July 27, 2025
Tom Howard sat alone in a hotel room at the MGM Grand in Las Vegas — stuck because of high winds, COVID raging outside — with a laptop, a yellow notepad, and a mission: build a budget for a business that had almost no reliable historical data and a growth rate that would curve like a hockey stick. He jumped for joy when he finally cracked the equation. That budget became the backbone of a $50+ million exit. If you think budgets are a finance department’s problem, this post will change your mind.
Why Most Contractors Are Flying Blind
Tom uses an analogy that is hard to shake: running a business without a budget is like flying a plane with no instruments. Your bank balance is your altitude. Your leads are your fuel. Your sales are your throttle. Your gross margin is your trajectory. You might feel like you are flying high because cash is in the account — but if your trajectory is pointed at the ground, you will not know until it is too late.
He describes a common scenario: a contractor sells a $20,000 job in August, banks the payment, then pays the labor two weeks later, and pays the supplier 45 days after that. In August, the bank account looks flush. In September and October, it looks dire. If you are making financial decisions based on your bank balance rather than an accrual-based profit-and-loss statement, you are essentially managing by guessing.
About 90% of the companies Tom has consulted for do not have a realistic budget. Most of the companies above $20 million in revenue do. That is not a coincidence.
How to Build a Budget From Scratch
Tom walks through the exact methodology he used for Fetch-a-Tech. Start with your biggest bottleneck. For most trades companies, that is technician capacity. If you have nine techs and each can generate $40,000 in revenue per month during peak season, your capacity ceiling is $360,000 per month in service revenue.
From there, work backward. If your average ticket is $500, you need 80 sold jobs per tech to hit that number. If your field conversion rate is 75%, you need 107 calls per tech. If your booking rate is 80%, you need 134 inbound calls per tech. Nine techs times 134 calls means you need 1,206 phone calls per month just to keep your field team fully booked in June.
Now you can have an intelligent conversation with your marketing team or agency. Not “the call volume feels light,” but “we need 1,206 booked calls in June, our booking rate is 80%, which means we need 1,508 total inbound calls, which means we need to increase our marketing budget by approximately X dollars.”
The Budget as a Scoreboard
A budget is not just a financial document. It is a shared reality. When Tom laid out the Fetch-a-Tech budget for the team, something shifted. Suddenly, every individual on the team understood what their specific contribution needed to be. The dispatcher knew how many calls needed to be booked. The sales team knew what revenue targets needed to be hit. The install manager knew how many systems needed to go in each month.
Tom quotes Tommy Mello’s famous principle: “Losers focus on winners; winners focus on winning.” A budget turns abstract ambition into specific, measurable, weekly performance. And when the team starts beating it — as the Fetch team consistently did, outselling their off-season July numbers in September — the scoreboard becomes the most powerful motivational tool in the building.
Accrual vs. Cash: The Accounting Method That Saves Businesses
Tom is unequivocal: you must view your financials on an accrual basis, even if you file taxes on a cash basis. The difference is simple but profound. On a cash basis, you record revenue when cash arrives and expenses when cash leaves. On an accrual basis, you record revenue when it is earned and expenses when they are incurred — regardless of when money actually moves.
For a trades business with 45-day supplier terms, weekly payroll, and jobs that sometimes close across month-end, the cash method produces wildly misleading month-to-month data. You will feel rich in August and broke in October from the exact same job. Accrual accounting ties revenues and costs together in the same period, giving you an accurate picture of what the business is actually doing.
If you don’t have clean, monthly accrual financials, Tom’s advice is direct: outsource it. The cost is less than you think, and the clarity it provides is priceless.
The Bottom Line
Tom Howard jumped for joy in a hotel room over a spreadsheet formula. That might sound unusual until you realize that formula eventually helped produce a $50 million business exit. A great budget is not a boring document — it is a strategic weapon. It lets you make fast decisions with confidence, communicate clear goals to your team, and spot problems before they become emergencies. Build one. Live by it. Revisit it monthly with your leadership team. And as Tom learned, be ready to be surprised when your team blows right past it.
