The Turnover Trap: Why growing your revenue in 2026 might be the fastest way to go broke.

It's January. The holidays are over. You are back in the boardroom looking at the forecast for the financial year.

The temptation is almost overwhelming.

“We need to grow. We need to hit $50 million this year. If we just win these three tenders, we fill the order book and the overheads take care of themselves.”

Stop.

If the last two years have taught us anything, it's that in the current Australian construction market, turnover is vanity.

We are seeing a dangerous trend where mid-tier contractors (turnover $20m–$100m) are trying to "grow their way out" of a cash flow squeeze. They take on more work to get the upfront mobilization payments, hoping it covers the losses on the last three jobs.

It’s a Ponzi scheme with your own balance sheet.

The "Profitless Boom" is still here

The latest data for January 2026 paints a sobering picture. While the economy is hoping for a "soft landing," the construction sector is still leading the nation in business failures.

In fact, ASIC data confirms that construction insolvencies hit record highs over the last 12 months. The scary part? Many of these weren't small mum-and-dad builders. They were established firms with massive order books.

They didn't run out of work. They ran out of cash.

Why $50M can be more dangerous than $10M

The math is brutal.

• Scenario A: You turn over $10m at 10% margin. You make $1m profit. You have 3 sites to manage. Your risk profile is low.

• Scenario B: You turn over $50m at 2% margin. You make $1m profit. You have 15 sites to manage. You need 5x the staff, 5x the bank guarantees, and 5x the cash flow.

In Scenario B, a single bad job (a wet month, a subbie collapse, a bad contract) wipes out your entire profit for the year.

The View from The Bench

In 2026, the smartest contractors we know aren't trying to get bigger. They are trying to get better.

They are declining the "sugar hit" of low-margin revenue. They are refusing to sign unamended contracts just to keep the crew busy. They are auditing their work-in-hand to ensure they aren't subsidizing a client's project with their own cash.

Our Advice for the Boardroom:

1. Audit your "Zombie Projects": Look at the jobs that are just washing their face. Are they consuming your best staff? Kill the tail to save the head.

2. Price for Risk, not Volume: If you can't get the margin, let the competitor win it. Let them go broke building it.

3. Watch the Cash Cycle: Growth eats cash. If you double your turnover, your trade debtors double, but your cash in bank doesn't. Ensure your facility can handle the swing.

References

• CreditorWatch: Business Risk Index January 2026 (Construction leads failures)

• Forward Path Advisory / ASIC: Building Company Insolvencies (Record highs 2024-25)

• The Access Group: Australian Construction Industry Outlook 2025 (The "Profitless Boom")