Where Does the Money Go?
A 5-minute walk-through of how Taishan actually makes — or loses — money each month. No accounting knowledge needed.
Revenue Is Not Profit
Follow one month of $300,000 all the way down.
The company did $300,000 of work, but only $17,600 was actually left.
What Does It Cost Just to Keep the Company Running?
These costs happen whether we build $0 or $500,000 of work.
Current management estimate — classification should be verified with accounting. If a wage is already inside direct project labour when we calculate the 25–28% project margin, switch it to “Direct project labour” so it is not counted twice.
How Much Work Must We Complete Before We Make $1?
Company Profit = Revenue × Gross Margin − Operating Expenses
The first ~$237,143 of monthly production only feeds the operating machine. Only production beyond that begins creating company profit.
Production × Margin = Result
Tap any cell to see the full calculation.
| Monthly | 20% | 22% | 25% | 28% | 30% | 32% | 35% |
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Margin Changes the Amount of Work We Need to Survive
Low-margin work forces the company to chase more revenue just to stand still.
“More Revenue” Is Not Free
- 1More revenue
- 2More projects
- 3More customers
- 4More scheduling
- 5More trucks / fuel
- 6More workers
- 7More mistakes / callbacks
- 8More management
- 9More mental energy
Increasing revenue is one solution — but revenue growth also increases operating complexity.
This is why increasing productivity and margin can sometimes be more powerful than simply adding more projects.
What Management Can Actually Pull
Saving $10,000/month means ~$35,714 less production required at 28%.
Profit accelerates once fixed overhead is already covered.
Same customers. Same $300k. Same crews. Very different result.
Every Fixed Dollar Must Be Supported By Gross Profit
Required Revenue = Fixed Cost ÷ Gross Margin
This Is Not About Blaming Employees
An employee does not need to personally install $35,714 of work. Value can be created indirectly.
The economic question is simple: does this position create or enable enough gross profit to justify its cost?
If One Part Doesn’t Carry Its Weight, Another Part Must
Example only. Monthly fixed cost $10,000 at 28% margin requires $35,714 of enabled production.
Directly or indirectly enables enough production. The cost pays for itself.
If one part of the operating structure doesn’t carry its economic weight, another part has to carry it.
The Same Crew Does Not Produce the Same Value Every Day
The crew’s daily labour cost stays almost identical. Their economic output does not.
Small Job vs Large Job
Same workers, same truck, same 8–10 hour day, similar daily labour expense.
Even perfect execution cannot produce more — the whole contract is only $2,000.
≈ 3.75× more production value
≈ 7.5× the $2,000 job
Production Progress Is Not Profit
$15,000 of contract progression does not mean $15,000 of profit — materials and direct costs still exist.
This one matters more — gross profit is what pays company overhead.
Production Value ÷ Crew-Day Cost
Illustrative management tool, not an accounting rule.
A Profitable Job Can Still Be a Poor Use of a Crew-Day
A $2,000 job might make money. That does not automatically mean sending a major production crew there was the best decision.
Crew spends the whole day on a small project.
Same crew progresses a larger project.
This is not automatically lost profit — it is production capacity that was used differently.
Workers Can Be Busy Without Producing
Every transition consumes labour hours without installing any work.
- 1Crew leaves yard
- 2Drives to job
- 3Unload equipment
- 4Setup
- 5Work
- 6Cleanup
- 7Load equipment
- 8Drive again
- 9Setup next project
Busy is not the same as productive. Only installed work creates production value.
What Must We Produce Every Working Day?
Simplified management benchmark, not an accounting rule.
Where Cash Flow Stops
At 28% margin and $66,400 operating expenses.
$250,000 a month feels like a big company. Under this cost structure it is barely above survival.
Cash Problems Are a Sequence, Not One Mistake
Cash problems are usually the result of a sequence, not one giant mistake.
We Cannot Remove Uncertainty. We Can Build Enough Margin to Survive It.
You Cannot Divide Money That Was Never Left Over
- 1Actual profit
- 2Debt / old wages
- 3Savings / investment
- 4Owners
Why Old Obligations Make It Worse
Old wages, supplier balances and previous losses must come out of the small final slice.
Enter your own number.
Three Zones
“Healthy” is not a universal accounting fact — management chooses the target.
The company is consuming cash.
Survives, but no protection.
Reserves, clearing liabilities, reinvestment.
How Much Work Do We Actually Need?
Required Revenue = (Operating Expenses + Desired Profit) ÷ Gross Margin
Put It All Together
All assumptions are estimates for management discussion, not audited accounting figures. CAD.
Six Questions
Are we pricing projects at sufficient margins?
Does every fixed operating position create or enable enough economic value?
Are our strongest crews spending their days on the highest-value production?
Are small jobs and mobilization consuming high-value crew capacity?
Can the existing structure produce significantly more without significantly increasing overhead?
Are we measuring success by revenue — or by gross profit and cash actually retained?
The problem is not necessarily that we don’t have enough work.
The question is whether our existing people, time and money are producing enough gross profit.
Taishan Construction — internal management model. Estimates only, in CAD.