September 19, 2025 • 40 mins
In this episode of the Profitable Painter Podcast, we sit down with Tara Riley, COO of the Academy for Professional Painting Contractors (APPC) and a 20+ year home services veteran and former President of Fresh Coat Painters. With experience diving into the financials of hundreds of painting businesses, she reveals the critical mindset shifts and operational strategies that separate stagnant companies from scaling superstars.
You'll learn how to:
- Break Through the $500k Barrier: Why your role must change from "Superman" doing the work to a leader investing in people.
- Overcome the "No Good People" Myth: How to shift from a scarcity mindset to building a deep bench of talent (her "30 Painters in 30 Days" method).
- Master Your Most Valuable Asset: Why your customer list is your business's true equity and how to nurture it for powerful, low-cost repeat and referral business.
- Diagnose Your Growth Gaps: Use the simple "Rule of 3" (3 minutes, 3 days, 3 weeks) to instantly identify bottlenecks in your sales and production capacity.
- Plan for Profit, Not Just Revenue: Why "Mama" Gross Margin (aim for 55%) is the #1 KPI to watch before you spend another dollar on marketing.
If you're feeling stuck, overwhelmed, or unsure what to fix first to scale your business, this conversation is a masterclass in strategic thinking from an expert who has helped franchisees grow from $15M to $70M.
Key Takeaways:
- The #1 limiting belief that holds owners back from hiring and how to overcome it.
- How to calculate the exact additional sales needed to justify a new hire risk-free.
- Why you must always be thinking 6-12 months ahead, especially to conquer the "Dark Quarter" (Nov-Jan).
- The two key numbers Tara looks at first with every client to diagnose their business health.
- Her actionable advice for building a business that lets you work less and make more.
Subscribe to The Profitable Painter Podcast for more weekly strategies on mastering your numbers, boosting profits, and building a business that works for you.
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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 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.
(00:45):
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, former painting business
owner, and your guide tomastering the numbers that drive
success.
Let's dive in and make yourbusiness more profitable, one
episode at a time.
Today, I'm super excited totalk with Tara Riley.
(01:08):
She has a huge amount ofexperience.
I'm really excited to dig intoall the knowledge that she has.
Welcome to the podcast, tara.
How's it going?
Speaker 2 (01:17):
It's going great.
Thanks, Daniel.
I really appreciate you havingme on.
This is such an important topicfor our painting members and
it's just great.
I'm so glad to talk profits anyday.
Speaker 1 (01:27):
Yes, excellent, and a lot of folks have probably
heard of you already.
But if you could kind of givefolks like, what's your
background in the paintingindustry, How'd you get started?
What would have been some majormilestones along the way?
Speaker 2 (01:39):
Yeah, great.
So officially I got into thepainting business when I took
over as president of Fresh CoatPainters, the franchise about 11
years ago.
I had worked in the tradesprior to that, so I have about
20 plus years of experienceworking in home services,
different trades butspecifically painting was when I
(02:00):
took over Fresh Coat Paintersand obviously that gave me a
wealth of information about, youknow, not just one business but
many businesses and scaling.
So you know, franchising is aninteresting world but I fell in
love with the painting businessand even though I've exited from
Fresh Coat and now work withthe APPC, you know I still love
helping our painting contractorsout there.
It's so much fun.
Speaker 1 (02:21):
Yeah, so much fun.
Yeah, and that's so you've.
You basically dove into thefinancials and the operations of
hundreds and hundreds ofbusinesses Cause under Freshcoat
you guys had a couple hundredor so and then, with Academy for
Professional PaintingContractors, you're also working
with dozens of other paintingbusinesses and you've been able
to basically dive into theirnumbers, dive into their
(02:42):
operations and figure out whatworks and what doesn't.
Is that fair to say?
Speaker 2 (02:46):
Yeah, absolutely.
I think at Freshcoat we had,you know, we, when we grew the
business, we grew it from about15 million to a little bit over
70 million.
In in the 10 years I was there,we had about 170 units.
So we, you know what was fun inthe franchising world.
We were launching newbusinesses.
So we understood what it tookto launch businesses from
scratch and ramp them up.
