June 6, 2025 • 39 mins
Welcome to the Profitable Painter Podcast! In this episode, host Daniel Honan, CPA and former painting business owner, sits down with Brad Ellison, founder of Ellison Painting, to uncover how he scaled his residential painting business from $0 to $5.1 million in under 3 years.
Brad shares: How he stumbled into the painting industry The exact marketing and hiring strategies he used to grow fast Why work-life balance was a non-negotiable from day one The importance of paid ads, project managers, and setting clear revenue targets His journey partnering with a longtime friend and structuring a smart, scalable business Key metrics like set rates, close rates, and marketing ROI benchmarks Whether you're just starting out or trying to break past the $1M ceiling, Brad’s transparent insights and numbers-driven approach are packed with takeaways you can apply today.
📌 Don’t forget to like, subscribe, and turn on notifications so you never miss an episode that could take your painting business to the next level! #ProfitablePainter #PaintingBusiness #MarketingTips #ContractorSuccess #EllisonPainting #SmallBusinessGrowth #Entrepreneurship #TradesBusiness
On August 5th 2025, I’m hosting a free, live webinar revealing:
✅ How to pay way less in taxes—legally
✅ The simple ratio top painting businesses use to grow profits fast
✅ What the top 20% of painters are doing differently
Go to BookkeepingForPainters.com/Webinar to register now!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the Profitable Painter Podcast.
The mission of this podcast issimple to help you navigate the
financial and tax aspects ofstarting, running and scaling a
professional painting business,from the brushes and ladders to
the spreadsheets and balancesheets.
We've got you covered.
But before we dive in, a quickword of caution While we strive
to provide accurate andup-to-date financial and tax
(00:20):
information, nothing you hear onthis podcast should be
considered as financial advicespecifically for you or your
business.
We're here to share generalknowledge and experiences, not
to replace the tailored adviceyou get from a professional
financial advisor or taxconsultant.
Speaker 2 (00:40):
We strongly recommend you seeking individualized
advice before making anysignificant financial decision.
Welcome to the ProfitablePainter Podcast, the show where
painting contractors learn howto boost profits, cut taxes and
build a business that works forthem.
I'm your host, daniel Honan,cpa and former painting business
owner, and your guide tomastering the numbers that drive
success.
So let's dive in and make yourbusiness more profitable, one
(01:01):
episode at a time, and thisepisode, I'm super excited
because I'm here with BradEllison.
Welcome to the podcast, bradhey.
Speaker 3 (01:10):
Daniel, thanks for having me, man, yeah.
Speaker 2 (01:12):
I'm super excited.
A lot of listeners probablyhave heard of you before you had
.
I mean, we'll get into it, butyou've built an amazing business
in a very short amount of time,so I'm super excited to get
into your story.
Could you kind of give folksjust what has been your journey?
What are some major milestonesin your, what brought you in the
(01:33):
painting industry and what aresome major milestones that
you've hit in the last few years?
Yeah, sure.
Speaker 3 (01:39):
So I actually stumbled into the painting
industry about eight years ago.
My wife and I had been recentlymarried, we quit our jobs and
decided we didn't want to workfor anyone else ever again and
we launched a health insurancebusiness together, which was my
background.
But the health insuranceindustry is very seasonal.
We have really three months ayear that we really had work to
(02:02):
do and so we're like, well, whatare we going to do?
We got pregnant right after ourwedding.
We had a baby on the way anddidn't seem reasonable or
responsible to not work theother nine months of the year.
So we thought, well, I shouldfind a seasonal sales job, maybe
something in the trades.
It makes sense.
And that was on a Saturdaynight.
(02:24):
The next morning I met a localpainter that owned a pretty
decent sized company here inMetro Detroit that was looking
to bring on a sales guy and thenultimately someone to buy his
business.
So met him on a Sunday.
By Tuesday we came up with apartnership agreement.
He hired me to essentially run,sell for his business and run
his business, which I did forthe next four and a half years
(02:45):
with the intent of buying it.
A push came to shove we decidedto not move forward with
purchasing his business, and so,April 1st of 2022, we launched
Ellison Painting EllisonPainting.
Since then, we just had ourthree-year anniversary.
That first year, that firstseven months, we were in
(03:06):
business.
We we sold and produced about amillion dollars worth of
business.
Uh, 2023, we sold and producedabout 3 million.
2024, we did 5.1 million.
So, within two and a half years, we had scaled up to a $5
million a year painting business.
Um, so it's been a wild ride.
I've been really fortunate tobe kind of right place, right
(03:27):
time, right relationships withthe right people Though I think
there's a conversation to be hadaround whether that's luck or
creating opportunities orrecognizing opportunities but
I've been fortunate to getplugged in with a lot of the
kind of leaders in the paintingindustry, including leaders of
(03:49):
the Painting ContractorsAssociation, and now I'm honored
to serve on the board ofdirectors for the Painting
Contractors Association as ofend of 2024.
So, yeah, pretty, I think it'sa pretty impressive business.
There hasn't been too manypeople maybe any that grew their
residential painting company asquickly as we did.
Though, even if we are thefirst, we definitely won't be
(04:11):
the last.
I'm already seeing some of that.
Speaker 2 (04:15):
Yeah, I mean, I've worked with hundreds of painting
businesses and there'sdefinitely been folks that have
grown their business to do amillion in the first year or
close to that.
Um, I can't think of a businessthat did three million in this
in the second year, I thinkthat's, and then, let alone five
(04:36):
million in the third year.
Um, I mean, there's people thathave gotten close, maybe two
million or two and a half threemillion, so there could be maybe
someone I'm just like notthinking of but to hit five
million in the third year.
For sure there's nobody that Iknow of that that has done that.
Um, not to say there's, therehasn't been anybody, but
(04:59):
obviously there's at least oneperson.
Um, so, yeah, it's superimpressive.
I mean, I just like you musthave been, just like, what was
your day-to-day like duringthose three years?
Um, and maybe it hasn't stopped, maybe you're still in the
grind, but like, is it, uh, asmuch work as it seems?
(05:21):
Or did you?
Do you have some sort of secretthat, uh, you can share with us
?
Speaker 3 (05:27):
But that's just like a huge amount of growth.
I think people are surprised tohear that it's not near as much
work as they think it would be.
And during the past three yearsI've probably worked a lot less
than other companies that arestruggling to get past that one
one and a half million.
What is the secret?
I don't know.
I would say if there is asecret, it's that I don't allow
(05:50):
myself to work more than I wantto work.
I'm not passionate aboutworking.
I'm passionate about building abusiness that allows me to not
have to work if I don't want to.
And so, even from the get-go,that first year, when it was
just me and my wife I'm, I'mmanaging all the sales and
marketing.
She's managing production forthe.
You know, for that first sixmonths, even then, I was still
(06:11):
getting to the gym every day.
Even then we were home with ourdaughter for family dinner, um,
every night.
It wasn't like I was working 70hours a week and we were both
running around with our like achicken with their heads cut off
.
It's certainly stressful andthere were some after hours and
handling emails and stuff on theweekend, but now we kept.
(06:32):
We were pretty strict aboutkeeping our schedule more
focused on our family than itwas on the business, and that's
always been the case for me.
So you know I I'm a pretty darngood salesperson and so I was
able to sell, you know, 40 to45% of the estimates I gave
pretty smart when it comes tomarketing and partnered with
(06:56):
agencies that were deliveringdecent quality leads and a high
enough volume that I could do 25, 30 estimates a week and just
kind of feeding that thatmachine, uh yeah.
So work-life balance for me hasalways been super important.
I don't it's it's.
It's not as stressful or astime consuming as people might
(07:18):
imagine from the outside scenehow quickly we grew.
Speaker 2 (07:23):
Yeah, it sounds like you, like you had your wife
helping you with production, soyou had the sales and marketing.
Your wife was pretty much likethe office production manager.
Did you guys use subs initially?
Speaker 3 (07:35):
So we only used subs.
We've always only used subs,okay.
Speaker 2 (07:43):
So that's a common constraint.
Where folks find is that ifthey don't have someone else in
the business, they don't have apartner or they don't have a
wife.
That is awesome, as your wifeapparently that can run
production.
You know they're they're.
They hit that constraint ofthey can.
Only they're doing sales andproduction simultaneously and
(08:03):
they kind of run around.
