September 8, 2025 • 20 mins
In this episode of the Profitable Painter Podcast, Daniel Honan (CPA, former painting business owner) and Richard Dunton (Enrolled Agent) dive deep into the SCALE Framework, the core system from Daniel's new book for ensuring your business is built to grow profitably.
You'll learn the 5 critical components to diagnose your financial health:
- S - Secure Profitability: Discover the #1 ratio to dial in for maximum profit (and why just being "busy" isn't enough).
- C - Control Cash Flow: Cash is King. Learn the simple mantra to fix cash flow issues fast (this is often more critical than profit in the short term).
- A - Avoid Over-Leveraging: Is your debt a tool or a trap? Learn the difference between "good debt" and "bad debt" and how to keep your business safe.
- L - Leverage Customer Dollars: Stop relying on banks and credit cards. Learn how to use your customers' money to fund your growth (including strategies for states with deposit limits).
- E - Execute With Confidence: Finally answer the question: "How much should I be paying myself?" Learn how to calculate your true worth based on the roles you play in your business.
If you're unsure about your margins, struggling with cash flow, or just want a clear checklist to ensure your business is on solid financial footing, this episode is for you.
FREE BOOK & LIVE WEBINAR INVITE!
This episode is a direct look into Daniel's new book, "Profitable Painter," which is packed with 9+ years of experience working with over 400 painting businesses.
You can get a FREE copy of the book + exclusive gifts by joining our LIVE Book Launch Webinar!
Date: September 9th
Time: 9:00 AM Pacific / 12:00 PM Eastern
Where: ZOOM
Register here NOW: https://profitablepaintercpa.com/webinar
Mark as Played
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 provideaccurate and up-to-date
financial and tax information,nothing you hear on this podcast
(00:22):
should be considered asfinancial advice specifically
and tax information.
Nothing you hear on thispodcast should be considered as
financial advice specificallyfor 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.
We strongly recommend youseeking individualized advice
before making any significantfinancial decision.
Speaker 2 (00:42):
Welcome to the Profitable Painter Podcast.
I'm your host, daniel Honan,cpa, former painting business
owner, and your guide tomastering the numbers that drive
success.
I'm super excited to be heretoday with Richard Dunton
enrolled agent.
How's it going, richard?
Speaker 3 (00:58):
It's going really well.
Daniel Happy to be here.
Speaker 2 (01:03):
Yeah.
So today we're going tocontinue our kind of review of
profitable painter, the new bookthat um releasing here on
september 9th on a book launch.
If you want to join us onseptember 9th, you can go to
profitable painter ctercpacomslash webinar and register to
(01:27):
join us at 12 Eastern, 9 amPacific, on September 9th where
we're actually going to gothrough the full book in detail
and then also everyone who goeswill get a free copy of
Profitable Painter as well as abunch of other cool prizes that
(01:48):
will announce that day.
So we're going to pick up wherewe left off from last episode
and we're going to talk aboutthe second framework in the book
, which is the scale framework.
So this is like the meat of thebook.
Most of the content of the bookis this second part of the book
, the scale framework, and thisis basically what you need to
(02:12):
use the scale framework toensure that your business is
financially healthy at any pointin time.
So you're using this frameworkto make sure, check in with your
business, to make sure you'reon track to scale profitably.
And so let's break down realquick what scale, what the
(02:34):
background is.
So the S stands for secureprofitability, c stands for
control cash flow.
C stands for control cash flow,a stands for avoid over
leveraging, l stands forleverage customer dollars and E
(02:56):
stands for execute withconfidence.
So we'll go through each ofthese to kind of give you a high
level idea of what goes intoeach.
So first off, we have S forsecure profitability.
So this is basically when youlook at your profit and loss,
what should you be seeing toensure that you have a healthy
(03:20):
and profitable business?
So in this part of the book wetalk a lot about the gross
profit to customer acquisitioncost ratio, which is kind of
like the most important ratiowhen it comes to overall
profitability.
If you can dial in this ratio,the gross profit to customer
acquisition cost ratio, then inmost cases your profitability
(03:41):
will be good to go.
And so the book really coversthat in detail and we've covered
it on previous podcasts.
But basically it's looking atyour gross profit, which is
what's left over after the jobhas been all the materials and
the labor has been paid for,what's left over in profit
(04:04):
compared to how much you'respending to get the customer,
and that's marketing costs andsalesperson compensation.