(03:07):
But we also had scaledbusinesses and my passion, as
you know, daniel, is aboutscaling.
You know.
It's really about working withbusinesses and understanding
what are the barriers that stopyou from having the business you
want.
Now this goes back all the waythrough my career in franchising
, whether it was in painting orother businesses that I started
with.
It actually started way backwhen I worked with McDonald's,
(03:29):
you know, and trying to figureout how to grow a restaurant
profitably so thatowner-operators would have, you
know, the lifestyle and theprofits that they wanted out of
a business.
It's something that I've beenpassionate about for a long time
, even, you know, just runningmy own restaurants I've had.
I had that in my background,but but you know, yes, we had
Fresh Coat.
We had that experience.
We had, you know, theopportunity to help.
(03:51):
You know, like I said, hundredsof business owners and at APPC
we've got well over a hundredmembers.
Right now, I personally coach15 groups of various sizes and I
also run our peer groups, andwhat's really nice about the
peer groups is we really diveinto the numbers with our peer
groups.
I obviously do with my coachingas well, but so there's another
like 25 or 30 members that arein our high performance peer
(04:12):
groups that we get to see theirmonthly numbers as well.
So I I'm a numbers gal.
You know that I'm a nerd whenit comes to numbers and and
because why are we in businessif we're not there to make money
right to numbers?
Speaker 1 (04:25):
and and because why are we in business if we're not
there to make money?
Right, yeah, absolutely.
Well, I'd love to dive into theyour your topic, which is uh,
how do you scale, or what thethings that prevent you from
scaling?
Can you just what?
What are, what are some typicalthings that prevent folks from
scaling to the level?
Like you know, maybe you couldtake an example of, there's a
common hurdles that happen likearound 500 K to 750, there seems
(04:51):
to be kind of a break pointthat's preventing folks from
getting to the next level.
Can you just give me yourthoughts on what?
What are the typical thingsthat prevent folks from getting
to the level that they want tobe at?
Speaker 2 (05:03):
Yeah, you know that's a great topic.
You know, and we all knowthere's that we call it an
inflection point that's what Ihave always called it.
Where people get there's sortof sticking points right, we get
stuck, and that is absolutelytrue.
We saw that at Fresh Coat.
People get stuck right aroundthat 500,000 mark and to me, and
it's also, these things happenin all service businesses.
It's not just painting, butwhat happens is it starts with a
(05:26):
mindset issue, right?
So the role of the ownerchanges dramatically in that
when we start flexing from that$300,000 to about that $600, you
know 300,000 are workingheavily in the business doing it
themselves.
(05:47):
Nobody can do it better than me.
You know, if it needs to be getdone, it needs to be done by me
, and our energy at that levelis going as an owner is going
into doing things.
To get to that next level, youhave to start to hire people,
not just painters.
But you have to.
You can't we all have.
(06:10):
You know, I'm sure mostpainting business owners have an
S tattooed on their chest andyou know cape and boots in the
closet.
They can do everything, right,we're Superman.
But the bottom line is you'rehuman and there's only so many.
You have a limit to your humancapacity and as the business
grows, the demands in the bigbuckets of being able to produce
, being able to acquire leads,to being able to sell and to
administer your business allgrow along with the size of the
(06:33):
business.
At some point you can't do itall and you need help feeling
comfortable with that a lot andthat's my number one barrier
that I've seen with businessowners in general uh, is that
just not having a good comfortlevel with being able to hire
somebody, delegate, you know,and not just delegate and
(06:54):
disappear.
That's one of our fears, youknow.
That's one of the things.
If you don't know how todelegate and follow up and and,
and you're not comfortable inthat role, it makes it really
difficult to get from that$300,000, $400,000 to $700,000,
because that's where your rolechanges as an owner.
You change from working onthings to starting to work on
people.
It's like you're investing yourtime.
(07:15):
Instead of investing your timein doing lots of things, you
start to invest your time intoacquiring and developing people,
and that's a challenge for alot of folks and that's to me
one of the biggest barriers inthat first inflection point.
Speaker 1 (07:30):
Yeah, that's a common thing I hear is for folks in
that range is, you know, there'sno good people, or like I can't
find anybody to help me, orlike just very, the labor market
is down or something like that,something to that effect.
