You want to bid the next job. Your P&L says you can afford it. Your bank account says something else.
This is one of the most common gaps I see in construction companies doing $1 million to $25 million in revenue, and it's rarely about being unprofitable. Most owners in this range are genuinely making money. The problem is that profit and available cash are two completely different things, and nobody ever explains why.
Here's what's actually happening. Retainage on your current jobs, usually 5-10%, gets held back by the customer until closeout, sometimes for months after you've already paid your crews and vendors for that work. Work in progress sits on the books as an asset, but it's not cash you can spend, it's value you've delivered and haven't billed for yet. And whatever cash you do have is already spoken for, payroll this week, vendor payments on jobs already running, equipment and material for work you've already committed to.
So when a new opportunity comes in, you're not actually looking at your bank balance or your profit number to decide if you can take it. You're looking at what's left after all of that. Most owners never calculate that number. They just feel the squeeze and pass on the job, or worse, take it anyway and find out three weeks later they're short.
That number, what's actually available to you once retainage, WIP, and committed spend are accounted for, is your real bidding capacity. It's a piece of your zero. And once you know it, bidding stops being a gut call. You know exactly how much room you have before you ever pick up the phone.
This is usually the difference between a contractor who stays cautious and small and one who scales with confidence. Not more revenue. Not more jobs. Just knowing the real number before you commit to anything.
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