THE SUBCONTRACTOR P&L EXPLAINED.
A profit and loss statement shows whether the work made money over a period of time. For a subcontractor the lines that count are revenue, direct job cost, gross profit, overhead, and net profit. The trap is reading the P&L without job costing behind it, because a healthy company-wide number can hide jobs that are losing money.
The P&L answers one question well and one question not at all. It tells you whether the business made money over a month, a quarter, or a year. It can't tell you which jobs produced that money and which ones drained it, and that hole is where subcontractors get fooled. A statement showing 8% net can hide one winning job carrying two losers, and nothing on the report tells you which is which. Read next to job costing and a WIP schedule, the P&L is powerful. Read by itself, it's a comforting average.
WHAT IT MEANS.
A profit and loss statement is a summary of revenue, costs, and expenses over a period of time, ending in net profit.
The P&L covers a span of time. The balance sheet is a snapshot at a single point in time, so the two answer different questions and an owner needs both in front of him. What the P&L won't do is tell you where the profit came from, because it rolls every job into one set of totals. That's why the P&L is the start of the analysis and not the end of it.
WHERE IT FOOLS YOU.
It averages every job into one total
The P&L rolls every job into one set of totals. A company-wide 8% net can be one job at 20% carrying two at a loss, and the P&L will never show it. Without job costing underneath, you can't tell a winning job from a losing one, so you keep bidding the losers thinking the business is healthy.
Revenue counts work billed, not cash collected
Revenue is the value of work performed and billed in the period. It's recognized when it's earned and not when it's paid, which is why a profitable P&L can sit next to an empty bank account. The report is telling you the truth about the work and nothing at all about the bank.
Overhead can eat a fine gross margin
Overhead is everything it takes to keep the business open when you aren't building: the office, the software, the insurance, the estimating team, and the owner. Gross profit minus overhead is net profit, and net profit is the only number that says the business works. A subcontractor can hold a fine gross margin and still net near zero if overhead is unmanaged.
WHAT IT LOOKS LIKE IN DOLLARS.
A company-wide 8% net can be one job at 20% carrying two at a loss. Revenue is the multiplier on whatever margin you're running: at a 10% net it turns $1M into $100K of profit, and at a loss it just speeds up the damage. Growing revenue on an unknown margin is the fastest way to make a small problem a large one.
For most subs a healthy gross margin runs in the low to mid twenties. Gross margin is what has to cover all overhead before anything becomes net profit, so a sub running under that range is asking overhead to come out of a thinner slice every month. Overhead doesn't shrink to fit the margin you brought home.
HOW THE P&L GETS HONEST.
The job costing structure gets built to match the way you estimate, so every dollar of cost posts to the job and the phase that earned it. The company-wide total then breaks into job-level truth: which jobs made money, which ones lost it, and why. That's the difference between knowing the business made money and knowing how it made money.
The P&L tells you whether the work made money. Job costing tells you which work did it. The balance sheet tells you whether the business is sound. All three get produced and reviewed together each month, because the P&L is the one report that's most dangerous to read alone.
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.
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