Speaker 3 (08:04):
You know, 700 000 for sure, which is why, as you know
, so many guys hit that onemillion, one and a half million
dollar ceiling and they willsometimes never get beyond that
right because they haven'teffectively off-boarded some of
the responsibilities.
We, you know, we launched in adifferent um, in a different
(08:26):
situation than most.
I did have a wife that waswilling to give me six months of
her time to be my projectmanager, and we did have some
money that we had been savingthat we used for a really
healthy marketing budget rightout of the gates.
We budgeted thirteenthousand000 a month for
marketing, starting from day one, so I had the funds to pay an
(08:47):
agency to get those leads.
It wasn't like I had to goaround knock on doors or cold
call or do a bunch of communitynetworking.
We had paid marketing leadscoming in right off the get-go
and there's no way that I couldhave sold a million dollars in
that first seven months withoutthose two things the marketing
(09:10):
and the project manager.
People always ask me all right,well, if you were me, you know
I'm stuck in a million dollars.
What do I do?
Well, either choose eithersales or project management to
be your focus and hire someoneelse to do the other piece and
if they, if you don't do that,you are never going to push
through that plateau like ever.
There's no way.
(09:30):
Yeah, I have a higher capacitythan most, I think, but I
couldn't.
One and a half million dollarbusiness with me doing all the
sales and all the projectmanagement that is my nightmare
scenario.
That is, 80 hours a week withno family time and, even if it's
a profitable business, have noopportunity to enjoy the profits
(09:52):
.
Right, because you're alwaysworking.
So I think people make themistake of not hiring that
person and they make it evenworse by saying things like well
, once I can afford it, I willhire a project manager.
Well, if you wait until you canafford something in your
business, you're never going todo it.
Right, I'll wait to startspending money on marketing
(10:13):
until I can afford it.
Well, until you start spendingmoney on marketing, you're not
going to be able to afford it.
So you just take the leap,trust that you have the right
systems in place, and you knowit's a calculated risk, but it's
a calculated risk that so manypeople before us have made that
we should have prettypredictable results.
Speaker 2 (10:35):
Yeah, Great stuff.
So first, Initially, the thingthat jumps out is when you first
got started, you were doingpaid ads immediately.
You weren't afraid to spend onmarketing, which I feel like a
lot of folks when they'regetting started or under
(10:56):
$500,000 in revenue.
They're basically just doingreferral and repeat work and
they're afraid to spend money onFacebook ads or direct mail or
door to door, because there'ssome risk there.
Like you said, like you do haveto figure something new out,
maybe not familiar with and thatcan be a little scary, but it
(11:18):
sounds like you pretty much.
You took that risk immediately,did not hesitate and went in
with a marketing agency thatknew what they were doing,
apparently.
Speaker 3 (11:28):
For sure, and I had run that other painting business
locally, right.
So it was a kind of similarstructure, similar type of
business as Ellison Painting is,though we used very different
paid marketing channels.
That business existed almostcompletely off.
It was HomeAdvisor and thenbecame Angie Leads, but we would
spend $200visor.
And then it became Angie Leadsbut we would spend $200,000 a
(11:52):
year on Angie Leads and we wouldgenerate $2 million worth of
business directly from that.
So I understood that paidmarketing in the painting world
worked, but we had never doneFacebook ads, we'd never really
done Google ads, but I spoke topeople within our industry you
know people that you know aswell that said, yeah, here's the
data here, you spend this, youget this.
We you and I both know all thesame marketing agencies that
(12:13):
were around three years ago andI had proof of concept from
friends and colleagues that areto use them.
It didn't feel like a big risk.
It just felt like I have to bewilling to spend the money to
get the reward.
Speaker 2 (12:29):
Yeah, yeah, no, knowing the numbers and knowing
what you're looking for Like.
If I feel like a lot of thefolks being afraid of spending
money on marketing and also youmentioned making a new hire is
that they don't know what theyshould be paying for, what kind
of return on investment theyshould be getting from marketing
(12:50):
, or how much do they pay incompensation for their new hire
and how is that going to affecttheir.
So it's often the fear isrooted in just not knowing what
to look for.
So did you have a pretty goodunderstanding of what the
marketing numbers should looklike, like what you should be
(13:12):
spending?
You mentioned you know it's$200,000 in angel leads to get
$2 million in revenue, which isabout a 10x return on investment
.
Is that pretty much kind ofyour rule of thumb there?
Speaker 3 (13:23):
Yeah.
So we had if you talk to NSlavik, you talk to Jason Paris,
they say kind of the same thingthat companies are trying to
grow aggressively whichobviously that was what we were
trying to do should be willingto spend up to between eight to
10% of their target revenue backinto marketing.
So if I wanted to do I wantedto, I wanted to operate as if we
(13:44):
were a one and a half milliondollar a year company right off
the get.
Go.
Well, divide, you know, 150 or1.5 million times 10%, is
$150,000 divided by 12.
What do you got?
12,500 bucks or something likethat.
It's close to that $13,000 amonth.
So I was willing to spend up to10% of my target revenue back
(14:05):
into marketing, and it was.
It was partly because of myexperience running the other
painting company, but alsobecause these guys and gals that
I knew and trusted that wererunning painting companies said
hey, you want to growaggressively, you got to invest
8% to 10% back into marketing.
And what we found is that firstyear, the first calendar year I
(14:25):
think we spent, we were at 8%cost of marketing.
And then the year 2023, when wedid $3 million we dropped down
to about 7% cost of marketing.
And then we did $5 million.
We were at 6% cost of marketing.
So, like the bigger that we get, the cost of marketing has
continued to drop.
The cost of marketing hascontinued to drop, but I'd still
, even to this day.
(14:46):
You know we're trying to take abig, big jump this year without
me selling as actively as I waslast year, and so I'm willing
now to spend 10%, 10%, and ifwe're trying to do 7 million,
that's $700,000 just intomarketing alone I'm willing to
spend it.
I don't want to right the goalisn't to spend 700,000, but the
(15:07):
goal is to spend as much as weneed, but hopefully as little as
possible to hit our sales goals.
Speaker 2 (15:13):
Yeah, and I bet you know you mentioned the cost of
marketing kind of goes down asyou grow.
I bet when you were super small, like in the first few months
of operating, when you werespending that 13 grand on
marketing, your marketingpercentage was probably a lot
higher of a percentage.
It might have been 15 or maybeeven higher.
Speaker 3 (15:34):
Only the first month.
Speaker 2 (15:36):
Only the first month.
Speaker 3 (15:37):
The first month we spent that 13,000 and I sold
like 60 grand.
But then, starting after that,I think every month after that I
sold at least 150,000.
So I was under 10% by month two.
That's awesome, but that'sagain.
I'm a decent sales guy.
I was fully invested in thebusiness.
I'm like this is my family'ssurvival on the line and so,
(15:59):
even if I wasn't working a tonof hours, you bet your butt I
was hustling and working hard.
Speaker 2 (16:03):
Yeah, yeah, and you know, for those folks that are
small, I think it's a good point.
Just to highlight, what yousaid was you wanted to hit out
$1.5 million and so you said,okay, that means I need to spend
$150,000 and I'm going todivide that by 12.
And that's what I'm going tospend on marketing.
It wasn't like you didn't lookat okay, I'm doing, you know,
(16:28):
$10,000 a month right now, so Ineed to spend a thousand dollars
on marketing because somepeople all about your target
revenue.
Right, exactly.
So that's a big point.
And it can be a little scaryagain because you're not at when
you first started.
Obviously you had zero revenue,but even in the second month
you might not had a lot ofrevenue revenue.
(16:49):
So it can be scary, but it canwork, not to say you just hire a
marketing agency and then itjust works.
There's definitely work to bedone in that um.
Um, could we dig into this alittle bit like uh to you know
that we want to have a 10xreturn, but what things should
we really be focused on,especially with working with a
(17:10):
marketing agency, like you did,with set rates, close rates?
What should we be trying to doto make sure that we're getting
a good return on investment withthe marketing dollars that
we're spending?
Speaker 3 (17:21):
Yeah, great, great question.
So our goal and I'll admit, thefirst the first eight, nine, 10
months I we didn't have anadmin at all.
It was me and my wife and soany lead that came in I was
handling and I answered thephone.
When someone called, four times, right, and that's the worst.
(17:45):
We at Rollout Marketing, theagency that I run now, we're
like you got to call and you gotto answer the phone, like
that's rule number one.
