Financial Management

To quote Kermit the Frog, “It’s Not Easy Being Green” That may be so, and it made for a cute song, but it’s much tougher when you are red. By that I mean in the financial red

With sustainability being a bit of a buzz word at the moment, I thought I would talk about another type of sustainability you should be interested in. That is your FINANCIAL sustainability.


Why Is It Important to be Profitable?

If you want to grow a business for the longer term and produce the kind of life for you and your family that is comfortable and with just enough stress to make it interesting, you need to build a financially sustainable business. You are not doing yourself, your team members, your suppliers and even your clients a favour if you cannot make a fair, consistent profit and sustain it in the long term. By building a profitable business you are able to provide a better level of service to your customers and assure them that you will be there down the track if they need you to fix any issues, or help them with their next project.


So what’s important to consider when building a financially sustainable business?  There are many aspects and I welcome feedback from you as to what you consider important. Email me at with your thoughts. Here are 5 suggestions I have, in no particular order.


Know Your Numbers.  

Do you know what is the average gross margin % you need to achieve across your projects each year to hit your required dollar profit amount? The amount of gross profit that will cover your overheads, pay you an owner/manager salary and still leave a bit in the pot? This figure is vital to start building a sustainable business from and may require you to put a brief budget together. Contact me if you need help with this.


Develop a Collaborative Selling Mindset

Move away from adversarial to collaborative selling. The traditional sales model in building is for the client (and maybe architect) to be in one corner and the builder to be in the other. The selling process is a game of punch and counter punch until one of the parties throws in the towel and a deal is done. Both parties probably have blood noses and feel a little hard done by. Is this the way to start the build relationship for the long term? Is a better, and more sustainable way for all parties to get together and make the outcome of the project the main focus? Work together come up with the best solution, for all parties. 


Embrace Business Learning

As a business owner you need to find time to learn how to run your business better, consider new ideas and put a plan together for the next 3-5 years. I know it’s tough to find the extra time and energy to do this, but the rewards in terms of money and less stress will be worth it in the end. Keep sharpening the (mental) saw.


Know When To Walk Away From a Bad Deal

Know when to hold ‘em and when to fold ‘em. Be prepared to walk away from a project that is obviously unsustainable from an economic standpoint. Knowing your true worth and having a clear idea on what your required gross margin on a project must be to balance the risk involved will give you the confidence to draw that line in the sand, or know exactly how much wriggle room you have in the final stage of negotiation.


Steady Growth Wins in the End

Grow at a sustainable rate. It is relatively easy to grow a construction business, at least in terms of revenue. Being overly aggressive in expanding the volume of work you take on is often done at the expense of profits and can lead to quality control issues, which further impacts profits. It can also put strain on your cash position, because the faster a business grows, the more cash it needs to sustain that growth. Growing at a steady rate allows your production capacity and management systems to keep pace, thus helping to deliver steady profits and keeping your stress levels in check.


So that’s my top 5 tips for building a financially sustainable business that will provide you and your family both a good living and enable you to have a life as well. There are other points I could have included, but in the interests of brevity, I have stopped at five. If you want to know the rest and have a conversation about how we can implement them into your business, contact me by either leaving a message at or phone me on 027-6886721


You might like to check out some other posts on profitability and how to improve it:

How to Increase Profits in Your Business

Controlling a fast growing business.