lag is $40,000+ per month sitting uncollected. Weekly collections calls on everything over 30 days prevent the backlog from building.
Revenue had jumped from $5M to $7M in 18 months and cash was worse than it had ever been. He had a $750,000 loan, overhead had crept up with three new hires, and AR had ballooned because the collections system hadn't scaled with the revenue.
AR that had accumulated during the growth phase — money that was already earned but never followed up on.
The loan that had funded the growth gap was eliminated once the billing structure caught up to the revenue level. Now on track for $12M with a financial system built to handle it.
A free call with Josh takes 30 minutes. Bring your last P&L and current bank balance. The gap between those two numbers is where we start.
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