With financial resilience under extreme pressure, Managing Director Phil Ellerby takes a look at short-term planning, pricing structures, cashflow and some difficult decisions.
Is it realistic to plan ahead in the current climate?
We’re ‘taught’ that you need to plan three, five or even ten years ahead – which is never an easy exercise, but it is especially difficult now as we approach the end of 2026.
For many firms, particularly in construction, the pace of change and volatility of macroeconomic conditions means the priority is purely survival. But even this short-term focus can have definition. So, ask yourself, what does success look like for the next 12 months – and be specific.
Are firms too obsessed with turnover?
I recently spoke to a prospect who wants to grow by 10 per cent – a seemingly conservative ambition. But they were currently underperforming by 50 per cent! Stop chasing turnover and ignoring margin. This is your financial efficiency metric.
Two of the most responsible things that firms must do in the remainder of 2026, are to create robust costing systems and get a grip on cost control. This will show if your pricing model is sustainable.
Look also at the profitability of individual service lines. What might feel like a popular part of your business may be costing more than you think. Wet room installations were a ‘best seller’ for one of our clients, but they never made any money on them!
Do you have any tips for keeping control of finances whilst aiming to grow?
At £1m turnover, you know everything. You grow to £4m, have 38 vans and don’t know whether they’re MOT’d or if the internal accounts team is overstating the balance sheet so it looks better than it is. This was a real customer scenario, and it’s not always this extreme. But my advice remains the same. Clear real-time metrics, open communication and trusted relationships are critical. If you don’t have these, make it your priority to fix this ASAP.
What is overhead absorption? And why is it becoming more important?
When you’re smaller, you complete a contract and make some profit. But with growth, if you make £25,000 on a job, you need to evaluate how this contributes to wider overheads – it’s not just about profit on the job alone. Overheads must be factored into modern pricing structures.
Also, and this is linked to my earlier point, look honestly at the shape and impact of your revenue. Facing severe burnout, we helped one client halve his turnover, while reducing overheads by more than 60 per cent which aligned better with his business and personal goals.
How can robust credit control help to improve cashflow?
It sounds obvious but robust credit control is critical to having money in the bank. We see so many subcontractors bankrolling billion-pound businesses because they’re desperate to secure the work. It’s hard to take a stance on this when there isn’t an industry-wide pushback. But not getting paid has catastrophic consequences.
Take an honest look at your client relationships and your ideal customer profile. If there are ‘repeat offenders’ or payment terms that will jeopardise your cashflow, it’s maybe time to come down a tier, however exciting the headline figures. Your accountant should objectively advise on this, without emotion.
Could you benefit from a Chief Financial Officer?
Not all businesses are of a size that warrants an in-house FD or CFO, but your accountant should adopt this advisory role to provide strategic guidance, impartial clarity and management challenge. Many business owners – particularly in construction – don’t want to admit there’s a problem, until they’re in a situation they can’t get out of. It’s okay to seek support – your business, and your wellbeing, will be better for it.
Disclaimer: This article first appeared in Insider Media, where it featured as part of an in‑depth interview, and should be viewed as a general advisory overview only. To benefit from bespoke financial advice, please get in touch and arrange an informal discussion.
