Quick Summary
When firms get more clients through marketing but still struggle with cash flow, the instinct is often to blame marketing or cut the budget. In this post, fractional CFO Stefanie Beharry explains why the real culprit is usually unoptimized project margins. If pricing and costs aren't dialed in first, generating more leads simply means doing more high-effort work at thin profit margins. We explore the warning signs of unprofitable growth and why fixing per-project profitability—rather than slashing marketing—is the true key to sustainable business growth.
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A fractional CFO explains what might be going wrong.
As I prepare for a seminar I’m teaching at the AEC/AI Summit in Austin, I’ve invited a few friends to take over this newsletter throughout November and share their insights.
First up is Stefanie Beharry from REI Finance, a fractional CFO for companies in the design and construction industry.
More Leads, But Not More Profit
Some clients don’t renew their marketing contracts because they’re not making enough profit. Marketing is bringing in leads and clients, but there’s still not enough money left after expenses.
They tell us, “I’m working hard, we’re getting clients, but there’s never enough money left over.”
So I asked Stefanie: Why does this happen?
“More leads mean more clients or projects. But more projects also mean more costs: more hours, people and resources.
If pricing and project costs weren’t dialed in before growth, the business can end up doing more work at the same thin margin.
Marketing did its job and brought in demand, but the business wasn’t set up to make that demand profitable.”
Three Signs of Unprofitable Growth
According to Stefanie, there are a few signs to see this coming:
- Revenue keeps climbing, but the bank balance doesn’t.
- You don’t know which clients or projects are actually profitable without digging through the numbers.
- New business is covering the costs of old projects instead of each project funding itself and leaving something extra.
The problem often gets blamed on marketing: “The leads aren’t good enough” or “We need to cut the marketing budget.”
But the real issue may be pricing and project profitability.
How to Afford Marketing
Stefanie says the first step to affording marketing is knowing what each client or project actually costs to deliver. Most owners know their numbers at the whole-business level, but not the per-project level.
Once you can see the numbers, the fix is usually pricing or scope, not cutting marketing.
If each new project has a healthy margin, more marketing can mean more profit. If the math isn’t clear, more leads may just mean more work at the same thin margin.
See you next next Thursday!
Tchau,
Daniela