But I didn't have the reallybandwidth when during working
hours I didn't want to answerthe phone, I wanted to be going
out and selling jobs, and so weset up some autoresponders.
(18:06):
If someone called in, theyautomatically got a text back
saying hey, sorry, we couldn'tanswer the phone.
If you're calling to schedulean estimate, click this link,
and it was a link to ourDripJobs estimate request form.
As soon as it came through Iwould call back or schedule it
and do it.
So the way I operated then is alittle different than we operate
now, but we're aiming for a setrate of at least 70%.
(18:29):
So of the estimates that comein people that reach out via
Facebook, website, phone call,whatever 70% of them we want to
schedule into estimates.
If we do that, then we are andthe numbers continue to work out
in terms of closing rate andall that.
We will get the return that weneed on our marketing.
(18:49):
And that varies seasonally.
During the spring months, wheneveryone wants to get their
house painted, everything's hot,our set rates higher.
During the winter months, whenpeople are more passive, or
maybe end of fall, where they'rereaching out for exterior
estimates but they don't reallywant it done this year, they
want it done in the spring, theset rates start to drop then.
(19:10):
But overall we're looking for70% and at Ellison Painting in
general we're averaging between75% to 80%.
So we're outperforming what ourexpectation is generally.
So that set rate when it comesto you know if we're talking
about closing right now.
On sales, our goal is 35%.
(19:30):
So 35% of the estimates that wedeliver we want to turn into
jobs.
That's a little lower thanother companies aim for, but we
do such a high volume ofestimates that we found that
that number works really, reallywell for us because it allows
us to continue to charge therate that we want to charge, a
really profitable rate, whichthen allows us to pay our
(19:51):
subcontractors really well.
It allows us to pay healthysales commissions.
But if we had half the leads,we would not be able to.
We'd have to be closing at 55to 60% in order to continue to
operate Right.
But 35% is what we aim for.
Speaker 2 (20:07):
Yeah, that that's a really good set rate.
And uh, cause I I see folksthat they're using, you know,
paid social and their set ratesare like 33%, you know, and that
that can really drive up your,your marketing costs.
So if you're looking at yourprofit and loss and you see like
(20:32):
15% for marketing, 20% formarketing, that might be the
problem.
This, your set rate is too low.
And and just so, if you'relistening set rate, what the
heck is that the amount of folksthat get on that, that come in
as a lead, that you actually geton the schedule to do an
estimate for so, the so itsounds like Alison painting is
doing, you know, of 10, 10 leadsthat come in you're you're
(20:53):
putting seven or eight, uh,estimates on the calendar,
correct, um, and what is that?
Uh, what's your mix Like?
Is it?
Do you guys mostly do paidsocial or is a lot of?
You're getting probably a lotof referral and repeat now too.
Speaker 3 (21:12):
Yeah.
So I mean, if I'm, if I look atour stats, I would say like
organic Google is probablyaround 20 percent of our sales
and leads paid Facebook lastyear leads Paid Facebook last
year I think we did $1.2, $1.3million just from Facebook ads.
From Google ads we did another,I don't know 800,000 or so.
(21:40):
Referrals, 900, about a million.
So we have a pretty good mixand the set rate definitely
varies based on those sources.
Our set rate on Facebook ads I'mlooking at last year, let's see
about 55%.
Our direct mail campaigns 86%.
People that just saw us likemaybe saw one of our vehicles
driving 78%.
(22:01):
Organic Google 72%.
So the set rate is a lot higherfor some lead sources than
others.
But with my marketingbackground and my sales
background, we have a culture ofif we're going to spend money
on marketing we need to getevery penny we can get out of
those marketing dollars.
(22:22):
And certainly there's someleads that come through that
will never, ever set for anestimate.
We'll never get a hundredpercent set rate right.
But if we're really working oursystems and we have really good
follow-up systems and we'rereaching out to these people
time and time again until it'sclear that they're never going
to schedule, then we're makingour marketing dollars stretch
(22:45):
way, way further, and that's howwe go from budgeting 10% and
only spending 6%.
Speaker 2 (22:52):
Yeah, that makes sense.
Yeah, and yeah, the set ratesare really strong.
And I think the general rule ofthumb is to shoot for a 50% set
rate for Facebook, because it'smore of like an outbound people
aren't looking for you, so ithas a lower set rate, but you
guys are exceeding that there.
And then the inbound stuff,like coming from the website or
(23:14):
from Google, it's higher, youknow.
So that makes sense.
And so the other piece of thatwas the close rate, which you
know 35%, you're good with, andthat seems the close rate which
you know 35%, um, you're goodwith, and that, that seems, you
know, reasonable, one out ofthree, approximately, uh, very
doable numbers, but it seemslike the.
(23:35):
The thing I think that probablysets you apart from a lot of
other businesses is that setrate, cause I would imagine,
well, I, based on my experience,the close rate is usually not
the issue Most folks can get aclose rate of around that, you
know.
But the set rate, I think, isthe big thing.
That is really impressive aboutyour company is probably why
(23:58):
you have such low cost of clientacquisition.
Yeah, I agree, 100% clientacquisition.
Yeah, I agree, a hundredpercent.
Um, so, year one focus was onnot a friend, you know, you
weren't afraid to spend onmarketing and you blew it up
from there.
And then year two, uh, then youneeded some help with hiring
(24:22):
someone to focus on production,so you could focus on sales and
marketing.
And you mentioned not beingafraid to spend money on that
person.
Did you have a, I guess?
Why was that?
You just knew that it worked.
Did you have a compensationplan in place?
Were you using a framework orsomething?
What made you so confident inthat big hire there?
Speaker 3 (24:45):
Yeah, I mean, we just followed industry benchmarks
and all the data that you and Ihave available to us says that
in our market, for what wecharge, for every $1.5 dollars
worth of sales, you need onesales guy and one project
manager.
So, going into 2023, when thegoal was to sell three million,
(25:07):
what's the math?
Two sales guys, two projectmanagers.
So I was one of the sales guys.
My wife transitioned out of thebusiness October of 22.
I hired my first projectmanager then and then in the
spring, when we started rampingup for exterior season, I hired
my second project manager andhired my second salesperson.
And uh, 2023, we also had a uh,another, another project
(25:32):
manager that came on didn't workout.
We covered for him.
2023 was a miracle that we gotto 3 million.
We just had a lot, a lot happen.
It was that was the hardesttransition year, I think.
And then we hit our 3 million.
We still hit it right and itwas very, very profitable
because I was still selling alot.
2024, the goal is 5 million andwhat I did was I knew that at
(26:01):
some point I was going to hit aceiling.
The company was going to hit aceiling because I had a ceiling,
and I didn't know what thatceiling was.
Again, I think I'm more capablethan most, my ceiling's
probably higher than most, but Iknew I was going to hit the
ceiling at some point, and I'mnot the kind of guy that is, you
know, just for ego's sake,wants to see how far I can push
it without help.
(26:21):
And so I made the decision tobring on a partner.
And so this is a guy that I hadknown since he was in eighth
grade.
We had worked together at amarketing agency for a couple of
years after he graduatedcollege.
Really smart, really capableand a complementary skill set to
me.
So the goal was 5 million,based on our math.
(26:43):
We needed three sales guys.
We needed three projectmanagers.
So I was still selling.
I brought him on to lead all ofproduction At that point.
We had a project coordinatorthat was scheduling all the
projects.
We had an estimate scheduler aswell, so we had a team of eight
to get us to the 5 million.
I might have been able to getto 5 million without my partner,
(27:03):
but it would have been very,very difficult, right, and I may
not have gotten there.
Uh, so bringing him on board atthat point was definitely the
right decision.
Um, so that, yeah, that lastyear was actually the most
profitable too.
We had the most overhead, uh,biggest staff.
But if you look at, if you lookat my books like sellers,
(27:26):
discretionary earnings we, wedid.
We sold 5.1 million and STE wasover a million dollars.
Wow, so it was super profitable, even through all, all of all
of this growth.
Wow, so it was super profitable, even through all, all of all
of this growth.
This year is really going to bethe test, I think, because now I
(27:47):
have a team of three full-timesalespeople not me and I'm I'm
selling a fraction.
I sold two and a half millionof the 5 million last year.
The goal this year is to sellless than a million.