So there's that ratio you wantto maintain at a minimum of
three to one ratio, but ideallymaybe like a five or six to one
ratio, and so the book kind ofgoes into detail on what you
(04:27):
should be looking for on thatratio.
And there's several otherthings with securing
profitability you want to lookat, like your compensation
packages to your team, the keyroles like salesperson,
production manager, and thenlooking at your overhead costs
as well, making sure you're notoverspending there.
So that is the secureprofitability portion of the
(04:50):
framework.
Speaker 3 (04:51):
I think that's such an important part too, because
sometimes we get so focused ontrying to get the jobs and then
we're focused on completing thejobs that we wonder did I make
any money on that?
And the only thing worse thannot having enough work is having
too much work and not gettingpaid for it.
So having these numbers down,knowing what you're spending on
(05:15):
advertising, knowing what you'respending to complete the work
and pay your key people that'skey Because if, at the end of
the day, you're not puttingenough into your own pocket,
then it's not working and youmight have a ton of business,
but you don't have a profitablebusiness that's going to support
you.
Speaker 2 (05:35):
Yeah, absolutely, and this is from you know.
You and I have worked withhundreds of painting businesses
on these numbers and we've seenthe same thing over and over
again in terms of compensationpackages and margins and ratios.
So we really give it all awayin terms of what you should be
(05:58):
looking for on your numbers andhow you can be in the top 20% of
profitability for paintingbusinesses.
So that is the S for secureprofitability.
Then the next one is C forcontrol cash flow and, as the
saying goes, cash is king.
You can't run a business withno cash in it.
(06:22):
You got to have cash.
That's the one thing you needto really keep your business
going.
You can get away with nothaving any profit for a long
time actually, but you can't getaway with not having any cash.
So this is almost Really moreimportant than profit, at least
in the short term.
Um, and you know a lot of thetimes when painting business
(06:47):
owners are coming to us for thefirst time, they have
profitability issues, but theyalso have cash flow issues and
we actually address the cashflow issue first, because that
is the most dangerous thing fora business is when you have cash
flow issues issues you can getaway with kicking the can down
(07:13):
the road a little bit on theprofit side to focus on the cash
, but obviously both need to beaddressed.
But if you're having cash flowissues, that's the first thing
to fix, and so that's what wereally dive into deep in the
book.
For cash flow is how do youimprove cash flow and to give it
away a little bit.
It basically can be boiled downto get paid faster and slow
(07:38):
down payments to other people interms of cash.
So that's the short answer, butof course, there's a lot of
details in there that we gothrough in the book.
But if you'd like to hear moreabout how to control your cash
flow, join us on September 9that 12 Eastern, 9 am Pacific,
(07:59):
where we're going to go throughthis framework and also the
other two frameworks in the book, and everyone who attends live
on Zoom will get a free book,Profitable Painter, as well as a
whole bunch of other goodies.
Looking forward to giving thataway.
So yeah, so that is controlcash flow.
(08:22):
Now the next piece is A foravoid over leveraging.
Basically, don't get too muchdebt.
You know, be careful with debt,and I'm not one to say that all
debt is bad.
I know some folks come to usand they listen to Dave Ramsey,
who I also really like.
(08:44):
I think he provides a lot ofgreat, great information.
But the difference is, I wouldsay and he might disagree but
when you're talking about yourbusiness, you should, you should
look at debt a little bitdifferently than than on the
personal side.
So on the personal side, I tendto agree that you probably
(09:08):
should avoid debt pretty much atall costs.
But on the business side, youcan, you can use it as a tool,
but you got to be really carefulwith it and you don't want to
over leverage or take on toomuch debt.
Because a lot of the times whenthis happens, people are just
business owners are kind of justtrying to plug the holes in the
(09:32):
boat.
You know they have profit leaksthat need to be addressed and
they're just trying to plug itwith debt.
And that doesn't.
It works for a while in termsof you can have cash in the
business which keeps thebusiness alive, but then you're
just racking up a bunch of debtover the years and we've seen
this happen, where the profitissue is ignored for years and
(09:56):
years and then the business justhas, you know a ridiculous
amount of debt that needs to behandled because they've just
been ignoring their profit issueand just taking out more debt
to keep cash in the business.
Speaker 3 (10:12):
Yeah, I would agree that there's good debt and
there's bad debt.