What are your thoughts on thoseexcuses?
Speaker 2 (07:49):
And that's a limiting belief that many, many people
have.
And I think, in terms ofcoaching, I've had to coach a
lot of people through that andyou know the thing is that if
that's what you believe, you'reright, you're going to, you're
absolutely.
You know.
Whether you think you can oryou can't, you're always right.
You have to get through.
That's the limiting belief thatstops people from growing.
(08:13):
Look, I've learned there arepeople out there and there are
people in your social network.
I mean, if you think yes andhow, in that role, and start
thinking about who can I hireand believe you're going to find
them, you'll find them.
I've never had problems findingpeople, whatever level I'm at.
You know.
If you have a question aboutthat, just turn around and look
at people you know that arerunning million dollar painting
(08:34):
businesses, that are running two, three, five $20 million
businesses.
How did they get there?
They have people so, magically,the people only exist in that
particular community, or maybethey're just better at it than
you are.
I mean, hey, look, we know thefear, but I say that, um, you
know, my comment on that is acouple of things.
One of the I think one of thebigger fears of hiring people.
(08:56):
Is this automatic?
There's a checkbook fear, Icall it.
If I'm going to hire somebody,I don't I think about all of a
sudden this is just an immediatedrain on my cashflow, like I
feel like I'm grabbing mycheckbook.
You know, I've got a checkright here.
I got it and I'm going to writea check.
If I'm going to pay somebody,you know, $40,000 for the year,
(09:16):
I'm like I'm writing a check for$40,000 and just handing it out
no-transcript.
(09:45):
If I'm going to invest insomebody, I want, I want that
person to be self-liquidating,in other words, the the
incremental growth of mybusiness, because, I've added,
this person covers their costs.
Plus, I'm going to make 20% offof it at least, or more, and
that's my rule of thumb in termsof hiring.
So we always when, when we'regoing to do the math to see,
okay, how much and people areshocked at how little
(10:07):
incremental sales you reallyneed to pay for somebody.
It's not a big number, it's not.
You think it's.
Oh, I'm going to have to doublemy business.
No, no, usually the number tocover that might be an
additional 10,000 a month orsomething at the latest, at the
highest, yeah, I think thousanda month or something at the
(10:27):
latest, at the highest.
Speaker 1 (10:27):
Yeah, I think that's a useful exercise is, once you
you're deciding to make thathigher, identifying how much
additional sales you need tomake to cover that and which
kind of tells you like I guessyou need to basically grow the
pie bigger.
For you know you're taking asmaller cut of hopefully a
bigger pie once you bring themon, because you're going to be
able to focus your attention onthings that are going to grow
(10:49):
the business, as opposed to justhiring them and then hanging
back.
Unless that's your goal is tohang back, and I'm assuming here
that you're trying to scale,trying to grow.
Speaker 2 (10:58):
Yeah, absolutely, and you may.
Daniel, you're bringing up agreat point, because there's
really two values to hiring.
One would be the scalabilityand growth.
The other is lifestyle.
So, as an owner, if I'm killingmyself when a lot of our owners
are, and I'm trying to relievesome pressure on that and give
(11:19):
myself some more freedom andflexibility, I hire somebody to
take on some of the tasks andactivities that I've been doing
gives you know, I may not.
I may be okay with that, I maybe okay with taking a lesser cut
of you know of the business,but, like you said, if we do it
right though the math works outreally great.
We take a smaller percentagepiece of a bigger pie and you'll
(11:40):
actually find out that thedollar amount we're taking is
bigger.
You're actually making moremoney and working less, and
that's what we shoot for.
We shoot for the math to sayyou're literally going to work
less and make more.
Speaker 1 (11:54):
Sounds like a good deal.
Speaker 2 (11:56):
That's what we're looking for.
Speaker 1 (11:58):
Yeah, so mindset limiting beliefs are definitely
a thing that hold people backfrom growing.
What are some other constraintsor bottlenecks that are
preventing folks from getting tothe next level?
Speaker 2 (12:13):
I think scarcity mindset, it's still in that
mindset, it's knowing that youhave to, you're going to send
your money out hunting.
