Cash flow comes first. You can be profitable on paper and still run out of money. Track your cash position weekly at minimum. Know what’s coming in, what’s going out, and when. Growing companies often die from cash flow problems, not lack of profitability. Your bank balance matters more than your income statement when payroll is due Friday.

Gross profit margin tells you whether your pricing works. Revenue growth means nothing if you’re losing money on every job. Calculate gross margin by project or service line, not just for the company overall. You’ll often find that certain work is subsidizing other work, and you need to know which is which so you can adjust.

Accounts receivable aging shows how long it takes customers to pay you. When you’re small, you notice when someone doesn’t pay because you remember sending the invoice. When you’re growing, invoices get lost in the shuffle. Run an aging report weekly. Anything over 30 days needs follow-up. Anything over 60 days is a problem. Anything over 90 days may already be a write-off.

Labor costs become critical once you have employees. Track total labor as a percentage of revenue. For contractors and trade businesses, this should land somewhere between 25% and 40% depending on your industry and business model. If that percentage creeps up, you’re either underbidding, undercharging, or your crew isn’t as efficient as you think.

Overhead ratio measures your fixed costs against revenue. Rent, insurance, vehicle payments, office staff, software subscriptions. These costs don’t shrink when work slows down. Know what percentage of revenue goes to overhead so you understand your break-even point. Growing companies often add overhead faster than they add revenue, which compresses margins even as sales increase.

Track profitability by customer or project type once you have enough history. Some customers are more profitable than others. Some types of work generate better margins. The data helps you focus on the right opportunities instead of chasing any revenue that comes your way.

As you scale past a handful of employees, fractional CFO services can help you identify which metrics matter most for your situation. The tracking needs of a five-person electrical contractor differ from a twenty-person general contractor or a growing service business with recurring revenue.

For contractors specifically, committed costs matter as much as actual spending. You’ve signed contracts with subs totaling $50,000 but only received $15,000 in invoices so far. Your current expense reports look fine, but you’re already committed to that remaining $35,000. Track what you’ve promised to pay, not just what you’ve paid.

A construction bookkeeper American Fork can set up reporting that surfaces these numbers automatically. The goal isn’t tracking for its own sake. It’s seeing the warning signs early enough to do something about them. Shrinking margins, aging receivables, rising labor costs. Catch them at week three instead of month three and you have options.

The metrics that matter change as you grow. A one-person operation really just needs cash flow visibility and job profitability. A company with employees needs labor tracking and overhead management. A company doing seven figures needs all of that plus customer profitability analysis and cash flow forecasting. Start simple and add complexity as the business demands it.