And good debt is debt thatmakes you more money than the
interest that you're paying onit.
And so if that debt is going tobe directly invested into your
business and you're seeing astrong return on investment,
then that's when debt is apowerful tool in your advantage.
(10:34):
But if you're taking on debtand you're not getting an ROI on
it because, like you mentioned,daniel, you've profit leaks and
you're just kind of throwinggood money at a back,
(10:56):
overloading- with debt.
Speaker 2 (10:58):
Yes, sir.
Now it should be noted thatresidential painting businesses
and commercial paintingbusinesses will have to have
different amounts of debt.
Like, if you're a residentialrepaint business, your long-term
debt should be pretty low.
However, if you're doingcommercial, you will often need
(11:21):
to take out more debt than aresidential business because of
those payment schedules that arepayment terms that commercial
painting businesses have to dealwith that are not as favorable,
and so they often need someadditional debt that maybe the
residential side don't reallyneed.
But again, you still need to besuper careful and make sure
(11:47):
your books are set up in a waywhere you understand that the
debt you're taking on is beingused and you're you're profiting
off of it and you're not justusing that debt to keep your
cash in the business becauseyou're you're hemorrhaging and
you're just taking on a bunch oflosses.
You're hemorrhaging and you'rejust taking on a bunch of losses
(12:14):
.
So that is the quick overviewon the control cash flow portion
of the book for C under thescale framework.
The next part of the scaleframework is the A for I'm sorry
, we just covered A for overleveraging.
We already did that one, sorry.
So that's the S for secureprofitability.
C for control cash flow.
A for overleveraging avoidoverleveraging.
(12:35):
Now the next one is L forleverage customer dollars.
So we know we want to avoidtaking on too much debt, but
what does that leave us with?
We still need cash.
Right, we need to need cashfrom somewhere.
So basically, we need toleverage our customers money to
grow the business.
(12:55):
Meaning, you know, for example,taking a deposit and using that
money to grow the business.
And so that's kind of where wedig into on this portion of the
framework is using how to useyour customers money to grow the
business.
And it really comes down to isget paid faster.
(13:16):
You know, take a deposit anduse that deposit to pay your
team, you know, because youcan't put payroll on a credit
card right, so you got to havecash.
So when you get that cash down,that gives you more flexibility
.
Additionally, doing progresspayments when needed.
If you have a longer termproject or if you're in one of
(13:38):
those states like California,nevada, massachusetts and, I
think, maryland, if you'relimited on how much you can take
as a deposit, doing a progresspayment on the first day of the
job, you want to keep that cashcoming in as quickly as possible
and leverage that money to notonly pay your team but also to
grow your business byreinvesting it into the
(14:00):
marketing so you can get anothercustomer.
So that is the L for leveragecustomer dollars.
And then the last portion ofthis framework is the E.
It stands for execute withconfidence.
And this really gets into, as abusiness owner, understanding
(14:23):
how much should you be making inyour business based off the
roles that you do.
The roles that you do andthat's a common question that we
get is like how much should Ipay myself, how much should I be
making?
And that this chapter in thebook and this part of the
framework really dive intolooking at okay, what are your
roles and then what should yoube expecting in terms of money
(14:47):
being made in your business.
And understanding this is keyto also understanding your
margins and what you should behitting in terms of your gross
profit margin, your net profitmargin and how much you should
be compensating yourself andother people for particular
roles.
So it kind of brings everythingtogether.
(15:09):
So you you know, for example, ifyou are a painting business
owner, that is, the salespersonand the production manager and
you're doing a million dollarsin revenue, how much should you
be making in your business.
It goes and it walks youthrough how to arrive at that
answer and to take that example.
And to take that example itwould be you know, 15% is kind
(15:54):
of like the benchmark for whatrevenue going to you as a
business owner without youhaving to do anything additional
.
Now if you're also thesalesperson and the production
manager, you should be gettingmoney to cover for those roles
that you're providing that valueto the business.
So a salesperson is usuallyabout 8% of what they close and
then a production manager issomewhere around four to 7% of
(16:14):
what they produce.
And so, roughly speaking, youshould be getting about 30%
profit margin If you are thatbusiness owner that does sales,
sales, production management andyou're also the business owner.
So this is a quick overview onthat portion of the book, the E
(16:42):
for execute with confidence.
Speaker 3 (16:42):
Yeah, when you talk about paying yourself and your
business, one thing I like toremind folks is kind of
understand where in yourbusiness life cycle you are.