We like to say, right, soyou're, you're going to invest
in the business and understandthat, that that you've got to
trust that the money's going togo out and bring friends back
with it.
Right, so we're looking for,like, if we're going to invest
in marketing.
(12:33):
So the next, usually the next,the people capacity is the first
limiting belief, like I need toadd some people.
But then realizing that I mayhave to invest if I'm trying to
grow aggressively and I'm tryingto make the math work on, you
know, paying myself back forthat investment.
Now I may need more leads.
(12:53):
If I've been relying on, forinstance, just repeat and
referral business, am I gettingenough leads to I get this
increase in sales or do I needto invest more?
The big I mean the big gap thatwe see is people don't
understand the value of theirbusiness.
They don't understand the valueof their lists.
(13:15):
You know it's a.
It's a big, just gap that I seeout there in the, and it's not
just in painting, it was in allthe trades.
But the most valuable thing inour business is our customer
list and there's a number ofpeople out there that can't even
just conjure up a list.
But if you have a good list,then are you communicating with
(13:38):
it?
Because if you want repeatreferral business, first of all
you'll get some.
But just because the windhappens to be blowing, you know.
But if you actually nurtureyour list, you'll increase that
amount of repeat referralsignificantly.
We've seen that.
I've seen that in the numbers.
So that's the first place tostart.
(13:58):
And then you know, if you wantto grow more aggressively than
that, then you're going to haveto put some money into outbound
marketing and more of a coldmarketing.
Right, you're going after notjust repeat referral, but now
I'm going after those moreexpensive cold clients.
But here's the beauty of thatthey're only cold once.
Once they come in, now they'rein your list.
(14:18):
And the beautiful thing is, ifyou're working your list the way
you should be, then it makesthe value of that cold marketing
even higher, because everycustomer you acquire now
increases your list.
I tell a lot of our clients sayhey, you know, there used to be
that old joke like the personwith the most toys wins Well, in
(14:41):
our world the person with themost customers wins right and
the more customers you have onthe list and that are viable
customers, the more you can win,the more you can leverage that.
So you know that's the equityof a trades business is
absolutely the customer list.
Speaker 1 (14:59):
Yeah, and it's crazy how much it reminds me of that
story.
I think it's Henry Ford whothey were like generating a
bunch of sawdust from building,building uh model t's or
something like that.
And then he's like what do wedo with all this?
Actually they were just likethrowing away the sawdust, but
then they ended up taking thesawdust and like using it to uh
(15:23):
sell another product.
I forgot what it was kingsfordcharcoal, he that was that's
right, in fact, the kingsfordcharcoal.
Speaker 2 (15:28):
That was the.
In fact, the Kingsford charcoalbrand came from Ford.
He put a friend of his inbusiness making charcoal and
buying the because they had alot of wooden parts, I guess in
those old model teas.
And yeah, that's a great storybut it is, it's, you know it's.
How do we make, you know, howdo we make a viable business out
of a scrap right?
Speaker 1 (15:48):
Yeah, and folks treat their customers like now on to
the next one, like getting morecustomers, but kind of ignoring,
like hey, you have this personwho just paid you five $10,000,
probably should use try to getmore value from that
relationship.
Speaker 2 (16:05):
Yeah, that's the.
I consider that thetransactional mindset we think
of the business and that limitsus in a number of ways, Like so,
when we see the customer as atransaction versus an equity
stake in our business, we treatthat customer you know, we, we.
It affects several things inthe business.
(16:25):
One is quality assurance.
It's, you know, how do we, youknow, how do we do we ever
market to that customer?
There's so many things.
You know we don't worry aboutgetting a, you know, getting a
Google review, putting a, youknow, putting a yard sign out.
I mean all those things thatswirl around realizing the value
of that customer versus I'mjust, I'm just onto the next
(16:46):
painting project and thatcustomer is down the line.
I think people misunderstand howoften people will paint if they
know how easy it is.
You know people think, oh yeah,they're only going to paint
once every 10 years.
Well, that's not really true.
You know, I've, I've, I had,we've had customers in our
database for fresh coat thatpainted something every year and
not I mean I'm talking resrepaint, not, not commercial,
(17:09):
not property managers, I meanjust a single, you know,
residential customer so yeah,absolutely yeah.
