Why 67% of Contractors Go Broke by Year 5: The Real Numbers Behind Construction Cash Flow
Data analysis of 400+ construction companies over 60 months reveals why two-thirds of contractors fail by year five. Failed companies averaged 112-day cash conversion cycles versus 67 days for survivors, operated with 1.1 to 1 working capital ratios instead of the 2.3 to 1 needed for construction’s extended payment terms, and only 23% used credit facilities compared to 89% of surviving companies. This post provides the exact financial metrics that separate surviving contractors from the 67% who fail.