A crew can stay booked all season and still leave the owner unpaid. The jobs close because the number was low enough to win, the bills leave the same account the deposits land in, and when a client asks for a discount the price drops while the scope stays the same. The shop looks busy. The bank account does not.
This article puts two conversations with Shawn Van Dyke together: how cash should move once money hits the business, and how the sale should read when price is the only thing the client wants to talk about. Profit First for Contractors with Author Shawn Van Dyke is episode 82, published January 25, 2021. Stop Selling Price, Start Selling Value with Shawn Van Dyke is episode 256, published April 29, 2024. Shawn wrote Profit First for Contractors, adapted from Mike Michalowicz’s Profit First, and runs Built to Build Academy. Every percentage, dollar figure, and closing-rate band below is from those two conversations.
Put Profit Ahead of the Bills
On episode 82 he calls Profit First a cash management system. Money is allotted by percentage of revenue into separate accounts, in a fixed order. The system is customizable, but the five foundational accounts stay the same.
Income is first. Sales land there. Without money coming in, he said, you do not really have a business. Profit is next, because that is why you are in business instead of running a charity. Tax sits after profit, because a profitable company owes taxes. Owner’s compensation is fourth. For a small construction company that still depends on the owner in the field or the office, that person is the most important employee, and the account exists so the business does not treat the owner as leftover. Operating expenses, OpEx, are last. That is where bills and materials get paid once the other four accounts are funded at their percentage or dollar amount.
The order is the point. Money comes in, profit is set aside, tax is covered on that profit, the owner is paid, and then the company operates on what is left. If any of those accounts other than OpEx is empty, he treats that as the business screaming that something has to change. Robbing the next job to cover this week’s bills is not the plan, even when cash gets tight.
He also separates this from job costing. Profit First is not a job-costing system. One project will run better and another will tank. The OpEx account will swing. Watch it long enough and you find what he calls a zero balance: the number below which you stress and above which you breathe. Before Profit First, many of us felt broke at whatever figure payroll demanded. His example was $20,000 that felt like zero, with the balance sometimes rising toward $40,000 while you stayed in a workable range. After a while, if that floor climbs to $25,000 or $30,000, run the numbers again. After bills, taxes, and owner’s pay are covered, leftover money in any account is profit. Move it to the profit account and get it out of the business before it turns into another dump truck you did not need.
Raise the Price When Almost Everyone Says Yes
The other gap he named on that episode is the difference between looking profitable on a statement and being paid for your hours. Owner distributions in the United States, as he described them, do not sit on the profit-and-loss line the way a salary does. A company can look fine on paper while the owner works 60 hours a week. Run the hours and the math can say fast food would have paid better. Math does not care whether the client loved the patio.
Closing rate is the filter. When owners tell him they win 80 or 90 percent of the jobs they look at, he hears a price that is too low. His made-up comparison was ten $100,000 projects versus one $1 million project. Fewer clients, more money, less running around. He would rather see a closing rate around 30, 33, or 40 percent, industry and market depending, so that the nos filter the work down to higher-margin clients. At 30 percent you hear no about 70 percent of the time. Those 30 percent, with a dialed process, make more money and create fewer headaches than the 80 percent that keep you on 60- or 70-hour weeks. Word-of-mouth with no marketing and an 80 percent close rate is not a badge. It is a reason to market to better clients and raise the number.
He has never met a contractor who called because they were making too much. A 30 percent margin in landscaping or hardscape, in his experience, is very good. He has also seen companies do well at 27 or 26 percent. Enjoy a high-margin niche while you have it, and watch for competitors who undercut it. The more common problem is charging too little, then designing the company for every caller instead of for the best customer: the right neighborhood, the right project size, a design process, a healthy deposit, clients who stay out of the way, pay on time, and send referrals.
Debt follows the same rule. Do not borrow to operate. Change how you operate so you do not need the line of credit for payroll. Profit is a habit, not an event that arrives after the next truck or the next crew. His illustration of healthy growth was a business already making about 8 to 10 percent net profit. If that 10 percent was $50,000, take part of it, say $25,000, put it toward a truck, and finance the rest only because the profitability is already proven. Borrowing to grow after that proof is different from borrowing because this week’s payroll is short. Keeping about 50 percent of profits in the business, as he described it in the book conversation, is for cash flow when things come up. Separately, build toward three to six months of bare-minimum expenses: lights, owner, key people you would keep if revenue stopped, not a full fantasy payroll with every crew sitting idle.
The first real profit check changes behavior. He used $5,000 sitting in an account after every bill and tax was paid. You would have spent $5,000 on equipment without thinking twice before. Seeing it as earned profit makes you ask whether the family vacation or the used machine with a cousin fixing it is the better move. That is investing. Calling unpaid owner pay “reinvestment” is not.
