646: Insights For Small Construction Business Owners Post-Disruption

This Podcast Is Episode 646, And It's About Insights For Small Construction Business Owners Post-Disruption

The past few years have been challenging for small business owners everywhere. For contractors, the global disruptions—pandemic shutdowns, supply chain bottlenecks, labor shortages, and inflation—hit especially hard. Projects were delayed, material costs spiked overnight, and cash flow felt like a rollercoaster.

 

If you’re a small construction business owner, you’ve lived through it. And while it’s been painful, it’s also been a powerful teacher. As construction bookkeeping specialists, we’ve had front-row seats to see how disruptions shook contractors and what strategies helped them survive—or even thrive—despite the chaos. 

 

Here are the key lessons learned from global disruption that every small contractor should carry forward.

 

1. Cash Flow is King

When the world turned upside down, it wasn’t just about profits on paper—it was about cash in the bank. Contractors who had substantial cash reserves or disciplined systems for separating money (using methods like Profit First) were able to weather late client payments, supply delays, and unexpected expenses.

Those who ran lean with no buffer struggled the most. Many relied on credit cards, lines of credit, or personal savings to keep projects moving.

Lesson: Always budget with a cushion. Build a reserve fund equal to at least two to three months of operating expenses. Cash flow isn’t a luxury—it’s survival.

2. Material pricing can change overnight

Lumber tripled in price. The costs of concrete, steel, and copper spiked. Even basic items like drywall screws saw shortages. For contractors who bid on jobs months in advance, these increases wiped out their profit margins.

The most resilient contractors learned to:

• Add price escalation clauses in contracts.
• Limit the validity period of an estimate.
• Communicate openly with clients about material volatility.
  
  

Lesson: Build flexibility into your pricing. Protect yourself in writing from market swings you can’t control.

 

3. Diversification builds stability

Some contractors relied heavily on one type of work, such as extensive remodels or commercial tenant improvements. When those markets slowed during lockdowns, their revenue disappeared. Others had more diversified income streams—such as small service calls, maintenance contracts, consulting work, or digital products—and were able to pivot.

Lesson: Don’t rely on one type of project or client. Diversify your work mix so when one stream slows, another sustains you.

4. Relationships matter more than ever

When suppliers had limited stock, who got the materials first? The contractors have strong, long-standing relationships. When crews were in short supply, which subs stuck around? The ones treated fairly, paid promptly, and respected.

Lesson: Invest in your relationships. Pay suppliers and subs on time. Be transparent with clients. In times of disruption, trust and loyalty can save your business.

5. Technology isn't optional anymore

The pandemic accelerated the adoption of technology across the industry. Contractors who relied only on paper receipts, hand-written invoices, or in-person meetings found themselves at a standstill. Those using cloud-based bookkeeping, project management apps, digital invoicing, and video calls continued to move forward.

Lesson: Adopt technology before you “need” it. Utilize digital systems for bookkeeping, estimating, contract management, and communication. It’s not about replacing personal touch—it’s about being adaptable when disruptions happen.

6. Lean teams are resilient teams

 

Many small contractors discovered they were carrying extra overhead—unused office space, underutilized vehicles, or administrative costs that didn’t directly produce profit. During global disruption, reducing the crew to essentials, subs, and systems made survival possible.