How to avoid losing money on a job !!
You need to understand that cashflow issues will kill your business far quicker than profitability issues. A lot of times people don't fully understand the difference between profitability and cashflow. Profits are what you're left with at the very end of job after everybody has paid up and you've paid everybody else. Cashflow is managing that money in-between. So we start the job, we get a draw, we pay a few people, we get an another draw, we pay a few more people.
One thing we can do to protect ourselves is make sure that we take our profits with the first-stage payment. We know there's never a problem getting the first-stage payment, the problems on the jobs always arise towards the end. So if you're waiting until the end and your profit is all held up with the last draw , as so many people wrongfully do, well you're leaving your money at risk until the very, very end.
So if you're doing a 20 grand job with three or four grand profit, take the extra three or four grand with the first-stage. If the client has difficulty in paying you the amount that you want as your first-stage payment, I can tell you here and now, they will definitely have difficulty paying it at the end. We need to de-risk the entire job by taking the profit that's left for us at the end and bringing it to the start, taking it with the first draw. If it's a case that the job is too big or you're uncomfortable with it, take half your profit with the first draw and half with the second. Do not be leaving your profit until the very end of the job. Simple as that.