Sell the Package, Not the Shopping List
When a client asks for line-item pricing, his default is no. Sell the professional and the whole project. He will talk through numbers out loud if they have questions. He used rough talk-through figures in that conversation, about $50,000 in driveway materials, about $12,000 in mulch and related work, about $6,000 for equipment to move it, only to show the habit of answering without handing over a shopping list. Written line items invite comparison shoppers. He had just seen a comment on Instagram from someone who told clients to collect two estimates so he could beat them by 10 percent. That is why the list is dangerous.
Owner-supplied materials get the same pushback. The paver line is not a grocery item you can swap off the shelf. The contractor price is tied to the management, insurance, liability, and crew that come with it. Square-footage shopping gets the same answer: we do not price by the square foot; we price the scope, and you can divide by whatever area you want afterward. Porta-johns, interest, and permits do not fit a neat per-foot story.
When the Number Stings, Fill the Gap With Data
By episode 256 the market had cooled from the rush years. Projects that looked solid were delayed. Labor and materials were expensive, and the gap between what a homeowner expected to pay and what the work cost had widened. Shawn’s advice to the contractors he coaches was not to argue with the economy. Fill the gap with data.
When someone says the project is about 30 percent more than they thought, agree with them. Show the supplier letters: increases of 10 percent, 5 percent, starting in January or March. Say you are uncomfortable presenting the number too. Then warn them about the bidder working from last year’s costs. A price 20 or 30 percent lower often means that company is not making money, and halfway through your job they will need another one to stay afloat. “I understand” is the phrase he wants in the room. Silence after the number is a tool. Let them ask what can be done. Ask what is most important before you dismantle the design. Phase it. Cut what is not a priority. Do not let them supply materials from a big-box aisle and call that a savings. Retail product is not the same as what you buy wholesale, and the risk of a wrong delivery sits with whoever ordered it.
He borrows from Chris Voss’s Never Split the Difference: a no is a decision, a yes is often a nervous lie, and a maybe is worthless. Pushing for a forced yes gets you a ghosted proposal. A clear no lets you close the file and go find another client.
Stop selling price, start selling value, in his words, means the number is friction and the benefits are why anyone buys. Ask whether you charge more than you did three years ago because labor and insurance went up, and then ask whether you are also better. If you are, part of the price is that improvement. When someone says you are 30 percent higher than another guy, he is willing to say he used to be that guy, and staying that guy would have put the company under. If price is their only filter, invite them to call ten other people. Do not chip the price while leaving the full scope in place. That is how you work for free.
If the job is roughly $100,000 and they can only do $90,000, he would rather negotiate value than silently eat $10,000. His example was filming the family at the start, again mid-project when the site is a mess, hosting a party at the end with designers invited, and writing that marketing access into the contract. He framed it as trading about $10,000 of price for $20,000 or $30,000 of marketing value he can reuse, leveraged toward something like $100,000 of marketing over years. The dollar gap could be $2,000 or $5,000 on a different job. The point is the same: the discount is paid back in documented promotion, with the right client in the right neighborhood. Dropping the price with nothing in return still shows up on the profit-and-loss statement as a loss of margin.
Give away the most valuable thing you know how to teach. Show the steps on video or in the proposal so a homeowner sees how many steps sit under a paver surface. His picture was someone realizing there were about 14 other steps just to get the base right, or a long video series they could follow but would rather not. The worst prospects try it themselves. The best ones hire you because the work looks hard and you already proved you know it.
Put the Client on a Monorail
Customers are always asking three questions, even when they do not say them: where am I at, how does this work, and what is next. Answer those at every stage. Development or pre-construction is selections and sketches. Contract is the agreement and deposit. Mobilization is the porta-john, the dumpster, the fence coming down, the mess before production starts. He used about two weeks as the example duration for that mobilization message. Keep them from jumping three stops ahead. He calls the path a monorail because you cannot get lost on one if every stop names where you are, how it works, and what comes next.
Status and data belong in that same conversation. Talking to ten people and advancing about two, or two or three, to the next stage is how he paints the filter. Of the ones who reach contract, the number they first talked about tends to grow by about 17.5 percent. Roughly the top 20 percent make it forward, and about half of those see the project grow once priorities get real. Tell them that up front. The ones who want that status stay. The ones who argue filter themselves out.
Systems start from the outcome, not from step one written alone in the office. For time cards, the outcome is 100 percent accuracy of time reporting. Let the people who do the work every day help build the steps, or they will ignore a step one that is not theirs. Time blocking is the owner’s version of the same discipline. Start with one two-hour block, his example was Friday from 3 p.m. to 5 p.m., and protect it for estimating, paperwork, or bookkeeping unless someone is bleeding or something is on fire. Practice it for about five or six weeks. You will miss some. Default back the next week. Grow it to four hours, then a day, then more blocks. Tell the crew so their questions arrive before the block starts. He compared it to Profit First: start with 1 percent if you have to, small enough that you cannot skip it.