Identifying Hidden Profit Leaks in 8-Figure Restoration Businesses
When your restoration company crosses the $10 million mark, it’s easy to assume that the heavy lifting is done. You’ve built strong teams, systems, and market share. But the truth is—the bigger you get, the easier it is for profits to quietly leak out.
At this level, it’s not about whether you’re profitable. It’s about whether you’re leaving hundreds of thousands of dollars on the table because of inefficiencies hidden in the details.
Here’s how to find the hidden profit leaks that are common in 8-figure restoration companies—and what you can do about them.
1. Poor Job Costing Discipline
You probably have a job costing system in place—but is it being used consistently and accurately across all divisions?
Common leak points:
Labor not tracked correctly to jobs
Materials expensed to general ledger accounts instead of assigned to projects
Missing overhead allocation (especially project manager time, equipment usage)
Solution:
Audit 5-10 random jobs per division. Are the actual gross margins where you expect them to be? If not, dig into why—and enforce tighter data discipline.
2. Unbilled or Underbilled Work
With large volume comes chaos. When multiple crews are in the field, it’s easy to forget to bill for:
Equipment left onsite longer than estimated
Change orders not signed but completed
Emergency labor hours that weren’t included in the original scope
Solution:
Run a monthly audit of jobs vs. invoices to catch discrepancies. Build automated alerts for unapproved or missing change orders.
3. Inefficient Labor Deployment
When you scale quickly, labor costs tend to creep. Crews might be clocked in but idle. Project managers might be overburdened and unable to properly supervise field teams. Overtime may be used to compensate for poor scheduling.
Solution:
Compare labor cost as a % of revenue across crews or locations. Spot outliers. If one team consistently operates at lower margins, it’s a signal to investigate deeper.
4. Vendor Bloat & Overpaying for Materials
At $10M+, you should be getting better deals. But unless someone’s actively managing vendor relationships, pricing often stays the same as it was at $3M. You might also be buying from too many vendors, missing out on volume discounts.
Solution:
Consolidate vendors where possible. Have someone price-check your top 20 materials quarterly. Negotiate based on spend.
5. Underperforming Divisions Hiding in Consolidated Reports
Your company may be profitable overall—but if you’re not reviewing financials by division, you may be carrying a chronically underperforming branch, team, or service line.
Solution:
Implement division-level P&Ls with clear KPIs. Hold leaders accountable to gross margin targets. Use internal benchmarking between divisions.
6. Cash Flow Timing Issues Masking Profitability Problems
When collections are delayed—especially with insurance carriers—you might not feel a profit leak until you’re in a cash crunch. That’s often when leadership realizes a job was never profitable in the first place.
Solution:
Pair job costing reports with a rolling cash flow forecast. Identify when revenue should hit vs. when it actually does—and how long you’re carrying costs in the meantime.
Turn Leaks Into Leverage
The scariest thing about hidden profit leaks is how quietly they add up. But the good news? Once you find them, fixing them puts money straight to the bottom line—without needing to grow top-line revenue.
You’ve already built the machine. Now it’s time to tighten it up and let it run at max efficiency.
Want a fresh set of eyes on your numbers? Kiwi Cash Flow helps 8-figure restoration companies tighten margins, uncover profit leaks, and turn reports into strategy. Book a free strategy call today and let’s plug those holes.