CONSTRUCTION PROFIT AND LOSS STATEMENT.
The P&L is the financial statement most subcontractors look at most often, and most misread. Here is what each section means for a commercial subcontractor, what healthy looks like at your revenue level, and the two numbers that count more than the bottom line.
The bottom line is the number most owners read and the least useful one on the page. Gross profit margin tells you whether the work is priced and produced correctly. Overhead rate tells you whether the office is sized for the volume you're running. Net profit is only what's left after those two, so it can never tell you which of them caused the result. Read the two upstream numbers and their trend across several months, and the bottom line stops being a surprise in February.
WHAT IT MEANS.
A profit and loss statement is the report that sets out revenue, direct job cost, gross profit, overhead, and net profit for a period, which is what the business earned rather than what it collected.
WHERE IT GOES WRONG.
You look at the bottom line and miss everything else
Most subcontractors check whether the P&L shows a profit and stop reading. The bottom line is the least useful number on the statement. Gross profit margin, overhead rate, and the trend of both over time tell you far more about the health of the business than whether you made or lost money in a given month.
Your P&L doesn't reflect construction reality
A P&L kept on cash basis, or kept without percentage of completion revenue recognition, doesn't reflect the work you performed. Revenue spikes on billing dates and drops in slow billing months. Costs hit when invoices get processed rather than when the work happened. The result is a P&L that's technically correct and operationally useless for a management decision.
You can't tell which part of the business is profitable
A single column P&L gives you total revenue and total cost, and it doesn't tell you which jobs, which GCs, or which trade scopes generated the profit. Without job level cost data feeding the P&L structure, the statement tells you what happened and never tells you why.
WHAT EACH SECTION IS TELLING YOU.
Revenue is contract revenue recognized for the period, meaning earned revenue based on work performed rather than work billed. Direct costs are all job level costs: field labor and burden, materials, subcontractors, and equipment allocated to jobs. Gross profit is revenue minus direct costs, the margin before overhead, and gross profit percentage is gross profit divided by revenue, which is your most important operational metric. Overhead is all G&A: office staff, rent, insurance, equipment overhead, vehicles, and marketing. Net profit is gross profit minus overhead, which is what the business made.
For most commercial subcontractors: a gross profit margin of 15 to 25% depending on trade, an overhead rate of 8 to 18% depending on revenue size, and a net profit margin of 5 to 8% for a well managed business. If gross margin is in range but net profit is low, overhead is the problem. If gross margin is below range, pricing, estimating, or job cost leakage is the problem. SPM works out which one is driving your specific situation during the 20 minute call.
SPM reviews your P&L monthly rather than at year end. Gross margin trends, overhead rate movement, and net profit trajectory all get tracked over time. When any of the three drifts outside the benchmark for your trade and revenue range, it comes to the monthly meeting with a specific explanation and a recommendation. The P&L becomes a management tool instead of a tax document.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