If you're just starting out,you might choose not to pay
yourself until you get a higher,more steady cash flow going.
We don't want to starve ourbusiness when it's brand new.
(17:03):
But yes, eventually, if you dothat, if you feed the business
when it needs it, you will getto that point where you're
sitting on the beach collectingyour 15% passive income.
But just try not to pull thattrigger too soon If your
business needs the cash.
Speaker 2 (17:23):
Keep it in the business, yeah, and that's a
good point.
That we look at under the C forcontrol, cash flow portion is,
you know, some, some owners havethe tendency to to pull money
out when you really should havekept in the business, because
you do want the business to beprepared for some sort of
unforeseen expense or downturnin the economy.
(17:48):
You want to have some reservesfor the business set aside.
All right, so that is a roughoverview of the scale framework,
which is basically theframework that you should use to
evaluate the financial healthof your painting business, and
(18:08):
in the book Profitable Painterwe go through all the tips and
tricks to ensure that you areset up financially, and we'll
actually go through this indetail.
On the book launch on September9th at 12 pm Eastern Time, 9 am
(18:29):
Pacific.
We'd love to see you there.
If you go toProfitablePainterCPAcom slash
webinar, you can register forfree, and for all attendees that
join us on that live Zoom event, they'll get a free copy of the
book Profitable Painter, plusseveral other surprises that I'm
(18:50):
excited about giving out aswell.
So definitely go over toProfitablePainterCPAcom slash
webinar to register.
Speaker 3 (18:57):
Yeah, it's going to be like going to a taping of
Oprah, right.
Everybody goes away with thegifts.
Speaker 2 (19:03):
Yeah, exactly that's what I want it to be like.
Exactly, try to provide as muchvalue as possible, um, but yeah
, it's, it's.
You know, over the last nineyears I really didn't hold
anything back in this book totry to make it as value as
possible, um, to put everythingI know in the book, um, which is
(19:25):
kind of hard like to to todistill it down into 269 pages,
but also to make it accessible.
So I obviously didn't puteverything I know, but try to
put it in a way that isaccessible.
That was put into somememorable frameworks that could
really help people be moreprofitable and scale to the next
(19:47):
level.
Speaker 3 (19:51):
Awesome.
Well, I'm looking forward tothe book launch.
I know it's going to provide alot of value for everybody there
and it's going to be a reallyexciting way to launch your new
book, Daniel.
So I hope everybody listeningcan make it, Even if you're not
going to be giving away carslike Oprah.
Speaker 2 (20:07):
It'll be even better if you're a painting business
owner yeah, I mean, with theseresources, hopefully you can
make more money than a car'sworth with, with uh, the content
that I put in into the book andalso into the gifts as well.
But, yeah, we, we look forwardto, uh, to seeing you there.
If you, if you're interestedregistering, go to
(20:29):
profitablepaintercpacom slashwebinar and register.
Just plug in your name andemail and we'd love to see you
September 9th and with thatwe'll 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 provideaccurate and up-to-date
financial and tax information,nothing you hear on this podcast
(00:22):
should be considered asfinancial advice specifically
and tax information.
Nothing you hear on thispodcast should be considered as
financial advice specificallyfor 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.
We strongly recommend youseeking individualized advice
before making any significantfinancial decision.
Speaker 2 (00:42):
Welcome to the Profitable Painter Podcast.
I'm your host, daniel Honan,cpa, former painting business
owner, and your guide tomastering the numbers that drive
success.
I'm super excited to be heretoday with Richard Dunton
enrolled agent.
How's it going, richard?
Speaker 3 (00:58):
It's going really well.
Daniel Happy to be here.
Speaker 2 (01:03):
Yeah.
So today we're going tocontinue our kind of review of
profitable painter, the new bookthat um releasing here on
september 9th on a book launch.
If you want to join us onseptember 9th, you can go to
profitable painter ctercpacomslash webinar and register to
(01:27):
join us at 12 Eastern, 9 amPacific, on September 9th where
we're actually going to gothrough the full book in detail
and then also everyone who goeswill get a free copy of
Profitable Painter as well as abunch of other cool prizes that
(01:48):
will announce that day.
So we're going to pick up wherewe left off from last episode
and we're going to talk aboutthe second framework in the book
, which is the scale framework.
So this is like the meat of thebook.
