Stop the Financial Bleeding: The Critical Profit Leaks Costing Your Restoration Business

At Kiwi Cash Flow, we understand that running a restoration business—dealing with water, fire, mold mitigation, contents, and rebuild/reconstruction—is complex. Your focus should be on solving client problems, but often, unseen financial leaks undermine your hard work, draining your profits before they even hit your bank account. We are here to help you turn your numbers into opportunities, transforming your financials into a clear roadmap for profitability and growth.

As fellow restoration business owners, we know that high-quality financial information is essential for making informed decisions. If you are tired of the guesswork, identifying where your business is silently losing money is the critical first step.

Here are the top profit leaks we identify when we dig deep into a restoration company's numbers:

1. Pre-Revenue Leaks: Revenue You Earned But Never Captured

Before revenue even shows up on your P&L, crucial profit leaks can prevent income from ever being recorded. These leaks are often operational but have devastating financial consequences:

• Failure to Submit Supplements or Change Orders: You performed the work, but the revenue wasn't captured. This is essentially free labor and materials provided to the customer or adjuster.

• Incomplete or Inaccurate Estimates: When jobs are underbid, profits disappear before the work even begins.

• Slow Response Time: Leads that aren’t followed up or qualified quickly are lost to faster competitors, meaning the job is never booked.

• Invoicing Never Sent: Revenue may be earned and work may be completed, but if the invoicing process is never triggered or sent, the revenue isn't recorded.

If you find revenue is "stuck in limbo," it may be because jobs are not being closed out promptly, or delayed invoicing is pushing out revenue recognition and distorting your financial visibility.

2. Direct Job Cost (COGS) Leaks: Where Margins Shrink

Once a job is underway, leaks in your Cost of Goods Sold (COGS) can drastically reduce your Gross Profit Margin. These are often tied to efficiency and tracking errors:

• Labor Overruns and Inefficiency: This occurs due to technician inefficiency, rework, or unplanned downtime.

• Missing Markups: Profit shrinks when you fail to apply necessary markups on materials or subcontractors.

• Uncaptured Equipment Costs: If equipment use isn't billed or recovered, you miss out on rental revenue or absorb costs that should have been attributed to the job.

• Hidden Job Costs: Costs like permits, dump fees, and travel expenses must be priced into the job or they will eat into your profits.

• The Lack of Post-Mortems: Without job costing reviews or post-mortems, you lose the ability to improve or replicate profitability on future jobs.

3. Overhead & Visibility Leaks: Fixing What You Can’t Measure

You can’t fix what you don’t measure. Visibility is key to strategic decision-making. When your financial data is disorganized or unclear, you risk spending money on capacity you don’t need or making poor investment decisions.

A thorough financial analysis—like the one we perform—needs to address these visibility gaps:

• Muddled Overhead: Overhead categories must be clear enough so you can see the true cost of running the business even when no jobs are happening. Furthermore, separate variable costs (like service vehicles going to job sites) from fixed costs (like a sales manager's car) for more accurate costing in both sections of the business.

• Owner Expenses vs. Business Expenses: We want to ensure the owner's expenses are clearly separated from the business's operational expenses. Likewise, owner pay must be clearly defined.

• Inaccurate Net Income: Asset purchases should be booked as assets, not simply run as expenses, which inaccurately decreases your net income.

• Lack of Profitability Segmentation: Critical operational decisions rely on knowing:

    ◦ If mitigation brings in solid margins, but rebuilds lose money.

    ◦ The profitability of individual jobs and services.

    ◦ The profitability of Residential vs. Commercial vs. CAT work.

Take Control: Turning Actionable Insights into Momentum

The goal of identifying these leaks is to empower you to make data-driven decisions. Figuring out your finances shouldn’t hold your business back.

At Kiwi Cash Flow, we provide the tools and expertise to gain this crucial clarity:

• Tailored CFO Subscription Services: We offer Financial Review & Analysis to dig deep into your numbers, Budgets & Cash Flow Forecasting for precise financial control, and Executive Summaries with personalized insights.

• The Kiwi Cash Flow Scorecard: This essential tool streamlines your financial analysis, delivering industry-specific financial reports and KPIs. It simplifies complex data, highlighting your highest-priority actions to drive your business forward.

We are your strategic partner in unlocking profitability and growth for your restoration business. If you are ready to start building real momentum toward your goals and transform your financials into a clear roadmap, reach out today.

Ready to stop the guesswork and gain confidence in every decision you make?

It’s simple! Click on Schedule a Right Fit Call or email us at results@kiwicashflow.com.