As the year wraps up, it’s time to take an honest look at your business finances. In this newsletter, we’ll break down the key questions every business owner should ask themselves before heading into the new year.
You’ll learn:
Why true profitability is more than just net profit.
How to calculate whether your business could survive without you.
What steps to take if you’re stuck in survival mode.
Why insurance should be a part of your profitability equation (if it's not already).
The importance of working capital to keep your business running smoothly.
Let’s get to it.
What Does It Mean to Be Profitable?
If your business isn’t paying you a salary and leaving profit after covering all expenses, it’s not really truly profitable.
And if your company couldn’t run without you doing the day-to-day work, those numbers on paper don’t reflect what’s really happening.
But there’s more to profitability than just paying the bills and making a little extra at the end of the year. If you don’t have the right protections in place, like insurance, your business might not be as profitable as it seems.
Here’s how to evaluate where you stand:
Salary: Could your business afford to hire one or two people to fully replace your role?
Profit After Payroll: After paying those replacements, is there any money left over?
Insurance Costs: Do you have the right insurance coverage for your operations, including liability, vehicle, and worker's comp insurance?
Working Capital: Do you have at least 1-2 months of expenses saved in the bank?
If you answered "no" to any of these, it’s time to focus on building that cash reserve and grow a business that can stand on its own.
Why Insurance is a Key Factor in Profitability
Many owner-operators think they’re doing fine without proper insurance—maybe they’re relying on friends or a couple of helpers, or they assume that since they’re doing the work, they don’t need coverage. But ignoring insurance can cost you big time.
And don’t get me wrong—everyone hates paying insurance premiums. I hate them. You hate them. Everyone hates them because they’re insanely expensive. Mostly because you’re paying for the uninsured in one way or another. When you actually need to use your insurance, they make it incredibly difficult to file a claim and actually receive money.
That’s the whole model behind insurance: collect premiums, limit payouts—that’s how they make money, in addition to investments.
But it’s part of the game. It’s one of the rules, and as much of a rule-breaker as I am, it’s not one you can afford to break. The risk far outweighs the reward when you skip insurance.
Things happen in this line of work—especially when you're operating trucks, heavy equipment, and working on job sites. Accidents can happen at any time. Even if the accident isn't your fault, you're still liable. And if one of your helpers is involved, the consequences can be even more severe.
Getting the right insurance and protections for your business is non-negotiable. It’s a crucial part of becoming a legitimate, profitable business. It's a cost that needs to be factored into your profitability equation, and it’s one that too many operators overlook.
Understanding Your Numbers and True Profitability
Now, here's a key point: understanding if your business is truly profitable and what to do if it's not will really set you on the right road. Too many guys don’t know their business numbers and continue doing the same thing over and over again, and that’s not good.
If you don’t understand your numbers and aren’t truly profitable, just grinding away without taking the time to analyze where you stand—or knowing how to do that—you’ll never get ahead. Knowing the problem, if there is one, is the first step toward making the necessary changes to get to profitability, make more money, and improve the quality of your life.
I see too many guys find this out when it’s too late—another year flies by, they don’t have a plan, they don’t understand their numbers, and they’re just chasing job after job.
They’re grinding to complete jobs.
They’re grinding constantly, barely coming up for air.
They’re just trying to pay their bills.
They don’t have investments.
They don’t have retirement money saved.
They don’t have a ton of disposable income.
They get frustrated, and it becomes an absolutely vicious cycle.
You can break that cycle, but you have to understand your business’s true financial health first. That means taking the time to break down the numbers and understand where you stand.
The Importance of Working Capital
First, what is working capital? It's basically the cash you need to keep your business running on a day-to-day basis. It’s the money that sits in your bank account, set aside to pay for things like bills, payroll, rent, and other everyday expenses. Think of it like a safety net or a cushion that helps you cover these costs when the money you’re making from your business isn’t coming in as fast as you'd like.
Why is Working Capital Important?
It's crucial for your business’s survival. Without it, you’re at risk of running out of cash when things get tough. For example, if you hit a slow month where you're not getting as many jobs, or if a few big clients delay their payments, you’ll still need money to cover your bills.
Without enough working capital, you may find yourself scrambling for cash, which could force you to borrow money or use outside sources to stay afloat—and nobody wants to rely on that. It's nerve-racking.
