You are operating the company against an empty account
Zero is not zero. If you do not know your New Zero, a balance above zero tells you nothing.
Most owners manage the business by looking at the bank. The trouble is that the bottom of the account is not the bottom of the business. Three to six months of fully burdened operating expenses is the floor a construction company has to hold, because you fund labor, material and mobilization before anybody pays you, and retainage stays out there for months after the work is done. Until that number is worked out, every decision about hiring, buying or paying down debt is being made against a figure that means nothing.
Three moves, in order
What CFOS does about it
CFOS reads your expenses from QuickBooks Online, and the overhead calculator gives a fully burdened monthly cost to start from. The 13 week cash forecast marks the lowest week, so you can compare it to the number you set. You pick the number and the multiple, and CFOS doesn't move money into a reserve.
Who owns this: Owner.
At $3M, a concentrated customer base points to the higher end of the range. Work out the monthly burdened cost, set the number, and treat anything under it as empty. At $15M, the controller should review the number each quarter as overhead changes.
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Research from another source
These figures come from another company's survey, not from Run On CFOS. Each one cites the report and the page.
Billd's 2026 National Subcontractor Market Report found 42 percent of subcontractors secured capital before they needed to use it.
Source: Billd, 2026 National Subcontractor Market Report, page 10 (survey of 623 respondents, published May 13, 2026).
Billd's 2026 National Subcontractor Market Report found 76 percent of general contractors said a subcontractor's working capital position is important to project success.
Source: Billd, 2026 National Subcontractor Market Report, page 11 (survey of 623 respondents, published May 13, 2026).
Step 07: Monthly cadence
Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.
Other problems step 07 solves
Other things that go wrong
What owners ask
How much working capital does a construction company need?
Zero is not zero. If you do not know your New Zero, a balance above zero tells you nothing. Most owners manage the business by looking at the bank. The trouble is that the bottom of the account is not the bottom of the business. Three to six months of fully burdened operating expenses is the floor a construction company has to hold, because you fund labor, material and mobilization before anybody pays you, and retainage stays out there for months after the work is done. Until that number is worked out, every decision about hiring, buying or paying down debt is being made against a figure that means nothing.
Which part of the system fixes this?
The step is number 07, monthly cadence. Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month. It's drawn from chapter 7 of CONTROL: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Work out your fully burdened monthly operating cost, with real labor burden in it rather than the payroll line off the P&L.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 07 depends on step 03, overhead calculation and step 04, estimating system and step 05, software and bookkeeping alignment and step 06, project management. Install it ahead of those and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.