Me personally, and I'm onlydoing, I'm only taking referrals
and repeat business, stuff likethat, and my partner is also
trying not to actively bemanaging the projects either.
So now we have two full-timeproject managers, one part-time
(28:09):
project manager, two projectcoordinators, estimate scheduler
.
This is this will be the bigtest whether Ellison painting is
a real business that cansustain without, you know, big
bad Brad selling, um, or whethersome of the magic was me
selling, who knows?
Speaker 2 (28:27):
Yeah, yeah, so I love this Um.
So you, you brought on apartner in that third year
because you knew that you hadsome blind spots.
We all have strengths andweaknesses and it sounds like
he's more production orientedand you're more sales oriented.
And how did that come aboutwith vetting your partner?
(28:53):
How did you know he was theright fit?
And then how did you structurethat partnership?
Cause that's a that can be asuper messy thing.
I've definitely seen this where, if you don't have the right,
you know, understandingexpectations and also documented
kind of like contract.
Uh, you know, it's basicallylike getting married to somebody
(29:15):
, so it can be very draining, um, if it doesn't work out.
And uh, do you have anythoughts on um, on how to
properly set up a partnership,and what did you learn that
worked there?
Speaker 3 (29:30):
Yeah, so well, the vetting had been done for the 20
years leading up to thepartnership.
Right Again, I've known himsince he was 13, and everything
I'd seen of him from 13 to 34 orhowever old he was when he
started working with me was andwe had worked together as well
pointed to the fact that he'sthe type of person that I would
(29:50):
be willing to partner with, andI've said this before.
There's only three people in mylife that I would feel
absolutely comfortablepartnering with, without a
question.
One is my wife, One is mylittle brother and one is Tim
and I.
When I launched Ellison, I toldhim listen, I'm launching my
own company.
Now, Eventually, I think youshould come partner with me.
Now's not the time, but let'skeep talking and I would keep
(30:11):
throwing out feelers.
And he had this fancy corporateconsulting job where he's
traveling around the countryworking with fortune 500
companies on systems and cultureand all this stuff and make it
really good money.
And he was always like nah, nah, nah, you know painting new
gross, and.
But then he had his first kidand the traveling around the
country wasn't as much fun as itwas, and so he's like all right
(30:34):
, I think this might be the timelet's start talking.
So the vetting was done, butthen it was like all right, well
, how do we partner or how do westructure this and how do we
protect each other?
Jason Paris is a great friendof mine.
He's him and his partners havekind of laid a foundation of how
to partner with people.
People, and even though I knowTim so well and I trust him so
(30:57):
much and he feels the same aboutme like we are, this is all
going to be in writing.
We're going to agree oneverything.
We're going to think about asmany contingencies and
roadblocks as we can and get itall written and agreed upon
ahead of time.
And we also agreed that thefirst year was actually going to
be a trial.
So 2024, he operated as apartner, but he was an employee
(31:23):
and I paid him a salary.
I paid him a $75,000 a yearsalary, which is what I paid
myself, and then hiscompensation was an additional
20% of profit on top of that atthe end of the year.
And we both agreed at the endof the year, if 2024 went well
and I'm thinking, yeah, Tim is agreat partner, and he thinks,
(31:43):
yeah, Brad's a great partner,Then we move forward and
actually sign the contract, butwe had negotiated all the terms
right off the bat.
So one of the signs that I knewit was going to be a good
partnership is, in the firstnegotiation meeting that we had,
we found ourselves arguing forthe other person, and what I
(32:07):
mean by that is let's.
I would say well, let's.
Hypothetically, I have a braininjury and evil Brad appears and
tries to take advantage of you.
What are the ways in which Icould do that?
And so I started pointing outall right, I could do this, I
could do that.
We need to make sure that thecontract addresses that.
So I don't have the ability todo that, and then he would do
(32:27):
the exact same thing.
You know well, you deserve tobe a minority or majority owner,
and so, with that, I think youshould have the power to do this
, this and this, even if Idisagree with you.
All right, so we were reallyoperating and discussing in good
faith, trying to look out forthe other person more than
ourselves which is how EllisonPainting operates and that's
(32:48):
part of why we've had so muchsuccess is if we are putting the
best interest of oursubcontractors ahead of our own
or the best interests of ourcustomers ahead of our own.
The goodwill pays off, right,and we don't do it so that we
can benefit more, but that'sjust a result of that.
So we we had all the contractterms laid out, we had the
(33:12):
contract drawn up end of theyear.
We're like, yeah, this is a nobrainer, the business is very
profitable, we're working reallywell together, and so we we
made the deal and he is nowofficially a 30% owner of
Ellison painting.
Um, and our roles, our roles,changed.
He's, he's essentially runningthe business.
I'm CEO Uh, I'm serving in likethe visionary role but he is
(33:35):
managing all of the people.
He's technically managing thesalespeople, he's managing the
production and which then freedme up to run rollout marketing
as well.
Speaker 2 (33:46):
That's.
That's awesome.
I love the fact that you guysred teamed your.
Your your like evil Brad.
What could I do?
That's a really so many peopledo.
Speaker 3 (33:59):
I mean, you've I'm sure you've seen the horror
stories.
Everyone's like, no, no, we, wedon't really need anything on
paper.
We know each other, we trusteach other, and then it all
falls apart.
Someone gets screwed,relationships are destroyed,
financial futures are destroyed.
Like, let's just, we believe ineach other, we believe that we
are both operating in good faith, and even so, let's just have
(34:20):
it all in writing.
Speaker 2 (34:22):
Yeah, it makes sense and I think it's a good exercise
to go through, obviously,document and get a signed
contract and a clearunderstanding and a clear
understanding.
But I love the adding in thewhat could I do to mess this up?
And like discussing that withthe partner ahead of time or the
(34:44):
potential partner.
That that's a.
That's a good one.
I love it.
So was it.
So it sounds like it wasbasically an option to buy in 30
by 30% at the end of the trialperiod and and then he had the
had the option to buy in or not,based off of how that first
year went.
It sounds like.
Speaker 3 (35:01):
Yep, and the way we structured the purchase price
was also a really healthy.
We each gave in a little bit.
He wanted to buy 40%, I wantedto sell 20%, we agreed on 30%,
but rather than just straight up30% on the valuation of the
business at the end of 2023,what we did is I said, all right
(35:23):
, I'll sell you 20% at the 2023valuation.
The next 10% is going to bebased on the valuation at the
end of this year when we'reworking together, and so what
ended up working out is his 20%actually cost him less than the
next 10%, which was good.
When you look at the totalvalue that he's receiving.
(35:48):
He's already positive equityand I felt honored that I wasn't
selling my business a portionof my business at like a really
really discounted rate Rightwasn't selling my business a
portion of my business at like areally really discounted rate
Right, so we locked in a portionof it.
Because we worked hard in 2024and we were really profitable, I
was rewarded with the extrapayment on the 10%.
Speaker 2 (36:07):
Yeah, that makes sense, and, in a lines,
incentives as well, like, yeah,so get you guys moving in the
same direction, so that thatmakes a lot of sense.
No, I appreciate you sharingthat.
Uh, I feel like partners.
It's it.
Uh, it can get really messyreally quick and it sounds like
you guys did it the right waywith really making sure the
(36:29):
match worked, red teaming aheadof time, getting everything
documented and then having a, acompensation plan and a option
to buy.
That made sense for both of youand aligned your incentives.
So, no, that sounds great, um,cool.
Well, I'd probably I could talkto you for the next couple
hours, but I don't want to stealyour time.
(36:52):
But, uh, this has been anamazing conversation.
I really appreciate youspending the time to discuss,
you know things, marketingpartnerships scaling from zero
to 5 million over the last threeyears.
Do you have any asks of theaudience or any tips or anything
anywhere that, if you want toconnect with them, the floor is
(37:16):
yours?
Speaker 3 (37:17):
Yeah, so we we operate pretty open-handedly at
Ellison painting.
So we have we have a lot ofresources that we've developed
sales brochures, subcontractorinfo packets, really good
playbooks for sales and projectmanagers.
We kind of share that stufffreely.
So if anyone wants to reach outto me for any of that stuff,
I'm happy to share it.
No real ask, other than ifyou're not a member of the
(37:42):
Painting Contractors Association, I would say for you that would
be a benefit.
Connect with like-mindedcontractors.
