Episode 205: Profit vs Owner's Salary - Business Tip of the Month with Hal Denbar of National Pool Partners
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Episode Summary
In this edition of Business Tip of the Month, we’re joined by NPP’s President of Texas Hal Denbar.
Listen in as Hal breaks down the important but often misunderstood distinction between making a profit and paying yourself as a business owner.
He also explains the advantages of having an accountant and how to build a healthy pool business using the profit-first model.
Topics Discussed
01:14 - Defining the problem
02:37 - Profit versus owner’s salary
04:29 - The advantages of having an accountant
05:12 - Common misconceptions around profit and salary
07:18 - Making it a habit to check your numbers
10:57 - How to build your business using the profit-first model
15:55 - Determining how much to pay yourself
18:18 - What counts as a “healthy” pool business
20:32 - The consequences of failing to grasp the differences between profit and salary
Resources Mentioned
Profit First by Mike Michalowicz
Simple Numbers by Greg Crabtree
Key Quotes From Episode
The owner’s salary, ideally, should be something that the owner specifies for themselves as a W-2 salary that’s realistic.
We don’t often take the time to look at our numbers in a true business sense, not just in a tax sense.
The profit-first model encourages you to determine how much profit you want out of your business, then to build your business around achieving that level of profitability.
If you want to be a healthy business in this industry, you should be looking for a 10-20% profit margin.
