Why is my contracting business not making money?
If your jobs are priced right on paper but the bank account never grows, the money is leaking out between the estimate and the final invoice. On Contractor Cuts, Clark Turner and James McConnell of ProStruct360 walk through eight places that happens: unbilled drive-bys, timeline slip, gray-area work you absorb, flat markups, idle equipment, free pre-construction, rework from late decisions, and overhead creep. Most of them are process problems, and every one has a fix.
From the episode
8 Places Contractors Lose Money That Never Show Up on the Estimate
Aug 24, 2026 · 47 min
Three hours a week of drive-bys is 150 hours a year
The first leak is the one most owners don't count: unbilled trips to the job site. A quick swing by to check on the tile guy, a run to answer a question, a drop-in because you were in the area. Clark estimates that adds up to about three hours a week, which over 50 working weeks is 150 hours you never invoiced.
The fix is a rule, not willpower. Visit sites on a set day (Clark uses Mondays), and handle questions in between by phone or a video call. Build the standards into the sub's work order so you don't have to be there to enforce them, like stopping ten minutes early each day to leave the site broom swept and tidy.
His broader point is that your subs and crew will never be as efficient as you are. But they will be exactly as efficient as the processes you hand them.
"They're not gonna be as efficient as you, but they will be as efficient as the processes that you run."
A three-week job that takes four cuts your year by 20 percent
Timeline slip is the leak James calls the deadliest, because it shows up on almost every job and nobody notices. If your standard three-week remodel routinely stretches to four, you complete about 20 percent fewer jobs a year with the same overhead. Revenue drops by a fifth and nothing on any single job looks wrong.
Clark describes why it's invisible: there's no tension. The painter asks for two more days, you call the flooring crew and push them, nobody's upset. You just made less money.
The fix is a Gantt chart for every job and internal deadlines that land before the client's deadlines. When the schedule has slack built in, a two-day delay from one trade doesn't cascade into a week.
"You don't feel time slip because there's no tension."
Quote the gray-area work even when you plan to eat it
Every job has gray-area work: the extra patch, the small fix the client assumed was included. Most contractors just do it. Clark's advice is to quote it every time, show the client the cost, and then absorb it if you choose to. Now the client knows you gave them something, and you've built what he calls ammunition for the next negotiation.
The same thinking applies to pre-construction. Planning, selections, and scheduling are real work, so Clark forces a pre-con line item onto every estimate, from about $150 on a small job up to $1,800 or more on a big one. On smaller projects he rolls it into a non-refundable deposit.
A related leak is rework caused by late client decisions. Weekly invoicing, benchmark walks, and a client engagement agreement that sets decision deadlines catch changes before the flooring is down, not after.
"I force a pre-construction line item on every single estimate."
A flat 35 percent markup underprices your riskiest items
A lot of contractors put the same markup on everything. Clark argues a flat 35 percent both undercharges and overcharges. Small, fiddly items that eat coordination time and carry risk should be marked up 60 to 80 percent. High-volume, low-risk items can carry less. The markup should reflect the time and risk each line actually involves.
Equipment is the next trap. Buying a machine to justify one job leaves it sitting idle the rest of the year. Clark's rule is to buy only if you'll keep it at least 60 percent busy for three or more months. Otherwise rent, and let your subs bring their own gear. As he puts it, you're a general contractor, not a laborer, and you can't hand tools to 1099 subs anyway.
"This is not a construction problem. It's a data and control problem. You can't plug a leak you don't know exists."
Budget on your worst six months, not your best one
The last leak is overhead creep. A couple of strong months come in, things feel good, and suddenly there's a new truck payment and a leased skid steer. Clark's rule is to base spending on worst-case revenue, meaning the average of your last six months, not the number you're projecting for next year.
Higher revenue isn't the signal to spend. Your actual needs and your growth plan are. Getting that discipline right is what turns a busy contractor into a profitable one.
"When revenue goes up, things feel good. That's not the indicator for spending more money."
What to remember
- Unbilled site visits cost roughly three hours a week. Set one visit day and handle the rest by phone or video.
- Letting three-week jobs slip to four cuts annual revenue by about 20 percent. Use Gantt charts with internal deadlines.
- Quote gray-area work before absorbing it, and put a pre-construction line item on every estimate.
- Replace flat 35 percent markups with rates that match risk: 60 to 80 percent on small, fiddly items.
- Only buy equipment you'll keep 60 percent busy for three months, and set overhead from your last six months of revenue.
People also ask
What markup should a contractor use?
Clark Turner argues against a single flat number. Small, high-risk, high-coordination items deserve 60 to 80 percent, while high-volume, low-risk items can carry less. Match the markup to the time and risk of each line.
Should contractors charge for pre-construction?
Yes. Clark puts a pre-con line item on every estimate, roughly $150 on small jobs up to $1,800 or more on large ones, or rolls it into a non-refundable deposit.
When is it worth buying equipment instead of renting?
Only when you'll keep it at least 60 percent busy for three or more months. Otherwise rent it or have subs supply their own.
Based on the August 24, 2026 episode of Contractor Cuts, "8 Places Contractors Lose Money That Never Show Up on the Estimate," hosted by Clark Turner and James McConnell of ProStruct360.