The PCA has a ton of resourcesto help businesses, big and
small, new and old.
And you know I just I love thePCA and it's it's been
instrumental to my growth and inparticular the relationships
(38:05):
I've made through the PCA.
So I don't benefit if you join.
You know it's not like I getpaid to be on the board of
directors, but the industry doesbetter when we all do better,
as our friend Nick Slavik says.
So join the PCA, reach out tome if there's any way I can help
, and happy to do that.
Speaker 2 (38:25):
Awesome.
I really appreciate your time,brad.
I definitely echo everythingyou just said with the PCA Great
resource and always has amazingevents.
Really appreciate your time,brad, and for the listeners with
that, we will see you next week.
Welcome to the Profitable Painter Podcast.
The mission of this podcast issimple to help you navigate the
financial and tax aspects ofstarting, running and scaling a
professional painting business,from the brushes and ladders to
the spreadsheets and balancesheets.
We've got you covered.
But before we dive in, a quickword of caution While we strive
to provide accurate andup-to-date financial and tax
(00:20):
information, nothing you hear onthis podcast should be
considered as financial advicespecifically for you or your
business.
We're here to share generalknowledge and experiences, not
to replace the tailored adviceyou get from a professional
financial advisor or taxconsultant.
Speaker 2 (00:40):
We strongly recommend you seeking individualized
advice before making anysignificant financial decision.
Welcome to the ProfitablePainter Podcast, the show where
painting contractors learn howto boost profits, cut taxes and
build a business that works forthem.
I'm your host, daniel Honan,cpa and former painting business
owner, and your guide tomastering the numbers that drive
success.
So let's dive in and make yourbusiness more profitable, one
(01:01):
episode at a time, and thisepisode, I'm super excited
because I'm here with BradEllison.
Welcome to the podcast, bradhey.
Speaker 3 (01:10):
Daniel, thanks for having me, man, yeah.
Speaker 2 (01:12):
I'm super excited.
A lot of listeners probablyhave heard of you before you had
.
I mean, we'll get into it, butyou've built an amazing business
in a very short amount of time,so I'm super excited to get
into your story.
Could you kind of give folksjust what has been your journey?
What are some major milestonesin your, what brought you in the
(01:33):
painting industry and what aresome major milestones that
you've hit in the last few years?
Yeah, sure.
Speaker 3 (01:39):
So I actually stumbled into the painting
industry about eight years ago.
My wife and I had been recentlymarried, we quit our jobs and
decided we didn't want to workfor anyone else ever again and
we launched a health insurancebusiness together, which was my
background.
But the health insuranceindustry is very seasonal.
We have really three months ayear that we really had work to
(02:02):
do and so we're like, well, whatare we going to do?
We got pregnant right after ourwedding.
We had a baby on the way anddidn't seem reasonable or
responsible to not work theother nine months of the year.
So we thought, well, I shouldfind a seasonal sales job, maybe
something in the trades.
It makes sense.
And that was on a Saturdaynight.
(02:24):
The next morning I met a localpainter that owned a pretty
decent sized company here inMetro Detroit that was looking
to bring on a sales guy and thenultimately someone to buy his
business.
So met him on a Sunday.
By Tuesday we came up with apartnership agreement.
He hired me to essentially run,sell for his business and run
his business, which I did forthe next four and a half years
(02:45):
with the intent of buying it.
A push came to shove we decidedto not move forward with
purchasing his business, and so,April 1st of 2022, we launched
Ellison Painting EllisonPainting.
Since then, we just had ourthree-year anniversary.
That first year, that firstseven months, we were in
(03:06):
business.
We we sold and produced about amillion dollars worth of
business.
Uh, 2023, we sold and producedabout 3 million.
2024, we did 5.1 million.
So, within two and a half years, we had scaled up to a $5
million a year painting business.
Um, so it's been a wild ride.
I've been really fortunate tobe kind of right place, right
(03:27):
time, right relationships withthe right people Though I think
there's a conversation to be hadaround whether that's luck or
creating opportunities orrecognizing opportunities but
I've been fortunate to getplugged in with a lot of the
kind of leaders in the paintingindustry, including leaders of
(03:49):
the Painting ContractorsAssociation, and now I'm honored
to serve on the board ofdirectors for the Painting
Contractors Association as ofend of 2024.
So, yeah, pretty, I think it'sa pretty impressive business.
There hasn't been too manypeople maybe any that grew their
residential painting company asquickly as we did.
Though, even if we are thefirst, we definitely won't be
(04:11):
the last.
I'm already seeing some of that.
Speaker 2 (04:15):
Yeah, I mean, I've worked with hundreds of painting
businesses and there'sdefinitely been folks that have
grown their business to do amillion in the first year or
close to that.
Um, I can't think of a businessthat did three million in this
in the second year, I thinkthat's, and then, let alone five
(04:36):
million in the third year.
Um, I mean, there's people thathave gotten close, maybe two
million or two and a half threemillion, so there could be maybe
someone I'm just like notthinking of but to hit five
million in the third year.
For sure there's nobody that Iknow of that that has done that.
Um, not to say there's, therehasn't been anybody, but
(04:59):
obviously there's at least oneperson.
Um, so, yeah, it's superimpressive.
I mean, I just like you musthave been, just like, what was
your day-to-day like duringthose three years?
Um, and maybe it hasn't stopped, maybe you're still in the
grind, but like, is it, uh, asmuch work as it seems?
(05:21):
Or did you?
Do you have some sort of secretthat, uh, you can share with us
?
Speaker 3 (05:27):
But that's just like a huge amount of growth.
I think people are surprised tohear that it's not near as much
work as they think it would be.
And during the past three yearsI've probably worked a lot less
than other companies that arestruggling to get past that one
one and a half million.
What is the secret?
I don't know.
I would say if there is asecret, it's that I don't allow
(05:50):
myself to work more than I wantto work.
I'm not passionate aboutworking.
I'm passionate about building abusiness that allows me to not
have to work if I don't want to.
And so, even from the get-go,that first year, when it was
just me and my wife I'm, I'mmanaging all the sales and
marketing.
She's managing production forthe.
You know, for that first sixmonths, even then, I was still
(06:11):
getting to the gym every day.
Even then we were home with ourdaughter for family dinner, um,
every night.
It wasn't like I was working 70hours a week and we were both
running around with our like achicken with their heads cut off
.
It's certainly stressful andthere were some after hours and
handling emails and stuff on theweekend, but now we kept.
(06:32):
We were pretty strict aboutkeeping our schedule more
focused on our family than itwas on the business, and that's
always been the case for me.
So you know I I'm a pretty darngood salesperson and so I was
able to sell, you know, 40 to45% of the estimates I gave
pretty smart when it comes tomarketing and partnered with
(06:56):
agencies that were deliveringdecent quality leads and a high
enough volume that I could do 25, 30 estimates a week and just
kind of feeding that thatmachine, uh yeah.
So work-life balance for me hasalways been super important.
I don't it's it's.
It's not as stressful or astime consuming as people might
(07:18):
imagine from the outside scenehow quickly we grew.
Speaker 2 (07:23):
Yeah, it sounds like you, like you had your wife
helping you with production, soyou had the sales and marketing.
Your wife was pretty much likethe office production manager.
Did you guys use subs initially?
Speaker 3 (07:35):
So we only used subs.
We've always only used subs,okay.
Speaker 2 (07:43):
So that's a common constraint.
Where folks find is that ifthey don't have someone else in
the business, they don't have apartner or they don't have a
wife.
That is awesome, as your wifeapparently that can run
production.
You know they're they're.
They hit that constraint ofthey can.
Only they're doing sales andproduction simultaneously and
(08:03):
they kind of run around.
Speaker 3 (08:04):
You know, 700 000 for sure, which is why, as you know
, so many guys hit that onemillion, one and a half million
dollar ceiling and they willsometimes never get beyond that
right because they haven'teffectively off-boarded some of
the responsibilities.
We, you know, we launched in adifferent um, in a different
(08:26):
situation than most.
I did have a wife that waswilling to give me six months of
her time to be my projectmanager, and we did have some
money that we had been savingthat we used for a really
healthy marketing budget rightout of the gates.
We budgeted thirteenthousand000 a month for
marketing, starting from day one, so I had the funds to pay an
(08:47):
agency to get those leads.
It wasn't like I had to goaround knock on doors or cold
call or do a bunch of communitynetworking.
