Why Your ￡2M Construction Business Isn’t Making Money (And How to Fix It)
Greg Wilkes
I help construction business owners grow a ￡5million+ company????♂? Award Winning Construction Business Coach, Property Developer & Author?? ??FREE Build Your Future book ????
We recently worked with a construction company turning over ï¿¡2M a year. Sounds like a great business, right?
The problem? They weren’t making any money.
At first, they assumed their overheads were the issue—too many expenses eating into their profits. But after breaking it down, we realised the real problem:
? Their overheads were actually fine
? They were running a lean operation
? But their gross profit margin was too low
Underpricing Without Realising It
Like many small construction firms, they thought a 10-15% margin was “normal†because that’s what the big companies do. They assumed that competing on price was the only way to win jobs.
But here’s the harsh reality: small firms can’t survive on 10-15% margins.
Unlike large firms with access to finance, bulk-buying discounts, and huge project pipelines, smaller businesses don’t have the same financial buffer. A single bad project, a delayed payment, or a slow month could wipe them out.
The Right Margin for Small Construction Businesses
For a construction business to be sustainable and profitable, they should be aiming for at least a 25-30% gross profit margin.
This ensures they can:
?? Cover overheads without stress
?? Invest in the right staff and equipment
?? Handle slow periods without cash flow crises
?? Grow without constantly chasing the next job to stay afloat
What’s Stopping You From Increasing Prices?
Many construction business owners fear that if they increase their prices, they’ll lose clients. But the reality is, clients who only choose you because you’re the cheapest aren’t the clients you want.
The best clients value expertise, quality, and reliability—and they’re willing to pay for it.
If you’re stuck in a cycle of low margins and financial stress, it’s time to ask yourself:
?? Have you checked your margins recently?
?? Are you charging what you’re actually worth?
?? What’s stopping you from increasing your prices?
Don’t let underpricing hold your business back.
Business Development Director at M.J.F Associates. M.J.F Associates is a group of experienced personnel providing estimating, cost control, quantity surveying and management expertise to small and medium sized companies.
3 天å‰Under Pricing is a Killer