How Does it Help Your Business?
In addition to the above, it also gives you the breathing room to reinvest in your business—whether that’s buying new equipment, marketing your services, or hiring additional help.
Simply put, having enough working capital means you're not constantly living paycheck to paycheck in your business. It gives you the peace of mind to focus on growing your company, instead of constantly worrying about where the next dollar is coming from.
A Real-Life Example
Imagine your profit and loss statement shows $30,000 in net profit at the end of the year.
Sounds decent, right?
But if you didn’t pay yourself a salary, that number doesn’t tell the full story.
Let’s say it would cost $60,000 annually to hire two people to replace the work you do (that's really low btw). Subtract that from your $30,000 net profit:
$30,000 - $60,000 = -$30,000
Your “real” profit is a $30,000 loss. And that’s before payroll taxes.
Add the need for $20,000–$30,000 in working capital, plus insurance premiums—which can range from $5,000 to $15,000 or more per year depending on the type of coverage—and now you’re short 50 to 60 grand.
This is the reality check many business owners face.
Ignoring it won’t make it go away.
The Quick End-of-Year Litmus Test
Take these five steps today to evaluate your business:
Did you pay yourself a salary this year? If not, calculate what you should be paying yourself based on your role. Also, consider how much it would cost to hire one or two people to fully replace your role, including salary, benefits, and training.
Factor in your insurance costs—including liability, worker's comp, and vehicle coverage. These are essential expenses for a legitimate business.
Include working capital in your calculation. Ensure you have at least 1-2 months of operating expenses saved in the bank to cover slow periods or unexpected costs.
Subtract these amounts from your net profit (salary replacement costs, insurance, and working capital).
If the result is zero or less, it’s time to focus on building the foundation of your business—not just fine-tuning things.
Your Next Steps
It’s time to address the root issues before focusing on long-term goals.
Here’s where to start:
Identify where you’re losing money—look at expenses, pricing, or inefficiencies in your operations.
Cut unnecessary costs and focus on maximizing the value of every dollar spent.
Improve cash flow by speeding up invoicing, reducing delays, or finding new revenue streams.
Once you're on the right track, work towards these key goals:
Pay yourself a consistent, fair salary.
Save enough to cover 1-2 months of expenses as a cushion.
Ensure you have the right insurance coverage to protect your business.
Generate enough profit to reinvest in growth or save for the future.
By addressing the immediate gaps in profitability, you can move toward building a strong, sustainable business.
For more info on ways to maximize your profits, download my ebook "Beyond Breaking Even" completely free for a limited time [here].
If you've found yourself in this or a similar situation, put aside concerns about optimizing taxes or cutting corners for now.
Your priority is building a business that can operate without being dependent on you to survive—and without putting your future at risk by skipping insurance or neglecting working capital.
The Bottom Line
As you plan for the new year, use this framework as a guide. This isn’t about just getting by—it’s about creating something sustainable and secure. Let’s make 2025 the year you take full control of your business.
You've got this.✌️
Justin Hubbard
PLUS: Whenever you're ready, here are three ways I can help you grow your business:
1. Get Personal Help with a FREE Strategy Call
Need fresh insights on your business strategy? Book a FREE 30-minute call with me. I help identify winning strategies to boost your bottom line and enhance your quality of life.
You’ve hired experts for your golf game and finances—now hire a coach to help your business thrive. As a fellow small business owner, I understand the challenges and know how to navigate them for growth and success. Book your strategy call HERE.
2. adimize: Grow Your Business with Our Proven Google Ads System
Want to maximize your ad spend and drive results? Get a FREE Google Ads account review with adimize. Our team specializes in optimizing ad campaigns to drive leads and increase bookings. With over a decade of hauling industry marketing experience, we help your business grow using intent-driven, results-focused strategies. And with no contracts, there’s nothing to lose. Schedule your free review HERE.
3. Order My New eBook: Beyond Breaking Even | Unlocking Profit Potential In Hauling Businesses
Discover how to generate sustainable revenue and growth. This book provides targeted, efficient strategies specifically designed for the hauling industry. Inside, you'll find actionable insights on how to scale your business, optimize operations, and increase profitability while minimizing risk. Learn from real-world examples and proven methods that have helped businesses like yours go beyond survival to achieving success. Purchase your copy HERE.
Kommentare