Speaker 1 (17:16):
we have painting businesses that do millions per
year and it's mostly referraland repeat work and folks just
painting every other year yearjust getting more work done.
So yeah, it's, yeah, I thinkyour, your focus on the
understanding, the value of yourother list is definitely a good
(17:38):
focus.
So once you're it sounds likeonce you're kind of, you know,
gotten the low hanging fruitfrom the list, then it's time to
move to outbound, more outbound, aggressive tactics, I'm
assuming, like Facebook ads ordoor-to-door or direct mail,
like going out and findingpeople.
Speaker 2 (17:57):
Networking.
A lot of people underestimatethe power of networking.
So I think you should be doingwhat I call your operational
marketing, which is loving yourlist, making sure you have yard
signs, your vehicles are wrapped, all the things you can do, you
know, it's just you know.
And and marketing to your ownlist.
Then, it's, you know you shouldbe networking, and networking
works both in res and commercial.
(18:17):
Then, um, you know, obviouslydigital outbound is the simplest
, you know.
So, google, lsas, um, you knowit's.
You know it's funny that spacechanges so rapidly.
I mean this, all this gray hairon my head came from digital
marketing.
I'm pretty sure it's how muchit's changed.
I mean, I can remember one ofthe one of the first trades
(18:40):
brands I worked in was a cabinetand floor refinishing company
and we still required a yellowpages ads.
That's how old I am, by the way.
There was no internet, or theinternet was just sort of it was
out there but nobody wasadvertising on it.
I mean we were still doingfreestanding inserts in the
newspapers and you know lots of,you know in marriage mail and
direct postcards and you knowall that.
(19:00):
Uh, and you know it was that inthat group we started to you
know, started to have landingpages and we started realizing
oh and vanity numbers and westarted thinking, man, a lot of
calls are coming from thisinternet thing.
This is more than 20 years ago.
But in the last 20 years, theamount of change just when I was
(19:22):
at Fresh Coat.
Year to year, the rapid changein digital and the constant
change in digital.
It's not for the faint of heart, but it is also the fastest way
to get to people.
So you know, first I canremember telling people whatever
you do, don't advertise onFacebook.
Oh no, meta is the place to beright now.
You know you've got to be onMeta.
(19:42):
Oh my God, you know it's crazyhow fast that changes.
But that means the averageowner needs help.
By the way and this is the othermindset you know, in order to
grow, you've got to acquireexpertise, you know.
So the capacity capacities arethings like human beings to do
things.
Can I get leads?
You know, and we'll talk.
We were talking about thisearlier, daniel is.
(20:04):
You know, how do we know whereour gaps are?
Right, you know.
So whatever it is we, whateverour gaps are, we got to figure
out how we're going to fill them.
And I think we were talkingabout how do we determine where
the gap is.
You know, you have an acronymfor gap which I like.
I just think of it as okay, doI have enough of something?
And so I start.
(20:25):
This is where you know we cantalk profitability, but I this
is where I start like, how muchcan you produce every week?
This is a.
There's two big numbers that Ilook at for every client.
One is first.
Number one is gross margin.
You know, are you job costing?
Do you know what your grossmargin is?
Are you on top of that?
I refer to gross margin as mama, as far as the KPIs go.
(20:47):
Yeah, you know why do we callit mama?
Because if mama ain't happy, noone's happy, your business
isn't happy.
And, as a coach, if your marginisn't right.
That's the first thing we'reworking on, because you know,
I've had I literally have hadfranchise owners and clients who
come and say I need, I got towork on my marketing and I'm
(21:12):
looking at their gross margingoing.
No, you don't.
You want to dig the hole deeper, faster, because if you're
spending money on marketingright now and you're only
turning a 28% gross margin, wehave a serious problem right now
.
That's not sustainable.
So we got to fix that first.
But assuming that we're turninga good gross margin now, it's
okay.
What, how much money do I wantto make?
And that's this is anothermindset thing.
I work with people in coachingall the time.
(21:33):
It's like begin with the end inmind.
It's okay to have a goal, tosay how much money do I want to
make?
I think I think a lot of peoplethink business just happens
like that.
You don't.