Most of the content of the bookis this second part of the book
, the scale framework, and thisis basically what you need to
(02:12):
use the scale framework toensure that your business is
financially healthy at any pointin time.
So you're using this frameworkto make sure, check in with your
business, to make sure you'reon track to scale profitably.
And so let's break down realquick what scale, what the
(02:34):
background is.
So the S stands for secureprofitability, c stands for
control cash flow.
C stands for control cash flow,a stands for avoid over
leveraging, l stands forleverage customer dollars and E
(02:56):
stands for execute withconfidence.
So we'll go through each ofthese to kind of give you a high
level idea of what goes intoeach.
So first off, we have S forsecure profitability.
So this is basically when youlook at your profit and loss,
what should you be seeing toensure that you have a healthy
(03:20):
and profitable business?
So in this part of the book wetalk a lot about the gross
profit to customer acquisitioncost ratio, which is kind of
like the most important ratiowhen it comes to overall
profitability.
If you can dial in this ratio,the gross profit to customer
acquisition cost ratio, then inmost cases your profitability
(03:41):
will be good to go.
And so the book really coversthat in detail and we've covered
it on previous podcasts.
But basically it's looking atyour gross profit, which is
what's left over after the jobhas been all the materials and
the labor has been paid for,what's left over in profit
(04:04):
compared to how much you'respending to get the customer,
and that's marketing costs andsalesperson compensation.
So there's that ratio you wantto maintain at a minimum of
three to one ratio, but ideallymaybe like a five or six to one
ratio, and so the book kind ofgoes into detail on what you
(04:27):
should be looking for on thatratio.
And there's several otherthings with securing
profitability you want to lookat, like your compensation
packages to your team, the keyroles like salesperson,
production manager, and thenlooking at your overhead costs
as well, making sure you're notoverspending there.
So that is the secureprofitability portion of the
(04:50):
framework.
Speaker 3 (04:51):
I think that's such an important part too, because
sometimes we get so focused ontrying to get the jobs and then
we're focused on completing thejobs that we wonder did I make
any money on that?
And the only thing worse thannot having enough work is having
too much work and not gettingpaid for it.
So having these numbers down,knowing what you're spending on
(05:15):
advertising, knowing what you'respending to complete the work
and pay your key people that'skey Because if, at the end of
the day, you're not puttingenough into your own pocket,
then it's not working and youmight have a ton of business,
but you don't have a profitablebusiness that's going to support
you.
Speaker 2 (05:35):
Yeah, absolutely, and this is from you know.
You and I have worked withhundreds of painting businesses
on these numbers and we've seenthe same thing over and over
again in terms of compensationpackages and margins and ratios.
So we really give it all awayin terms of what you should be
(05:58):
looking for on your numbers andhow you can be in the top 20% of
profitability for paintingbusinesses.
So that is the S for secureprofitability.
Then the next one is C forcontrol cash flow and, as the
saying goes, cash is king.
You can't run a business withno cash in it.
(06:22):
You got to have cash.
That's the one thing you needto really keep your business
going.
You can get away with nothaving any profit for a long
time actually, but you can't getaway with not having any cash.
So this is almost Really moreimportant than profit, at least
in the short term.
Um, and you know a lot of thetimes when painting business
(06:47):
owners are coming to us for thefirst time, they have
profitability issues, but theyalso have cash flow issues and
we actually address the cashflow issue first, because that
is the most dangerous thing fora business is when you have cash
flow issues issues you can getaway with kicking the can down
(07:13):
the road a little bit on theprofit side to focus on the cash
, but obviously both need to beaddressed.
But if you're having cash flowissues, that's the first thing
to fix, and so that's what wereally dive into deep in the
book.
For cash flow is how do youimprove cash flow and to give it
away a little bit.
It basically can be boiled downto get paid faster and slow
(07:38):
down payments to other people interms of cash.
So that's the short answer, butof course, there's a lot of
details in there that we gothrough in the book.
But if you'd like to hear moreabout how to control your cash
flow, join us on September 9that 12 Eastern, 9 am Pacific,
(07:59):
where we're going to go throughthis framework and also the
other two frameworks in the book, and everyone who attends live
on Zoom will get a free book,Profitable Painter, as well as a
whole bunch of other goodies.
Looking forward to giving thataway.
So yeah, so that is controlcash flow.
(08:22):
Now the next piece is A foravoid over leveraging.
