Stop the Leak: 7 Financial Errors Killing Your Restoration Job Profitability Before Work Even Starts
Many restoration business owners focus intensely on project execution, but the hard truth is that profitability can disappear before work even begins. These "profit leaks" stem from errors in intake, estimating, and initial job setup.
At Kiwi Cash Flow, we help businesses transform their financials into a clear roadmap for profitability and growth. Gaining control requires going deep into your numbers to uncover these critical opportunities for growth.
Here are 7 financial errors that are likely killing your job profitability before you ever send a technician to the site:
1. Incomplete or Inaccurate Estimates
One of the most critical preventable revenue losses occurs when jobs are underbid. If your initial estimate is incomplete or inaccurate, profits effectively disappear before the work even starts. Accurate job costing reviews are essential to prevent this, ensuring you don’t repeat profitability mistakes.
2. Failure to Capture Supplements and Change Orders
Work may be performed in the field, but if there is a failure to submit supplements or change orders, the revenue associated with that additional scope is never captured. This documentation gap prevents you from justifying charges to adjusters or clients, leaving money on the table.
3. Missing Hidden Costs in the Estimate
Direct job cost leaks often occur when estimation fails to account for certain mandatory expenses. For example, permit fees, dump fees, and travel are frequently not priced in. When these hidden costs are absorbed by the business instead of being accounted for, they directly eat into your potential profits.
4. Poor Intake and Triage Procedures
The quality of your financial outcome starts the moment a lead comes in. Poor intake or triage processes often result in accepting the wrong jobs or starting with missing information, which leads to poor margins from the start.
5. Equipment Use Not Billed or Recovered
Your expensive equipment must generate revenue to justify its cost. When equipment use is not billed or recovered, the business suffers a missed rental revenue opportunity or absorbs unnecessary costs, resulting in direct job cost leaks.
6. Subcontractor Overbilling or Poor Scope Control
Subcontractors are integral to many restoration projects, especially reconstruction. However, unchecked subcontractor overbilling or poor scope control leads to unchecked costs, which constitutes a significant direct job cost leak. When analyzing labor, it’s crucial to understand how subcontractor costs are factored into the overall labor percentage.
7. Static Commission Plans
While perhaps not an upfront estimating error, a static commission plan can actively squeeze your margins and is often established before the job starts. If commission plans are not aligned with your updated pricing or current margins, the incentive structure may be fundamentally flawed and contribute to cost leaks.
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Take Control of Your Financials
Figuring out your finances shouldn't hold your business back, especially when these financial errors can be prevented early. Our CFO subscription services deliver industry-specific financial reports and KPIs in a clear, easy-to-understand format. We provide a clear financial roadmap by transforming your financial data into actionable insights that drive success. If you are tired of the guesswork and want to ensure every dollar counts in your restoration business, Kiwi Cash Flow is here to help. Book a free “right fit call” here: https://calendly.com/kiwicashflow