We had paid marketing leadscoming in right off the get-go
and there's no way that I couldhave sold a million dollars in
that first seven months withoutthose two things the marketing
(09:10):
and the project manager.
People always ask me all right,well, if you were me, you know
I'm stuck in a million dollars.
What do I do?
Well, either choose eithersales or project management to
be your focus and hire someoneelse to do the other piece and
if they, if you don't do that,you are never going to push
through that plateau like ever.
There's no way.
(09:30):
Yeah, I have a higher capacitythan most, I think, but I
couldn't.
One and a half million dollarbusiness with me doing all the
sales and all the projectmanagement that is my nightmare
scenario.
That is, 80 hours a week withno family time and, even if it's
a profitable business, have noopportunity to enjoy the profits
(09:52):
.
Right, because you're alwaysworking.
So I think people make themistake of not hiring that
person and they make it evenworse by saying things like well
, once I can afford it, I willhire a project manager.
Well, if you wait until you canafford something in your
business, you're never going todo it.
Right, I'll wait to startspending money on marketing
(10:13):
until I can afford it.
Well, until you start spendingmoney on marketing, you're not
going to be able to afford it.
So you just take the leap,trust that you have the right
systems in place, and you knowit's a calculated risk, but it's
a calculated risk that so manypeople before us have made that
we should have prettypredictable results.
Speaker 2 (10:35):
Yeah, Great stuff.
So first, Initially, the thingthat jumps out is when you first
got started, you were doingpaid ads immediately.
You weren't afraid to spend onmarketing, which I feel like a
lot of folks when they'regetting started or under
(10:56):
$500,000 in revenue.
They're basically just doingreferral and repeat work and
they're afraid to spend money onFacebook ads or direct mail or
door to door, because there'ssome risk there.
Like you said, like you do haveto figure something new out,
maybe not familiar with and thatcan be a little scary, but it
(11:18):
sounds like you pretty much.
You took that risk immediately,did not hesitate and went in
with a marketing agency thatknew what they were doing,
apparently.
Speaker 3 (11:28):
For sure, and I had run that other painting business
locally, right.
So it was a kind of similarstructure, similar type of
business as Ellison Painting is,though we used very different
paid marketing channels.
That business existed almostcompletely off.
It was HomeAdvisor and thenbecame Angie Leads, but we would
spend $200visor.
And then it became Angie Leadsbut we would spend $200,000 a
(11:52):
year on Angie Leads and we wouldgenerate $2 million worth of
business directly from that.
So I understood that paidmarketing in the painting world
worked, but we had never doneFacebook ads, we'd never really
done Google ads, but I spoke topeople within our industry you
know people that you know aswell that said, yeah, here's the
data here, you spend this, youget this.
We you and I both know all thesame marketing agencies that
(12:13):
were around three years ago andI had proof of concept from
friends and colleagues that areto use them.
It didn't feel like a big risk.
It just felt like I have to bewilling to spend the money to
get the reward.
Speaker 2 (12:29):
Yeah, yeah, no, knowing the numbers and knowing
what you're looking for Like.
If I feel like a lot of thefolks being afraid of spending
money on marketing and also youmentioned making a new hire is
that they don't know what theyshould be paying for, what kind
of return on investment theyshould be getting from marketing
(12:50):
, or how much do they pay incompensation for their new hire
and how is that going to affecttheir.
So it's often the fear isrooted in just not knowing what
to look for.
So did you have a pretty goodunderstanding of what the
marketing numbers should looklike, like what you should be
(13:12):
spending?
You mentioned you know it's$200,000 in angel leads to get
$2 million in revenue, which isabout a 10x return on investment
.
Is that pretty much kind ofyour rule of thumb there?
Speaker 3 (13:23):
Yeah.
So we had if you talk to NSlavik, you talk to Jason Paris,
they say kind of the same thingthat companies are trying to
grow aggressively whichobviously that was what we were
trying to do should be willingto spend up to between eight to
10% of their target revenue backinto marketing.
So if I wanted to do I wantedto, I wanted to operate as if we
(13:44):
were a one and a half milliondollar a year company right off
the get.
Go.
Well, divide, you know, 150 or1.5 million times 10%, is
$150,000 divided by 12.
What do you got?
12,500 bucks or something likethat.
It's close to that $13,000 amonth.
So I was willing to spend up to10% of my target revenue back
(14:05):
into marketing, and it was.
It was partly because of myexperience running the other
painting company, but alsobecause these guys and gals that
I knew and trusted that wererunning painting companies said
hey, you want to growaggressively, you got to invest
8% to 10% back into marketing.
And what we found is that firstyear, the first calendar year I
(14:25):
think we spent, we were at 8%cost of marketing.
And then the year 2023, when wedid $3 million we dropped down
to about 7% cost of marketing.
And then we did $5 million.
We were at 6% cost of marketing.
So, like the bigger that we get, the cost of marketing has
continued to drop.
The cost of marketing hascontinued to drop, but I'd still
, even to this day.
(14:46):
You know we're trying to take abig, big jump this year without
me selling as actively as I waslast year, and so I'm willing
now to spend 10%, 10%, and ifwe're trying to do 7 million,
that's $700,000 just intomarketing alone I'm willing to
spend it.
I don't want to right the goalisn't to spend 700,000, but the
(15:07):
goal is to spend as much as weneed, but hopefully as little as
possible to hit our sales goals.
Speaker 2 (15:13):
Yeah, and I bet you know you mentioned the cost of
marketing kind of goes down asyou grow.
I bet when you were super small, like in the first few months
of operating, when you werespending that 13 grand on
marketing, your marketingpercentage was probably a lot
higher of a percentage.
It might have been 15 or maybeeven higher.
Speaker 3 (15:34):
Only the first month.
Speaker 2 (15:36):
Only the first month.
Speaker 3 (15:37):
The first month we spent that 13,000 and I sold
like 60 grand.
But then, starting after that,I think every month after that I
sold at least 150,000.
So I was under 10% by month two.
That's awesome, but that'sagain.
I'm a decent sales guy.
I was fully invested in thebusiness.
I'm like this is my family'ssurvival on the line and so,
(15:59):
even if I wasn't working a tonof hours, you bet your butt I
was hustling and working hard.
Speaker 2 (16:03):
Yeah, yeah, and you know, for those folks that are
small, I think it's a good point.
Just to highlight, what yousaid was you wanted to hit out
$1.5 million and so you said,okay, that means I need to spend
$150,000 and I'm going todivide that by 12.
And that's what I'm going tospend on marketing.
It wasn't like you didn't lookat okay, I'm doing, you know,
(16:28):
$10,000 a month right now, so Ineed to spend a thousand dollars
on marketing because somepeople all about your target
revenue.
Right, exactly.
So that's a big point.
And it can be a little scaryagain because you're not at when
you first started.
Obviously you had zero revenue,but even in the second month
you might not had a lot ofrevenue revenue.
(16:49):
So it can be scary, but it canwork, not to say you just hire a
marketing agency and then itjust works.
There's definitely work to bedone in that um.
Um, could we dig into this alittle bit like uh to you know
that we want to have a 10xreturn, but what things should
we really be focused on,especially with working with a
(17:10):
marketing agency, like you did,with set rates, close rates?
What should we be trying to doto make sure that we're getting
a good return on investment withthe marketing dollars that
we're spending?
Speaker 3 (17:21):
Yeah, great, great question.
So our goal and I'll admit, thefirst the first eight, nine, 10
months I we didn't have anadmin at all.
It was me and my wife and soany lead that came in I was
handling and I answered thephone.
When someone called, four times, right, and that's the worst.
(17:45):
We at Rollout Marketing, theagency that I run now, we're
like you got to call and you gotto answer the phone, like
that's rule number one.
But I didn't have the reallybandwidth when during working
hours I didn't want to answerthe phone, I wanted to be going
out and selling jobs, and so weset up some autoresponders.
(18:06):
If someone called in, theyautomatically got a text back
saying hey, sorry, we couldn'tanswer the phone.
If you're calling to schedulean estimate, click this link,
and it was a link to ourDripJobs estimate request form.
As soon as it came through Iwould call back or schedule it
and do it.
So the way I operated then is alittle different than we operate
now, but we're aiming for a setrate of at least 70%.
(18:29):
So of the estimates that comein people that reach out via
Facebook, website, phone call,whatever 70% of them we want to
schedule into estimates.
