Most contractors run their businesses using gut instinct, job schedules, and what’s in the bank account. But the best contractors we work with? They measure against benchmarks.

Benchmarks let you compare your financial performance to others in the industry—and spot red flags before they become real problems.

Today we’ll explore how financial benchmarking works, which metrics matter most, and how you can use benchmarks to grow more profitably.

What Are Financial Benchmarks?

Financial benchmarks are standard metrics used to evaluate how a construction company performs compared to others in the industry.

Instead of asking, “Is this number good or bad?”, benchmarking helps you ask, “How does this compare to others doing the same type of work?”

Why Contractors Should Care About Benchmarks

In construction, the margin for error is razor thin. You might be busy but not profitable. You could be making money but draining cash.

Benchmarks help you:

• Spot early signs of financial stress
• Set realistic goals for growth
• Improve conversations with bankers and bonding agents
• Align your team on what success looks like

“We’re doing okay” isn’t a strategy. Benchmarking gives you data to back your decisions.

What Should You Benchmark?

Here are some of the most important metrics we recommend for commercial contractors:

1. Current Ratio

Measures liquidity (Can you pay your bills in the short-term?)

• Benchmark: 1.5 – 2.0+

2. Debt-to-Equity Ratio

Measures leverage (How much debt are you using to grow?)

• Benchmark: < 3.0 is often preferred for bonding

3. Gross Profit Margin

Measures job profitability (Are your jobs profitable enough to cover overhead?)

• Benchmark: 15–25%, depending on trade and risk

4. Net Income Margin

Measures overall company profitability

• Benchmark: 5–10% is a solid target for many trades

5. Backlog-to-Revenue Ratio

Measures future workload coverage

• Benchmark: 3.0+ means you have enough future work booked

6. Overhead as a % of Revenue

Measures spending efficiency

• Benchmark: Usually < 20%, but depends on company structure

 

Common Red Flags Benchmarks Can Reveal

• Low liquidity? Could signal overbilling or cash flow issues
• High leverage? May limit bonding or loan capacity
• Thin margins? Could point to poor estimating or job management
• High overhead? Often means bloat or inefficiencies

The point isn’t to be perfect. It’s to know what’s normal—and what needs your attention.

How to Start Using Benchmarks

Step 1: Clean up your financials → Benchmarks are useless if your reports are wrong or late

Step 2: Choose 3–5 metrics to monitor → Focus on liquidity, leverage, and profitability first

Step 3: Track your trends monthly or quarterly → A bad month isn’t the issue. A trend is.

Step 4: Compare to peer benchmarks → Use tools like CFMA, RMA, trade associations, or your CPA/consultant

Step 5: Set improvement goals → For example: “Let’s increase our current ratio to 1.75 by year-end”

Bonus: Use Benchmarks in Your Team Meetings

Don’t keep this data to yourself. Share it with your team to:

• Create accountability
• Set clear targets
• Align estimating, project management, and accounting

When your team understands the score, they play the game better.

Ready to Benchmark Smarter?

If you want help using benchmarks in your monthly or quarterly financial review, our Atlas Growth Model includes built-in construction benchmarking tools. We compare your actuals to industry standards so you know where you stand—and what to improve.