When does an electrical crew turn work into profit and cash?

Build sales from sold hours and completed job scope

At base prices, a two-hour service call has an illustrative invoice of $580 including materials and the blended permit allowance. An eight-hour installation has an invoice of $2,830. These are lump-sum job equivalents, not advertised tariffs. Service work takes 60.0% of billed hours; installation uses the remainder. Job counts are therefore outputs from hours and durations, not a second independent sales forecast.

Demand loads usable capacity from 35.0% in month 1 to 90.0% in month 12 before seasonality. January-start multipliers are planning assumptions, not measured Texas demand. Production stops at capacity and unmet requested hours are recorded. The same two-person payroll remains paid during the ramp; owner time is not made free to improve launch profitability.

Read contribution, EBITDA and cash as different measures

Materials, permit cost, fuel, consumables, card fees and credit losses are variable. Wages are a fixed paid roster: $6,400 owner wage, $5,280 journeyman wage and $2,102 employer-cost allowance each initial month. Fixed nonpayroll overhead is $3,300. BLS’s US employee wage comparison supports a labor benchmark only; it does not verify a Texas offer or self-employed owner income.

Contribution before paid roster equals revenue less those variable costs. EBITDA then deducts fixed payroll and overhead. Profit before tax further deducts book depreciation and interest. Cash deducts interest and principal and adjusts for stock, receivables and payables. Borrowing proceeds are opening financing, not revenue. Reserve is cash, not an operating expense.

The downside cannot be funded into profitability

Downside prices are 0.9 times base, material cost is 1.2 times base, travel consumes 30.0% of paid time and callbacks consume 8.0% of billed time. Service-hour mix falls to 40.0% and installation collection slows to 40.0% in the same month. Those drivers produce persistent losses and negative cash from month 4; no rescue credit line is inserted.

At Year 1 downside economics the cash threshold exceeds usable crew capacity. The failure is structural: even a fuller diary cannot cover the assumed wage bill, overhead and debt at those margins. Reprice, narrow the territory, improve scope control or change staffing/commitments before committing more capital. The gap is the modeled cumulative deficit, not a recommendation to borrow it.

Upside improves prices, routing, callbacks and collections while retaining the same people and van. It does not assume that a busy month adds free crew capacity. Demand above the cap is unserved, and earnings do not include a second crew’s revenue.

A first-month result can tie even when it loses cash

Reducing base same-month installation collections from 70.0% to 40.0% lowers the minimum cash to $17,391 while leaving sales and EBITDA unchanged. The ordinary earnings statement cannot diagnose that timing risk alone. The model independently reconciles every month’s direct receipts and supplier payments to cash and balances assets against debt, payables, contributed equity and retained earnings.

Define the investment before quoting recovery

Project recovery here means cumulative pre-income-tax cash before debt service and after working-capital changes reaches total opening uses of $144,996. It includes the opening reserve in the investment basis and assumes no later asset replacement, sale or distribution. Base reaches that basis in month 41; downside does not reach it within 60 months; upside reaches it in month 18. This is a comparison convention, not an investor return or a promise.

Equity cash recovery instead compares cumulative cash after scheduled debt service with contributed equity. It has a different month and still leaves a loan balance. Neither measure includes owner income taxes, terminal value or a new van after the book life. EBITDA divided by debt service is shown separately from cash available after working-capital changes; neither is labeled a lender’s underwriting DSCR.

Owner compensation is already paid in the model

Year 1 gross owner pay is $76,800, for 20 paid days per month at $40 per paid hour. It covers on-site work, travel and administration inside the stated time budget. Burden is applied to both workers; no unpaid master-supervisor role is hidden outside payroll.

That wage is not take-home pay, dividend cash or the full return on equity. The reference ledger excludes income taxes and owner distributions. Leaving cash in the company protects the ramp and the ability to replace stock; withdrawing the accumulated balance would require an explicit new distribution/covenant scenario. Record the owner’s required household cash separately before adopting this case.

Compare the monthly cash path

Download all scenario cash values (CSV). This educational case export is separate from the planned personalized Excel model.