If we do that, then we are andthe numbers continue to work out
in terms of closing rate andall that.
We will get the return that weneed on our marketing.
(18:49):
And that varies seasonally.
During the spring months, wheneveryone wants to get their
house painted, everything's hot,our set rates higher.
During the winter months, whenpeople are more passive, or
maybe end of fall, where they'rereaching out for exterior
estimates but they don't reallywant it done this year, they
want it done in the spring, theset rates start to drop then.
(19:10):
But overall we're looking for70% and at Ellison Painting in
general we're averaging between75% to 80%.
So we're outperforming what ourexpectation is generally.
So that set rate when it comesto you know if we're talking
about closing right now.
On sales, our goal is 35%.
(19:30):
So 35% of the estimates that wedeliver we want to turn into
jobs.
That's a little lower thanother companies aim for, but we
do such a high volume ofestimates that we found that
that number works really, reallywell for us because it allows
us to continue to charge therate that we want to charge, a
really profitable rate, whichthen allows us to pay our
(19:51):
subcontractors really well.
It allows us to pay healthysales commissions.
But if we had half the leads,we would not be able to.
We'd have to be closing at 55to 60% in order to continue to
operate Right.
But 35% is what we aim for.
Speaker 2 (20:07):
Yeah, that that's a really good set rate.
And uh, cause I I see folksthat they're using, you know,
paid social and their set ratesare like 33%, you know, and that
that can really drive up your,your marketing costs.
So if you're looking at yourprofit and loss and you see like
(20:32):
15% for marketing, 20% formarketing, that might be the
problem.
This, your set rate is too low.
And and just so, if you'relistening set rate, what the
heck is that the amount of folksthat get on that, that come in
as a lead, that you actually geton the schedule to do an
estimate for so, the so itsounds like Alison painting is
doing, you know, of 10, 10 leadsthat come in you're you're
(20:53):
putting seven or eight, uh,estimates on the calendar,
correct, um, and what is that?
Uh, what's your mix Like?
Is it?
Do you guys mostly do paidsocial or is a lot of?
You're getting probably a lotof referral and repeat now too.
Speaker 3 (21:12):
Yeah.
So I mean, if I'm, if I look atour stats, I would say like
organic Google is probablyaround 20 percent of our sales
and leads paid Facebook lastyear leads Paid Facebook last
year I think we did $1.2, $1.3million just from Facebook ads.
From Google ads we did another,I don't know 800,000 or so.
(21:40):
Referrals, 900, about a million.
So we have a pretty good mixand the set rate definitely
varies based on those sources.
Our set rate on Facebook ads I'mlooking at last year, let's see
about 55%.
Our direct mail campaigns 86%.
People that just saw us likemaybe saw one of our vehicles
driving 78%.
(22:01):
Organic Google 72%.
So the set rate is a lot higherfor some lead sources than
others.
But with my marketingbackground and my sales
background, we have a culture ofif we're going to spend money
on marketing we need to getevery penny we can get out of
those marketing dollars.
(22:22):
And certainly there's someleads that come through that
will never, ever set for anestimate.
We'll never get a hundredpercent set rate right.
But if we're really working oursystems and we have really good
follow-up systems and we'rereaching out to these people
time and time again until it'sclear that they're never going
to schedule, then we're makingour marketing dollars stretch
(22:45):
way, way further, and that's howwe go from budgeting 10% and
only spending 6%.
Speaker 2 (22:52):
Yeah, that makes sense.
Yeah, and yeah, the set ratesare really strong.
And I think the general rule ofthumb is to shoot for a 50% set
rate for Facebook, because it'smore of like an outbound people
aren't looking for you, so ithas a lower set rate, but you
guys are exceeding that there.
And then the inbound stuff,like coming from the website or
(23:14):
from Google, it's higher, youknow.
So that makes sense.
And so the other piece of thatwas the close rate, which you
know 35%, you're good with, andthat seems the close rate which
you know 35%, um, you're goodwith, and that, that seems, you
know, reasonable, one out ofthree, approximately, uh, very
doable numbers, but it seemslike the.
(23:35):
The thing I think that probablysets you apart from a lot of
other businesses is that setrate, cause I would imagine,
well, I, based on my experience,the close rate is usually not
the issue Most folks can get aclose rate of around that, you
know.
But the set rate, I think, isthe big thing.
That is really impressive aboutyour company is probably why
(23:58):
you have such low cost of clientacquisition.
Yeah, I agree, 100% clientacquisition.
Yeah, I agree, a hundredpercent.
Um, so, year one focus was onnot a friend, you know, you
weren't afraid to spend onmarketing and you blew it up
from there.
And then year two, uh, then youneeded some help with hiring
(24:22):
someone to focus on production,so you could focus on sales and
marketing.
And you mentioned not beingafraid to spend money on that
person.
Did you have a, I guess?
Why was that?
You just knew that it worked.
Did you have a compensationplan in place?
Were you using a framework orsomething?
What made you so confident inthat big hire there?
Speaker 3 (24:45):
Yeah, I mean, we just followed industry benchmarks
and all the data that you and Ihave available to us says that
in our market, for what wecharge, for every $1.5 dollars
worth of sales, you need onesales guy and one project
manager.
So, going into 2023, when thegoal was to sell three million,
(25:07):
what's the math?
Two sales guys, two projectmanagers.
So I was one of the sales guys.
My wife transitioned out of thebusiness October of 22.
I hired my first projectmanager then and then in the
spring, when we started rampingup for exterior season, I hired
my second project manager andhired my second salesperson.
And uh, 2023, we also had a uh,another, another project
(25:32):
manager that came on didn't workout.
We covered for him.
2023 was a miracle that we gotto 3 million.
We just had a lot, a lot happen.
It was that was the hardesttransition year, I think.
And then we hit our 3 million.
We still hit it right and itwas very, very profitable
because I was still selling alot.
2024, the goal is 5 million andwhat I did was I knew that at
(26:01):
some point I was going to hit aceiling.
The company was going to hit aceiling because I had a ceiling,
and I didn't know what thatceiling was.
Again, I think I'm more capablethan most, my ceiling's
probably higher than most, but Iknew I was going to hit the
ceiling at some point, and I'mnot the kind of guy that is, you
know, just for ego's sake,wants to see how far I can push
it without help.
(26:21):
And so I made the decision tobring on a partner.
And so this is a guy that I hadknown since he was in eighth
grade.
We had worked together at amarketing agency for a couple of
years after he graduatedcollege.
Really smart, really capableand a complementary skill set to
me.
So the goal was 5 million,based on our math.
(26:43):
We needed three sales guys.
We needed three projectmanagers.
So I was still selling.
I brought him on to lead all ofproduction At that point.
We had a project coordinatorthat was scheduling all the
projects.
We had an estimate scheduler aswell, so we had a team of eight
to get us to the 5 million.
I might have been able to getto 5 million without my partner,
(27:03):
but it would have been very,very difficult, right, and I may
not have gotten there.
Uh, so bringing him on board atthat point was definitely the
right decision.
Um, so that, yeah, that lastyear was actually the most
profitable too.
We had the most overhead, uh,biggest staff.
But if you look at, if you lookat my books like sellers,
(27:26):
discretionary earnings we, wedid.
We sold 5.1 million and STE wasover a million dollars.
Wow, so it was super profitable, even through all, all of all
of this growth.
Wow, so it was super profitable, even through all, all of all
of this growth.
This year is really going to bethe test, I think, because now I
(27:47):
have a team of three full-timesalespeople not me and I'm I'm
selling a fraction.
I sold two and a half millionof the 5 million last year.
The goal this year is to sellless than a million.
Me personally, and I'm onlydoing, I'm only taking referrals
and repeat business, stuff likethat, and my partner is also
trying not to actively bemanaging the projects either.
So now we have two full-timeproject managers, one part-time
(28:09):
project manager, two projectcoordinators, estimate scheduler
.
This is this will be the bigtest whether Ellison painting is
a real business that cansustain without, you know, big
bad Brad selling, um, or whethersome of the magic was me
selling, who knows?
Speaker 2 (28:27):
Yeah, yeah, so I love this Um.
So you, you brought on apartner in that third year
because you knew that you hadsome blind spots.
We all have strengths andweaknesses and it sounds like
he's more production orientedand you're more sales oriented.
