Where Did All the Money Go

There is a moment that happens to many trades business owners. You look at the amount of work your company completed during the year and realize that the number is impressive. Maybe your business produced $250,000 in sales. Maybe it produced $500,000. Perhaps you finally crossed $1 million in annual revenue. Customers are calling, employees are working, trucks are moving, invoices are going out, and money is regularly entering the business. From the outside, everything may look successful.

Then you look at the bank account and wonder where all the money went. This can be one of the most frustrating parts of owning a trades company because you know how hard you worked. You remember the early mornings, late evenings, emergency calls, estimates, customer complaints, employee problems, equipment breakdowns, and weekends spent catching up on paperwork. You also know how much customers paid the company because you saw the invoices, deposits, credit-card payments, checks, and bank transfers.

Yet somehow there never seems to be as much money remaining as you expected. This does not necessarily mean the company is failing. It may mean you have reached a stage of business ownership where revenue alone no longer tells you very much about the financial health of the company. A trades business can collect a tremendous amount of money while keeping surprisingly little of it because revenue has many responsibilities before any portion of it becomes true profit.