33 points of overhead found in the first 30 days
An electrical service contractor had been running on fear since a partner situation pulled six figures out of the company.
Thirty days in and still running. The 4 points of overhead are identified and scheduled, not yet removed, and this page says so until they are.
What it looked like from the owner's chair
This wasn't an owner who never knew her numbers. She used to run a weekly profit and loss review split out by job. A partner situation took six figures out of the business and took that discipline with it, and everything after was scrambling to stay afloat while real money stayed frozen, including an unpaid invoice and a bank error still working through resolution. She had debt from a previous business, receivables were stretching past 60 days, and the collections list was 80 accounts deep with no way to tell which ones were worth chasing.
What was actually happening
The numbers said the work was fine. Gross profit at 39.17%, net at 6.07%. That is 33 points of overhead between the two, roughly $1.03M a year at her revenue. She wasn't losing money on jobs. She was losing it on structure, and no amount of selling harder closes a shortfall that size, because every additional job brings the same 33 points with it.
This is a known failure and it has a page of its own, with what it costs and how to size it in your business.
The work
We started with cash flow forecasting to sequence who gets paid, when, and how much beyond the minimum, so decisions come off a plan and not off whatever the balance says that morning. Invoicing moved to immediately at completion instead of batching. The collections list got ranked so she chases the accounts worth chasing rather than staring at the full list. Alongside that we are building a commercial branch to stabilize the work next to the service side, and a cash reserve so net 60 terms stop being a threat.
Where it is at 30 days
Accounts payable is current. Receivables are at 30 days or less, down from 60 plus. The bad debt from the previous business and the vehicles are nearly paid off. We have identified 4 points of overhead to remove, $124,000 a year, which takes her from 6.07% net to roughly 10.1% and clears our 10% minimum without selling one additional job. All of that inside 30 days.
Other contractors with the same problem
All 14 are on one page, filterable by which step did the work.
What owners ask about this one
What was actually wrong?
The numbers said the work was fine. Gross profit at 39.17%, net at 6.07%. That is 33 points of overhead between the two, roughly $1.03M a year at her revenue. She wasn't losing money on jobs. She was losing it on structure, and no amount of selling harder closes a shortfall that size, because every additional job brings the same 33 points with it.
What did you change?
We started with cash flow forecasting to sequence who gets paid, when, and how much beyond the minimum, so decisions come off a plan and not off whatever the balance says that morning. Invoicing moved to immediately at completion instead of batching. The collections list got ranked so she chases the accounts worth chasing rather than staring at the full list. Alongside that we are building a commercial branch to stabilize the work next to the service side, and a cash reserve so net 60 terms stop being a threat.
How long did it take?
30 days. Still running, and this page says which parts are done and which are not.
Which part of the system did it?
step 03, overhead calculation and step 07, monthly cadence. Installed in dependency order, which is the same order every client gets, because a step that reads from a number the one before it never established produces output that looks finished and isn't.
Do these figures apply to every electrical contractor?
No. This is one company at $1M–$5M and the numbers are its own. What generalizes is the mechanism, not the magnitude. The published electrical benchmarks across all 7 revenue bands are on its trade page, and those are the figures to measure yourself against.
Wrote CONTROL, the 8 step system behind these figures. More about the author.