It's in the Netherlands and Idon't really control anything,
I'm just out there operating.
The bottom line is people whoplan, who write plans, who write
(21:54):
business plans and say and sayI'm going to drive to an end
result, get there.
I have very few clients I'veever worked with who actually
write a reasonable business planthat don't achieve it, you know
, and it's because this is agreat business to be in, to make
money.
I mean, that's one of thereasons I'm still here.
It's because I felt once I sawthat I was in restaurants for
(22:15):
years and with little things,tiny little margins, with lots
of work.
And I remember the first time Ilooked at a trades business and
I saw the bottom line and wentwhat have I been doing for 20
years?
I'm insane, you know.
It's like I should have been inthe trades.
I mean.
So here, I am right.
I mean her ability to scale.
It's like infinitely scalable.
You don't.
(22:39):
You're not.
You know retail businesses arestuck in four walls and there's
a ton of investment that goes toacquire these four walls and
then turn a small amount ofprofit out of the bottom, the
trades business business.
You know you, you can scale itto you, tell me what you want to
accomplish and it can be done.
I mean, it's, it's, it's, I'mlike it was mind-blowing to me,
you know, when I saw that andthis is again almost 30 years
ago, but it's like you know,this is great.
(23:01):
So.
So you've got to look at, like,if I have a goal we were talking
about, you know, let's put abig ass, big hairy goal out
there.
You know, five million, you'regoing to hit five million.
You got to be able to produce ahundred million, a hundred
thousand dollars a week, right,52 weeks in the year, you know,
you know, and some weeks,honestly, because of seasonality
, you probably have to be ableto produce 150,000 certain weeks
(23:24):
, because you're not going to,you know, may not produce that,
but we can get into that detaillater.
But you know, you, just if youlook at the math and say, okay,
can I produce, do I have enoughphysical capacity between w2,
painters, subs, whatever, um,you know, to how can I produce
this amount?
Okay, if we say yep, then Ihave enough.
(23:46):
You know, painting resources,applications, resources to do it
.
That's good.
Okay, well, can I produce that?
Or am I Well, do I have thepipeline to do it?
Do I have enough backlog or doI have enough work coming in the
door right now to be able toproduce 100,000 a week, a week?
(24:10):
And if I can, if I say yes, thenI have to look and say, okay,
if I'm not producing 100,000 aweek but I have the capacity to
do it, there's something brokenin that scheduling or, you know,
deployment of labor.
We have a problem there, right?
So we could say there's theproblem.
If I don't have the pipeline.
Then I start working my wayback towards okay, can I sell?
You know, am I what?
(24:31):
Am I able to sell?
Do I have the capacity to sella hundred thousand a week or
more?
And we would have to look atthat.
And if I have the physicallabor to do it but they're not
selling, now we've got to startlooking at marketing.
Do I have enough leads?
So you can really just work thebusiness backwards and say and
(24:51):
I love to pivot it because, atthe end of the day, the
profitable production, weeklyproduction, is.
You've got to hit that If you'renot hitting that you're not
going to hit your goal, you'renot going to be able to cover
your overhead, whatever.
So that is a critical kind of II think just sort of a flow
(25:12):
chart and you'd look through thebusiness and say you know you
had.
All of this has to be inbalance.
If you're producing, if you canproduce 200, a thousand a week,
but you're only selling ahundred thousand a week, at some
point you're going to depleteyour pipe and I've had clients
have this happen where theydeplete, they don't catch that
they're depleting their pipelinetoo fast, they're not
backfilling it and all of asudden they run out of work.
(25:32):
That's not a situation we wantto be in, because you've got
this big machine that we'retrying to feed and all of a
sudden it comes to a screechinghalt.
I've seen issues with pipelinewhere we get lulled into a sense
of complacency in a biggerbusiness.
We get lulled into a sense ofcomplacency in a bigger business
.
I've had somebody have a $2million pipeline but because of
(25:53):
timing and not paying attentionto what was the timing of this,
pipeline run out of work in theimmediate.
So we have to look at pipelineand say how much of this is
available to be completed now.
I mean, res repaint in generalis pretty much now, but you
could have.
I had a res repaint plant whohad, you know it had a really
nice look like.
