Where does the money actually leak in a $3M–$20M Texas business?
The five leaks
- Pricing that has not moved with cost
- Jobs quoted from memory
- Margin measured annually instead of weekly
- Discounting with no floor
- Work performed and never billed
Why it happens
None of this is a mistake. It is drift.
Every one of these leaks was a reasonable decision once. The price was right when it was set. The estimator was accurate when he learned the trade. An annual review was enough when the company was half this size. Nothing broke.
The business simply grew past the habits that built it. That is why the leaks survive: they are invisible to the people closest to them, and they never show up as a loss. They show up as a company that is busier every year and no more profitable than it was three years ago.
Owners usually feel this before they can name it. Revenue is up, the crews are full, the phone rings — and the bank balance behaves the way it always did.
The five leaks
Where it goes.
Pricing that has not moved with cost
Material, labor, insurance and fuel all moved. The price list did not — or it moved once, late, and straight across the board. In a business running a thin net margin, a small pricing lag is a large share of the year’s profit.
The fix is not a percentage. It is knowing your cost by line and by trade well enough to price deliberately, and reviewing it on a schedule instead of after a bad quarter.
Jobs quoted from memory
The most experienced person on the team quotes from recall, and he is usually close. Close is the problem. Nobody can say which jobs earned money and which were carried by the rest of the schedule, because the quote was never built from cost in the first place.
It is also the single largest concentration of owner dependence in most contracting and manufacturing businesses. When one person is the estimating system, the company cannot bid without him.
Margin measured annually instead of weekly
The accountant closes the year. By then the job is finished, the crew has moved on, and the number is history. A margin you see once a year is a scorecard. A margin you see every week is a control.
Weekly does not mean complicated. It means one figure, produced from data the company already generates, in front of the person whose decisions move it.
Discounting with no floor
Someone in the field is authorized to hold a customer. Nobody has told him where the floor is, so the floor is wherever the conversation ends. The discount feels like relationship work, and in the moment it usually is.
Concessions given to keep a customer are rarely tracked and almost never reviewed against the job that absorbed them. Write the floor down, name who can go below it, and make every exception visible.
Work performed and never billed
Change orders agreed on the phone. Extra trips. Callbacks absorbed to keep the peace. Hours logged after the invoice went out. In service and contracting businesses this is often the largest leak of the five.
It is also the hardest to see, because the missing revenue never existed. It appears nowhere in the profit and loss statement. It only appears in the gap between the hours your team worked and the hours a customer paid for.
The change that matters most
A weekly number, in front of the person who can move it.
Most of this work is not analysis. It is rhythm. Once margin is reported every week — by job, by crew, or by line — the conversation changes without anyone being told to change it. People stop arguing about whether a job made money and start asking why it did not.
We build that report out of what the company already produces. No new platform is required to know what a job earned. In most businesses this size the data exists; it is simply never assembled while the answer would still be useful.
What changes
What is different ninety days in.
Not everything, and not permanently yet. Ninety days is enough to close the two worst leaks and to prove to your team that the numbers are now real.
- A price list rebuilt from current cost, with a documented floor and a named approver
- Quotes generated from a cost model instead of recall, so a bid can be checked before it goes out
- Margin reported weekly, owned by the person closest to the work
- Discount authority written down, with every exception visible to someone
- A billing check that catches change orders, extra trips and unlogged hours before the invoice closes
Honestly
What we don’t do.
We don’t cut your people to make a quarter look better. We don’t raise prices across the board and call it strategy. And we don’t publish client results, because the results worth publishing belong to companies that would rather not be named.
What we will do is work the arithmetic on your own numbers, in front of you, before you commit to anything.
Profitability work is not a cost-cutting exercise. It is the recovery of money the company already earned and never collected, priced, or noticed.