I had a great conversation with a digital marketing-inclined client today about ad spend and budgeting as we head into winter. He runs a junk removal and dumpster rental business and had questions about where his budget should be allocated to help him continue growing. This client has shown a tremendous amount of growth this year, but as a newer business, he’s in that headspace of wanting to grow quickly.
I remember being there myself when I was a young business owner—wanting fast growth without fully understanding how tough and expensive it can be in a linear service business like this.
Growth in our industry is often tied directly to how many trucks you have and how many jobs you can complete. If you want to double sales, you usually need to double capacity, which means doubling assets, labor, and ad spend. That’s a big commitment, especially as we approach the end of the year and the slower winter season. I shared some of my own experiences with him about how, when business is going well and you’re seeing growth, acquiring assets, and staying cash flow positive, it’s often best to take a slower, more methodical approach to growth. Don’t overextend your capital or take on too much financing and debt to grow too quickly.
I’ve always been driven by speed—growing as fast as possible and getting to the sale quickly because I value the feedback I get from each step to make better business decisions. But when it comes to heavy capital investments, especially in big, expensive assets, it’s easy to find yourself in a tough spot if things don’t go perfectly. Even if nothing goes wrong and things just stay the same, you could end up struggling to cover monthly carrying costs and interest, which is a bad place to be.
Years back, I tried expanding too soon into a territory to the north. I thought I had enough inventory, trucks, and manpower to handle it, doubling our service area to reach a larger population. But I was wrong. We increased our ad spend, hired new staff, bought a new truck, and set aside dozens of dumpsters for that area. But we couldn’t get enough business up there quickly, and our main territory kept demanding more of us, stretching our resources thin. After a year of trying to make it work, we pulled back. We brought all our assets back home, built up inventory, and refocused our efforts in our primary area. Then, a couple of years later, we launched back into that northern territory, and now it’s going well.
That experience taught me how expanding too quickly can get you ahead of yourself. Thankfully, I didn’t lose money, but I didn’t make nearly as much as I could have, and it could have easily gone the other way, putting us in a position where we’d struggle with cash flow.
So, my advice to anyone looking for more growth is to work with what you have until you’re at least 90% tapped out—aim for a 90% asset utilization rate throughout most of the year before looking to grow.
Build up your cash reserves, stay net profit positive, and make smart, well-timed investments. I also suggest planning major investments carefully, avoiding big purchases in the slower months, like winter and holiday season. If you’re buying trucks, dumpsters, or other assets, try to arrange for delivery in early spring. Put down a small deposit if necessary but delay payments until spring. Timing can be a major factor in the success of your investments and growth.✌️
Justin Hubbard
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