And how did that come aboutwith vetting your partner?
(28:53):
How did you know he was theright fit?
And then how did you structurethat partnership?
Cause that's a that can be asuper messy thing.
I've definitely seen this where, if you don't have the right,
you know, understandingexpectations and also documented
kind of like contract.
Uh, you know, it's basicallylike getting married to somebody
(29:15):
, so it can be very draining, um, if it doesn't work out.
And uh, do you have anythoughts on um, on how to
properly set up a partnership,and what did you learn that
worked there?
Speaker 3 (29:30):
Yeah, so well, the vetting had been done for the 20
years leading up to thepartnership.
Right Again, I've known himsince he was 13, and everything
I'd seen of him from 13 to 34 orhowever old he was when he
started working with me was andwe had worked together as well
pointed to the fact that he'sthe type of person that I would
(29:50):
be willing to partner with, andI've said this before.
There's only three people in mylife that I would feel
absolutely comfortablepartnering with, without a
question.
One is my wife, One is mylittle brother and one is Tim
and I.
When I launched Ellison, I toldhim listen, I'm launching my
own company.
Now, Eventually, I think youshould come partner with me.
Now's not the time, but let'skeep talking and I would keep
(30:11):
throwing out feelers.
And he had this fancy corporateconsulting job where he's
traveling around the countryworking with fortune 500
companies on systems and cultureand all this stuff and make it
really good money.
And he was always like nah, nah, nah, you know painting new
gross, and.
But then he had his first kidand the traveling around the
country wasn't as much fun as itwas, and so he's like all right
(30:34):
, I think this might be the timelet's start talking.
So the vetting was done, butthen it was like all right, well
, how do we partner or how do westructure this and how do we
protect each other?
Jason Paris is a great friendof mine.
He's him and his partners havekind of laid a foundation of how
to partner with people.
People, and even though I knowTim so well and I trust him so
(30:57):
much and he feels the same aboutme like we are, this is all
going to be in writing.
We're going to agree oneverything.
We're going to think about asmany contingencies and
roadblocks as we can and get itall written and agreed upon
ahead of time.
And we also agreed that thefirst year was actually going to
be a trial.
So 2024, he operated as apartner, but he was an employee
(31:23):
and I paid him a salary.
I paid him a $75,000 a yearsalary, which is what I paid
myself, and then hiscompensation was an additional
20% of profit on top of that atthe end of the year.
And we both agreed at the endof the year, if 2024 went well
and I'm thinking, yeah, Tim is agreat partner, and he thinks,
(31:43):
yeah, Brad's a great partner,Then we move forward and
actually sign the contract, butwe had negotiated all the terms
right off the bat.
So one of the signs that I knewit was going to be a good
partnership is, in the firstnegotiation meeting that we had,
we found ourselves arguing forthe other person, and what I
(32:07):
mean by that is let's.
I would say well, let's.
Hypothetically, I have a braininjury and evil Brad appears and
tries to take advantage of you.
What are the ways in which Icould do that?
And so I started pointing outall right, I could do this, I
could do that.
We need to make sure that thecontract addresses that.
So I don't have the ability todo that, and then he would do
(32:27):
the exact same thing.
You know well, you deserve tobe a minority or majority owner,
and so, with that, I think youshould have the power to do this
, this and this, even if Idisagree with you.
All right, so we were reallyoperating and discussing in good
faith, trying to look out forthe other person more than
ourselves which is how EllisonPainting operates and that's
(32:48):
part of why we've had so muchsuccess is if we are putting the
best interest of oursubcontractors ahead of our own
or the best interests of ourcustomers ahead of our own.
The goodwill pays off, right,and we don't do it so that we
can benefit more, but that'sjust a result of that.
So we we had all the contractterms laid out, we had the
(33:12):
contract drawn up end of theyear.
We're like, yeah, this is a nobrainer, the business is very
profitable, we're working reallywell together, and so we we
made the deal and he is nowofficially a 30% owner of
Ellison painting.
Um, and our roles, our roles,changed.
He's, he's essentially runningthe business.
I'm CEO Uh, I'm serving in likethe visionary role but he is
(33:35):
managing all of the people.
He's technically managing thesalespeople, he's managing the
production and which then freedme up to run rollout marketing
as well.
Speaker 2 (33:46):
That's.
That's awesome.
I love the fact that you guysred teamed your.
Your your like evil Brad.
What could I do?
That's a really so many peopledo.
Speaker 3 (33:59):
I mean, you've I'm sure you've seen the horror
stories.
Everyone's like, no, no, we, wedon't really need anything on
paper.
We know each other, we trusteach other, and then it all
falls apart.
Someone gets screwed,relationships are destroyed,
financial futures are destroyed.
Like, let's just, we believe ineach other, we believe that we
are both operating in good faith, and even so, let's just have
(34:20):
it all in writing.
Speaker 2 (34:22):
Yeah, it makes sense and I think it's a good exercise
to go through, obviously,document and get a signed
contract and a clearunderstanding and a clear
understanding.
But I love the adding in thewhat could I do to mess this up?
And like discussing that withthe partner ahead of time or the
(34:44):
potential partner.
That that's a.
That's a good one.
I love it.
So was it.
So it sounds like it wasbasically an option to buy in 30
by 30% at the end of the trialperiod and and then he had the
had the option to buy in or not,based off of how that first
year went.
It sounds like.
Speaker 3 (35:01):
Yep, and the way we structured the purchase price
was also a really healthy.
We each gave in a little bit.
He wanted to buy 40%, I wantedto sell 20%, we agreed on 30%,
but rather than just straight up30% on the valuation of the
business at the end of 2023,what we did is I said, all right
(35:23):
, I'll sell you 20% at the 2023valuation.
The next 10% is going to bebased on the valuation at the
end of this year when we'reworking together, and so what
ended up working out is his 20%actually cost him less than the
next 10%, which was good.
When you look at the totalvalue that he's receiving.
(35:48):
He's already positive equityand I felt honored that I wasn't
selling my business a portionof my business at like a really
really discounted rate Rightwasn't selling my business a
portion of my business at like areally really discounted rate
Right, so we locked in a portionof it.
Because we worked hard in 2024and we were really profitable, I
was rewarded with the extrapayment on the 10%.
Speaker 2 (36:07):
Yeah, that makes sense, and, in a lines,
incentives as well, like, yeah,so get you guys moving in the
same direction, so that thatmakes a lot of sense.
No, I appreciate you sharingthat.
Uh, I feel like partners.
It's it.
Uh, it can get really messyreally quick and it sounds like
you guys did it the right waywith really making sure the
(36:29):
match worked, red teaming aheadof time, getting everything
documented and then having a, acompensation plan and a option
to buy.
That made sense for both of youand aligned your incentives.
So, no, that sounds great, um,cool.
Well, I'd probably I could talkto you for the next couple
hours, but I don't want to stealyour time.
(36:52):
But, uh, this has been anamazing conversation.
I really appreciate youspending the time to discuss,
you know things, marketingpartnerships scaling from zero
to 5 million over the last threeyears.
Do you have any asks of theaudience or any tips or anything
anywhere that, if you want toconnect with them, the floor is
(37:16):
yours?
Speaker 3 (37:17):
Yeah, so we we operate pretty open-handedly at
Ellison painting.
So we have we have a lot ofresources that we've developed
sales brochures, subcontractorinfo packets, really good
playbooks for sales and projectmanagers.
We kind of share that stufffreely.
So if anyone wants to reach outto me for any of that stuff,
I'm happy to share it.
No real ask, other than ifyou're not a member of the
(37:42):
Painting Contractors Association, I would say for you that would
be a benefit.
Connect with like-mindedcontractors.
The PCA has a ton of resourcesto help businesses, big and
small, new and old.
And you know I just I love thePCA and it's it's been
instrumental to my growth and inparticular the relationships
(38:05):
I've made through the PCA.
So I don't benefit if you join.
You know it's not like I getpaid to be on the board of
directors, but the industry doesbetter when we all do better,
as our friend Nick Slavik says.
So join the PCA, reach out tome if there's any way I can help
, and happy to do that.
Speaker 2 (38:25):
Awesome.
I really appreciate your time,brad.
I definitely echo everythingyou just said with the PCA Great
resource and always has amazingevents.
Really appreciate your time,brad, and for the listeners with
that, we will see you next week.
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