Basically, don't get too muchdebt.
You know, be careful with debt,and I'm not one to say that all
debt is bad.
I know some folks come to usand they listen to Dave Ramsey,
who I also really like.
(08:44):
I think he provides a lot ofgreat, great information.
But the difference is, I wouldsay and he might disagree but
when you're talking about yourbusiness, you should, you should
look at debt a little bitdifferently than than on the
personal side.
So on the personal side, I tendto agree that you probably
(09:08):
should avoid debt pretty much atall costs.
But on the business side, youcan, you can use it as a tool,
but you got to be really carefulwith it and you don't want to
over leverage or take on toomuch debt.
Because a lot of the times whenthis happens, people are just
business owners are kind of justtrying to plug the holes in the
(09:32):
boat.
You know they have profit leaksthat need to be addressed and
they're just trying to plug itwith debt.
And that doesn't.
It works for a while in termsof you can have cash in the
business which keeps thebusiness alive, but then you're
just racking up a bunch of debtover the years and we've seen
this happen, where the profitissue is ignored for years and
(09:56):
years and then the business justhas, you know a ridiculous
amount of debt that needs to behandled because they've just
been ignoring their profit issueand just taking out more debt
to keep cash in the business.
Speaker 3 (10:12):
Yeah, I would agree that there's good debt and
there's bad debt.
And good debt is debt thatmakes you more money than the
interest that you're paying onit.
And so if that debt is going tobe directly invested into your
business and you're seeing astrong return on investment,
then that's when debt is apowerful tool in your advantage.
(10:34):
But if you're taking on debtand you're not getting an ROI on
it because, like you mentioned,daniel, you've profit leaks and
you're just kind of throwinggood money at a back,
(10:56):
overloading- with debt.
Speaker 2 (10:58):
Yes, sir.
Now it should be noted thatresidential painting businesses
and commercial paintingbusinesses will have to have
different amounts of debt.
Like, if you're a residentialrepaint business, your long-term
debt should be pretty low.
However, if you're doingcommercial, you will often need
(11:21):
to take out more debt than aresidential business because of
those payment schedules that arepayment terms that commercial
painting businesses have to dealwith that are not as favorable,
and so they often need someadditional debt that maybe the
residential side don't reallyneed.
But again, you still need to besuper careful and make sure
(11:47):
your books are set up in a waywhere you understand that the
debt you're taking on is beingused and you're you're profiting
off of it and you're not justusing that debt to keep your
cash in the business becauseyou're you're hemorrhaging and
you're just taking on a bunch oflosses.
You're hemorrhaging and you'rejust taking on a bunch of losses
(12:14):
.
So that is the quick overviewon the control cash flow portion
of the book for C under thescale framework.
The next part of the scaleframework is the A for I'm sorry
, we just covered A for overleveraging.
We already did that one, sorry.
So that's the S for secureprofitability.
C for control cash flow.
A for overleveraging avoidoverleveraging.
(12:35):
Now the next one is L forleverage customer dollars.
So we know we want to avoidtaking on too much debt, but
what does that leave us with?
We still need cash.
Right, we need to need cashfrom somewhere.
So basically, we need toleverage our customers money to
grow the business.
(12:55):
Meaning, you know, for example,taking a deposit and using that
money to grow the business.
And so that's kind of where wedig into on this portion of the
framework is using how to useyour customers money to grow the
business.
And it really comes down to isget paid faster.
(13:16):
You know, take a deposit anduse that deposit to pay your
team, you know, because youcan't put payroll on a credit
card right, so you got to havecash.
So when you get that cash down,that gives you more flexibility
.
Additionally, doing progresspayments when needed.
If you have a longer termproject or if you're in one of
(13:38):
those states like California,nevada, massachusetts and, I
think, maryland, if you'relimited on how much you can take
as a deposit, doing a progresspayment on the first day of the
job, you want to keep that cashcoming in as quickly as possible
and leverage that money to notonly pay your team but also to
grow your business byreinvesting it into the
(14:00):
marketing so you can get anothercustomer.
So that is the L for leveragecustomer dollars.
And then the last portion ofthis framework is the E.
It stands for execute withconfidence.
And this really gets into, as abusiness owner, understanding
(14:23):
how much should you be making inyour business based off the
roles that you do.
The roles that you do andthat's a common question that we
get is like how much should Ipay myself, how much should I be
making?
