Real Questions, Real Answers: Practical Guidance for Today’s Business Owners

Business owners often face new challenges every day. From rising costs and uncertain markets to the constant pressure of balancing efficiency with growth. As we frequently hear the same pressing questions from clients and peer groups, addressing them head-on becomes crucial, often leading to meaningful improvements in profitability and peace of mind. Below are some of the most common topics raised by business leaders, along with practical insights that can help guide your own decision-making.

Measuring Direct Labor Efficiency

How often should we measure direct labor efficiency? It’s one of the most frequently asked questions by business owners. But the answer is more straightforward than it might seem—every time you run payroll. By reviewing labor costs alongside sales and gross margin on a bi-weekly or semi-monthly basis, you gain a clear, timely picture of how effectively your labor is contributing to profitability.

The goal is not to track numbers down to the penny but to spot trends that allow for course correction. For example, if your efficiency ratio dips below target halfway through the month, you still have time to adjust—either by improving margins, flexing labor hours, or both. Waiting until month-end to review these figures often means discovering a problem weeks too late. Consistency in tracking builds a rhythm of accountability and decision-making, helping businesses spot inefficiencies earlier and make proactive changes that protect profitability.

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Rethinking Insurance Renewals

Insurance is another area that can quietly erode profitability if not reviewed carefully. Too often, companies simply renew with the same carrier year after year without asking whether coverage limits are appropriate or whether more competitive options exist.

If your agent consistently presents only one carrier at renewal, consider it a red flag. While it is possible that the existing carrier remains the best fit, you should always confirm whether alternatives were explored. In today’s environment, general liability and workers’ compensation premiums are climbing by 15–20 percent, with health insurance trending up 10–15 percent. That makes shopping your coverage, revisiting policy limits, and confirming that insurance keeps pace with your company’s growth essential steps in protecting your business.

Failing to update coverage levels can leave businesses dangerously exposed. A company that doubled in size over two years but maintained the same limits may find itself underinsured at the exact moment coverage is most needed. An annual review process, paired with a willingness to hold brokers accountable, is one of the simplest ways to preserve both cash flow and peace of mind.

 

Leveraging Subject Matter Experts

As companies grow, they often wrestle with the question of when to bring on senior leadership. Many are tempted to hire high-level executives, such as Chief Revenue Officers or operations directors, prematurely, only to realize that the workload doesn’t justify the expense.

A more flexible and cost-effective approach is to engage subject matter experts (SMEs) or consultants for targeted projects. For example, a company may hire a CRO on a full-time basis, only to discover six months later that the strategic work is complete and there’s little left to do. In hindsight, a six-month engagement with a consultant could have yielded the same results at a fraction of the cost, allowing the company to scale resources up or down as needed.

This approach is particularly valuable in areas such as sales, marketing, and operations, where outside expertise can establish systems, processes, and strategies, allowing the company to manage execution internally. The rise in peer learning and networking has made more business leaders comfortable with engaging SMEs, and many are now finding that this approach provides both agility and strong returns on investment.

 

Investing Outside the Business

Finally, business owners often ask what they should do with excess cash once their business is healthy and growing. While reinvesting in the company should remain the priority, there comes a point when diversification becomes prudent.

A solid foundation begins with personal stability—maintaining six months of emergency household expenses and, for many, paying off the family home. These steps may not always make sense on paper, especially in a low-interest environment, but they reduce risk and provide peace of mind for both the owner and their family.

From there, consider building retirement savings or maintaining liquidity through market-based investments. Real estate remains a favorite among entrepreneurs, though limited partnerships and private equity funds are also common avenues. For those with a greater appetite for risk, angel investing can offer opportunities to partner with startups—often through arrangements where capital partners eventually transition to minority ownership once initial investments are repaid with a return.

The guiding principle is balance: protect your household first, diversify wealth second, and approach higher-risk opportunities only after the fundamentals are secured.

Bringing It All Together

Each of these topics —labor efficiency, insurance, expert engagement, and outside investing —comes back to the same theme: making informed, proactive decisions. Businesses that thrive are those that measure performance regularly, revisit their assumptions often, and strike a balance between growth and protection.

As you consider these areas in your own company, the key is not to chase data or ideas for their own sake but to identify the strategies that help you act decisively. Whether it is course-correcting labor costs mid-month, renegotiating insurance, or engaging outside expertise, small steps taken consistently can create lasting profitability and resilience.

Learn More

Want to learn more about real-world examples of how businesses are addressing many of these very questions? Mike Maxson and Brandon Gray share practical insights and client experiences that highlight how leaders are measuring labor efficiency, making smarter insurance decisions, engaging subject matter experts, and investing outside their businesses. Listen to the latest episode of Profitability Playbook: The Simple Numbers Podcast for more.