Is Your Business Growing, or Is Your Revenue Just Getting Bigger?
What growing trades companies need to understand about revenue, cash flow, and profitable growth.
For almost 30 years, I've watched businesses celebrate growth.
Revenue is up 20%.
Sales hit another record.
Another crew is added.
Another truck hits the road.
The backlog is full.
Those can all be great things. But I've always been the weird accountant in the room asking one more question: Did growing the business actually leave us with more money?
Because revenue tells you how big you're getting. Cash helps tell you whether that growth is actually working for you.
I've Always Been a Weird Accountant
I don't really fit the accountant stereotype.
I'm expressive. I ask a million questions. I have the patience of a gnat for repetitive work, and if someone shows me a process we have to manually repeat every month, my first question is usually, "Why are we doing this again?"
I'm constantly asking:
Why are we entering the same job information into three different systems?
Why does someone have to manually build this report every week?
What happens to this information after the crew turns it in?
And my personal favorite: Is all this work actually taking us anywhere?
At one point, I actually told one of my bosses he wasn't allowed to add another report until he either eliminated one we already had or could explain exactly what decision each report helped us make.
More information isn't always more clarity. Sometimes it's just more work.
Through almost 30 years in finance, from Controller and Finance Director roles to leading finance teams for large, complex companies, I constantly felt the pressure to make the numbers bigger and deliver them faster.
Grow revenue. Improve margins. Hit the quarter. Beat expectations.
Those numbers mattered. But I was usually the weird accountant asking: Are the decisions we're making today actually building a stronger business for tomorrow?
It has always bothered me when businesses get so focused on what outsiders say success should look like that they stop asking what success actually means for them.
Trades owners hear it too. “Grow. Grow. Grow. Add another crew. Buy another truck. Hit the next revenue milestone. Bigger is better.”
But is it?
If you double your revenue, double your stress, double the number of people you're responsible for, and still don't have more cash in the bank, did you actually get what you wanted?
I've never been interested in making a business look successful on paper. I want it to actually be stronger and still be successful years from now.
Growing Revenue and Growing Cash Are Not the Same Thing
Maybe your construction, HVAC, plumbing, electrical, roofing, or other trades business had $5 million in revenue last year and you're headed toward $7 million this year.
That's exciting.
You may need another crew.
Another truck.
More materials.
More equipment.
More office support.
Maybe another salesperson.
All of those things can help you grow. They also require cash.
That's the part that can get lost when everyone is focused on the top line.
Imagine you land another $100,000 job.
That's $100,000 more revenue on the board.
But it isn't $100,000 more in your bank account.
That job needs materials. It needs labor. Your trucks need fuel. Your insurance and overhead still have to be paid. Maybe the crew needs overtime. Maybe material prices changed after the estimate. Maybe there's a callback you didn't expect.
By the time that $100,000 works its way through the business, what actually made it to the bank? That's one of the numbers I want to understand.
Because revenue tells you how big you're getting. Cash helps tell you whether that growth is working for you.
Sometimes the Best Dollar Is One You've Already Earned
This is why I don't automatically assume that "sell more" is the answer. Suppose you could sell another $100,000 of work. Great.
But what if we could also look inside the business you're already running and find $10,000 that is quietly disappearing through material waste, unnecessary overtime, duplicate work, poor purchasing, rework, growing overhead, or processes nobody has questioned in years?
Which opportunity should we look at first?
Selling another $100,000 may require more leads, more estimates, more materials, more labor, more working capital, and more risk. Finding $10,000 you're already losing doesn't require another customer. You already earned that money.
I'm not suggesting businesses shouldn't grow. I love growth.
I just want growth to actually benefit the business and the people who worked so hard to create it.
Knowing Your Numbers Is About Making Better Decisions
This is where financial reporting should actually help you.
Your accounting system may tell you revenue increased.
Your job management system may tell you the crews are busy.
Your CRM may tell you the pipeline is full.
Your bank tells you how much cash you actually have.
If those systems aren't connected, you can have more information than you've ever had and still struggle to answer a very simple question: Is all this growth actually making my business stronger?
That's why knowing your numbers isn't about staring at reports. It's about understanding what those numbers are telling you so you can decide what to do next.
Maybe the right answer is to chase another million dollars of revenue.
Maybe it's to improve your material margin.
Maybe it's to fix overtime.
Maybe it's to get paid faster.
Maybe it's to stop doing work that keeps everyone busy but doesn't generate enough cash.
The numbers aren't the destination. They're supposed to help you decide which road to take.
The Bottom Line
THE DHF IDEA
Revenue tells you how big you're getting. Cash helps tell you whether that growth is actually working for you.
WHAT YOU NEED TO WATCH FOR
As revenue grows, watch what happens to materials, labor, overhead, equipment, debt, working capital, and most importantly, cash in the bank.
THE HIDDEN OPPORTUNITY (BURIED TREASURE)
Sometimes finding $10,000 you're already losing is faster, easier, and far less risky than selling another $100,000.
THE QUESTION YOU MUST ASK YOURSELF RIGHT NOW
“Is my business actually growing, or is my revenue just getting bigger?”
The Hound's Take
Growth is a wonderful thing when it creates a stronger business. Don't grow just to put a bigger number on the board.
Know what you're keeping in the bank.
Meet the Lead Hound
Howdy Y'all!
I'm Kathy (aka Shepherd), founder of Data Hounds Finance.
I am a CPA by trade, an engineer at heart, and happiest with dirt under my fingernails.
I'm a wife to an amazing husband who is also a trades business owner, a Jesus follower, and the proud caretaker of an ever-growing collection of cats, dogs, chickens, turkeys...and whatever else decides to wander onto our little farm.
For almost 30 years I've helped businesses untangle financial messes by doing one simple thing: fixing the system instead of fixing the same problem over and over.
Life's too short to spend it manually updating spreadsheets or redoing work a computer can finish in five seconds. I'd rather put technology to work so people can spend their time thinking, creating, serving customers, and building better businesses.
Whether I'm pulling weeds in the garden or weeds out of an accounting system, I'm usually asking the same question:
"How can we fix this once, and fix it right?"
Thanks for spending a few minutes with me.
Until next time...keep pulling weeds at the root and don't forget to enjoy the harvest.
Kathy
