The Biggest Budget Mistakes We See Clients Make
1. Building a Budget Based on Hope Instead of Capacity
Why it happens:
Revenue targets are often set based on “what we want to do next year” rather than what the company can realistically execute with its current team, backlog, and systems.
Common symptoms:
Aggressive revenue growth assumptions
No plan for additional staff or systems
Burnout in operations and admin teams
Fix:
Start with capacity, not revenue:
Current crew size
Average revenue per PM / crew
Backlog quality and timing
Then build growth on top of that reality. It’s okay to have a budget based on ideal growth, but have a version that also shows you a “worst case scenario” breakeven so you know where you need to be at a minimum.
2. Underestimating Overhead (Especially Payroll & Admin Costs)
Why it happens:
Overhead grows quietly (raises, benefits, software, insurance, vehicles) but budgets are built using last year’s numbers plus a small increase.
Common symptoms:
“Overhead creep” throughout the year
Changes / investments in the business to keep up with growth
Surprises in Q3–Q4 that weren’t on your radar on January 1
Fix:
Line-item your overhead:
Fully loaded payroll
Insurance increases
Software & subscriptions
Office, vehicles, and professional fees
Assume costs will rise, because they almost always do.
3. Creating a Budget and Never Looking at It Again
Why it happens:
Budgets are built in December, filed away in January, and ignored until year-end.
Common symptoms:
No visibility into performance vs plan
Overruns discovered too late
Budget feels “useless”
Fix:
Use the budget as a management tool:
Monthly budget vs actual review
Quarterly re-forecast
Adjust as backlog, staffing, or market conditions change
A budget is only powerful if it’s used.
In summary: Building your annual budget is an opportunity to take an honest snapshot of where the business stands at the start of the year and to map out a realistic plan for the year ahead. This process helps clarify your target gross profit margins (job profitability) alongside your overhead (fixed) costs. Together, these inputs establish clear benchmarks: what each job needs to produce and the overall breakeven point the business must reach to cover its core expenses. Optimism has its place in setting goals and motivating growth, but day-to-day operations should be grounded in realistic expectations.
Once the budget is finalized, it’s equally important to have a system in place to regularly compare budget vs. actual performance throughout the year. No company finishes a year exactly as originally planned and that’s expected. What matters is understanding how actual results compare to your assumptions so you can adjust proactively. For example, you may budget for significant hiring, but if sales soften by Q2, that may be a signal to pause or delay certain hires. On the flip side, coming in under budget on an expense like insurance may appear positive at first glance, but it could also indicate that a required premium or coverage was overlooked. Regular reviews turn the budget from a static document into an active management tool.
Let the budget be your guide in 2026!