The 10% rule every contractor must follow

Business is good. You have multiple jobs, you’re keeping your guys busy every day with plenty of money coming in. Then the tide starts to go out as your payables start coming in and what once looked like a nice healthy cushion in your bank account isn’t looking so fat anymore.

We’ve all been there. “Where does it go?”  Every self employed contractor asks eventually. The black hole of course. The black hole of overhead, the black hole of business expenses. Yes, you are paying yourself, your guys, your vendors and keeping the lights on, but this nagging voice keeps whispering, “Is it all worth it?” Is it worth all the time, stress and energy to keep all the plates spinning for what seems like an endless cycle of paying bills and putting out fires? Maybe you even think back to a time when it was just you and your van with your tools. “Wasn’t I happier back then?” you ask yourself.  Maybe yes, maybe no, but the fact is that its simply too complicated now to really know the truth. Most likely you were sitting in your van with your tools dreaming of the day when you could afford to pay someone else to do the work.

But here you are now. So how do you find the clarity and motivation that you need? When despite all of your success you seem to have nothing to show for yourself or your company at the end of each  job?


The answer I’ve found lies in the fictional story of the ancient scribe from Babylon named Arkad from George Clasons famous story “The Richest Man in Babylon”. In this classic tale, Arkad reveals the secrets of how he became the richest man in Babylon by following the “Seven Rules of a Lean Purse” and “The Five Laws of Gold”

The first rule which is the keystone to all the others is that “Part of what you earn is yours to keep” What a novel concept!  Taking 10% of your income and setting it aside to make it your slave and never setting it free.  In other words, invest it, lock it up and throw away the key! You can live/operate/work off the remaining 90% and you will never miss the 10% that you have set apart. Now this may sound over simplistic but just imagine if you had been doing this from the very start. Would you not be in a different spot financially than where you are today?

I have adapted this philosophy for my business as well as my personal life. I take 10% of all my gross sales and pay myself first. But, what if my company needs that 10% to operate or pay its bills you may be asking? Herein lies the key! If my company is running low on cash and lets say my workman’s comp insurance bill is due, I’m sure as hell going to find a way to pay that one! But, if I’m running low on cash and everyone else has been paid and I haven’t paid myself yet, I’m more than likely going to let that one slide and wait for the next train. But, experience has taught me that once the train leaves the station it never comes back.


Because we get LAZY!!! The fires are all put out, it’s Friday and the beer is cold. We will worry about saving or retirement tomorrow. It’s simply human nature.

You have to pay yourself first! Try it and see how your entire outlook on your business changes over night.

And read the book. A used copy is $1.00 plus shipping on amazon…  The Richest Man In Babylon


Nathan Dishington has been a General Contractor in the greater Boston area since 2002.  He shares his experience and anecdotes from the wild world of residential remodeling to help bring some sanity for both contractors and homeowners alike.

Nathan Dishington

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