And that this chapter in thebook and this part of the
framework really dive intolooking at okay, what are your
roles and then what should yoube expecting in terms of money
(14:47):
being made in your business.
And understanding this is keyto also understanding your
margins and what you should behitting in terms of your gross
profit margin, your net profitmargin and how much you should
be compensating yourself andother people for particular
roles.
So it kind of brings everythingtogether.
(15:09):
So you you know, for example, ifyou are a painting business
owner, that is, the salespersonand the production manager and
you're doing a million dollarsin revenue, how much should you
be making in your business.
It goes and it walks youthrough how to arrive at that
answer and to take that example.
And to take that example itwould be you know, 15% is kind
(15:54):
of like the benchmark for whatrevenue going to you as a
business owner without youhaving to do anything additional
.
Now if you're also thesalesperson and the production
manager, you should be gettingmoney to cover for those roles
that you're providing that valueto the business.
So a salesperson is usuallyabout 8% of what they close and
then a production manager issomewhere around four to 7% of
(16:14):
what they produce.
And so, roughly speaking, youshould be getting about 30%
profit margin If you are thatbusiness owner that does sales,
sales, production management andyou're also the business owner.
So this is a quick overview onthat portion of the book, the E
(16:42):
for execute with confidence.
Speaker 3 (16:42):
Yeah, when you talk about paying yourself and your
business, one thing I like toremind folks is kind of
understand where in yourbusiness life cycle you are.
If you're just starting out,you might choose not to pay
yourself until you get a higher,more steady cash flow going.
We don't want to starve ourbusiness when it's brand new.
(17:03):
But yes, eventually, if you dothat, if you feed the business
when it needs it, you will getto that point where you're
sitting on the beach collectingyour 15% passive income.
But just try not to pull thattrigger too soon If your
business needs the cash.
Speaker 2 (17:23):
Keep it in the business, yeah, and that's a
good point.
That we look at under the C forcontrol, cash flow portion is,
you know, some, some owners havethe tendency to to pull money
out when you really should havekept in the business, because
you do want the business to beprepared for some sort of
unforeseen expense or downturnin the economy.
(17:48):
You want to have some reservesfor the business set aside.
All right, so that is a roughoverview of the scale framework,
which is basically theframework that you should use to
evaluate the financial healthof your painting business, and
(18:08):
in the book Profitable Painterwe go through all the tips and
tricks to ensure that you areset up financially, and we'll
actually go through this indetail.
On the book launch on September9th at 12 pm Eastern Time, 9 am
(18:29):
Pacific.
We'd love to see you there.
If you go toProfitablePainterCPAcom slash
webinar, you can register forfree, and for all attendees that
join us on that live Zoom event, they'll get a free copy of the
book Profitable Painter, plusseveral other surprises that I'm
(18:50):
excited about giving out aswell.
So definitely go over toProfitablePainterCPAcom slash
webinar to register.
Speaker 3 (18:57):
Yeah, it's going to be like going to a taping of
Oprah, right.
Everybody goes away with thegifts.
Speaker 2 (19:03):
Yeah, exactly that's what I want it to be like.
Exactly, try to provide as muchvalue as possible, um, but yeah
, it's, it's.
You know, over the last nineyears I really didn't hold
anything back in this book totry to make it as value as
possible, um, to put everythingI know in the book, um, which is
(19:25):
kind of hard like to to todistill it down into 269 pages,
but also to make it accessible.
So I obviously didn't puteverything I know, but try to
put it in a way that isaccessible.
That was put into somememorable frameworks that could
really help people be moreprofitable and scale to the next
(19:47):
level.
Speaker 3 (19:51):
Awesome.
Well, I'm looking forward tothe book launch.
I know it's going to provide alot of value for everybody there
and it's going to be a reallyexciting way to launch your new
book, Daniel.
So I hope everybody listeningcan make it, Even if you're not
going to be giving away carslike Oprah.
Speaker 2 (20:07):
It'll be even better if you're a painting business
owner yeah, I mean, with theseresources, hopefully you can
make more money than a car'sworth with, with uh, the content
that I put in into the book andalso into the gifts as well.
But, yeah, we, we look forwardto, uh, to seeing you there.
If you, if you're interestedregistering, go to
(20:29):
profitablepaintercpacom slashwebinar and register.
Just plug in your name andemail and we'd love to see you
September 9th and with thatwe'll see you next week.
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