Let’s face it: Times have been tough for several years. The good news is that, as the economy starts to improve, lots of contractors are busier than ever. And many will need to use this increase in volume to climb out of a financial hole.

If you've sustained losses over the last few years, you will need to earn enough profit to not only cover your job costs and overhead, but also to pay back any money you’ve borrowed. For instance, you might have had to pull money from your credit line, or you racked up a hefty credit card balance. You didn’t pay taxes on that money; loans are not taxable. Now you need to make a profit to pay back the loans. But since the money coming into the company wasn’t taxable, the money going out to pay the loans is not a tax-deductible expense. Hence the cash flow crunch.

Here's another issue: If you were profitable in 2013, you will need to pay taxes. But that profit is probably not sitting in the bank. What’s an owner to do?


The answer is slow and controlled profitable growth. Use the lessons learned over the last few years to commit to only doing profitable work. It’s better to do less work that is profitable than more work that just keeps you busy but doesn’t help you dig out of the hole. Remember, it’s slow and steady that wins the race.