WHEN CAN I AFFORD TO HIRE FOR MY CONSTRUCTION COMPANY, THE FINANCIAL ANALYSIS.
The question isn't whether you can make the payroll. It's whether the revenue the hire enables justifies the overhead increase it creates. Every hire above field labor raises the overhead rate from day one, so the bid template has to be updated before the next bid. The revenue breakeven is fully burdened cost divided by gross margin rate. And the working capital for the ramp period has to be available before the offer is signed. Most contractors make hiring decisions on workload and gut feel. The financial analysis takes 20 minutes and produces a specific breakeven number, so make the call from both.
Hiring is the one decision where the cost is certain and the benefit is a forecast. The salary hits the P&L in the first pay cycle and every one after it, whether the extra work came in or not. The revenue that person unlocks depends on bids you haven't won yet and jobs that haven't started. That's why the arithmetic has to run in both directions: what the hire costs fully burdened, and what it has to produce to pay for itself. Once both numbers are on the table, the decision usually makes itself in about five minutes.
WHAT IT MEANS.
The revenue breakeven on a hire is the fully burdened cost of that person divided by your gross margin rate, which is the extra revenue the business has to produce to cover them.
THREE QUESTIONS, IN THIS ORDER.
What's the fully burdened cost and the overhead rate impact?
A $60,000 base salary hire costs $78,000 to $84,000 fully burdened, which is salary plus payroll taxes, workers comp, health insurance, and 401k. At $3M in revenue that's 2.6 to 2.8 points of overhead, and at $2M revenue it's 3.9 to 4.2 points. The overhead rate increases by that amount from the day the person starts. Every bid submitted after the hire at the old overhead rate is underpriced by the new overhead contribution, so the bid template has to be updated before the next bid goes out rather than at year end.
Does the revenue this person enables justify the overhead increase?
A PM hire lets the owner bid and win projects the current portfolio is too full to chase. A bookkeeper hire lets the financial close happen on time so the cost-to-complete is reliable. A superintendent hire lets more simultaneous projects run without quality falling off. In each case the hire is financially justified if the incremental revenue it enables, at current gross margins, exceeds the fully burdened cost of the hire within 12 months, which is what the revenue breakeven calculates: fully burdened cost divided by gross margin rate equals the revenue required to offset the hire.
Is the working capital available to fund the hire through the revenue ramp?
A new hire costs money from day one. The revenue that hire enables doesn't reach the bank until 30 to 60 days after the first projects they enable are billed. For a PM hire on a 6-week project start-to-first-billing cycle, the working capital requirement for the ramp period is 6 weeks of fully burdened PM cost, roughly $9,000 to $12,000, which most businesses can carry without difficulty. For a superintendent hire on a $2M project with 10 weeks between mobilization and billing, the ramp capital is a much bigger number, so model it before the offer is signed.
WHAT IT LOOKS LIKE IN DOLLARS.
Take a PM hire at $75,000 base salary. Fully burdened cost is $75,000 times a 1.32 burden rate, which is $99,000 a year. At a current gross margin of 22%, the revenue breakeven is $99,000 divided by 0.22, or $450,000 in incremental revenue. The overhead rate impact at $4M revenue is plus 2.5 points. If that PM lets the owner pursue and win $450K or more in projects that would otherwise be passed, the hire pays for itself in year one. If not, it's a net cost in year one that needs a longer horizon to justify.
WHAT HAPPENS AROUND THE DECISION.
The overhead rate calculation is redone the week the hire starts, and the bid template reflects the new rate immediately. Waiting until year end means every bid in between is priced on a business that no longer exists. It's also the cheapest part of the whole exercise, because the arithmetic takes an afternoon.
Projects bid and won that the owner would have passed without the hire are tracked as their own number. That's the ROI measurement on the hire. It's also the only thing that answers, a year later, the question you asked before signing the offer.
A PM doesn't fix a cash flow problem, and a bookkeeper upgrade doesn't fix a profitability problem without the financial system underneath it. Build the financial infrastructure first. Once the numbers are visible, they will tell you whether the hire is justified and when.
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.