It was a nice pipeline, fourhundred thousand dollars in a
(26:14):
pipeline and we were going intowinter and realized all four
hundred thousand of that wasexterior, uh, no interior.
Then it's like, oh, you know,it's like so we have to.
You know, you have to look atnow you, you know that's the
dissecting the pipeline to makesure you understand, like, okay,
what's in my pipeline?
Can I produce it right now?
(26:34):
And then going to say, you know, and then, based on that, am I
marketing in the right areas?
You know, like right now, rightnow, for anybody north of the
freeze line, you need to bethinking about winter, and
that's the other thing.
Business owners need to bethinking six to 12 months ahead,
(26:55):
and that's.
You were asking me things thatlimit people from being able to
grow.
One of them is constantly beingfocused on the now and
forgetting to be.
Your job as the owner is to beconstantly six to 12 months out.
So right now you should bethinking about how am I going to
be above, break even and andfeed my team and myself in that
I call it the dark quarter,which is really of November,
(27:17):
december, january.
With the holidays andeverything going on, it tends to
be a just a challenging quarterfor everybody.
So, yeah, so.
Speaker 1 (27:39):
So how just you were talking about booking out.
How far should folks be bookedout for residential repayment?
Do you have like a range likethey should be like three to six
weeks booked out or like, or isit just pretty much dependent
on what their goals?
Speaker 2 (27:54):
are for when they're booked out.
But here's the thing we knowfrom statistics that there's
kind of we call it the rules ofthree.
Right, as far as maximizingleads and maximizing conversion
(28:14):
of leads coming in and producingwork, you need to be able to.
You need immediate response toa customer, to a lead.
You know we used to say threeminutes at the outside and I
mean that but live answer with aability to schedule you need to
be able to do, to generate anddeliver the estimate within
three days.
I mean, and you should,honestly, you should be
(28:37):
delivering it on the spot.
You know you should be a onecall close.
Every delay, every little delayyou have causes your numbers, it
causes inefficiency.
Right, if you don't answer thephone live, you're losing
clients, that's.
You know you're going to have adrop in your booking rate If
you can't schedule quotes in ashorter period of time, you're
(29:00):
basically you're going to havesome of those drop off.
You'll see it mostly in acancellation rate.
If you have a highercancellation rate with quotes
because you're booked two weeksout, that's a problem.
And, honestly, completing work,you really want to be in that
three to four week window beingable to complete work and we saw
that too.
It's like you know, if you andthat's people like, oh man, I
(29:23):
only have a three, three monthpipeline, you know the thing is
that a three week, sorrypipeline, but that is what you
know.
If you, if you're farther outthan that again, you're going to
get cancellations.
They're going to find somebodyelse.
It's at risk.
Anything that the further outsomething is is the more at risk
(29:45):
it is.
I, we had, I, you know this isyou don't even think about
natural disasters, but we hadtwo clients with that, the
hurricane that went through, theappellations and stuff.
I mean we had two clients.
I had one client had a wholepipeline of work.
It literally get destroyed.
I mean houses that werescheduled to be painted weren't
(30:05):
there anymore.
I, you know same thing.
I mean just, and this, therewere several of our clients that
got caught with that.
I mean you just don't, youdon't think about that kind of
stuff.
But anything that's out in thefuture is at risk.
The further out in the futureit is, the more at risk.
It is that three-week numberand we saw that for years of
(30:26):
tracking stuff at Fresh Coat.
We would see that if you weremore than three weeks out.
Now I will say exteriors it'sokay to book exteriors in the
winter, for the spring.
Just know that some of it mightget canceled.
But you know, you're, you're,you're moving your sales along.
You know, bill, if you're in aagain above the freeze line, if
(30:47):
you're in, if you're North ofthe freeze line and you're
you're just times a year whereyou can't do exteriors, it's
okay to book those, you know,and have them, have them queued
up for the for the spring andthe summer.
Yeah, okay with that pipeline.
But you, but there's no,there's never, it never snows or
rains inside your interior work.
(31:07):
You want, you want to be ableto turn that through pretty
quickly yeah, I love the rule ofthree.
Speaker 1 (31:13):
So three minutes speed to lead, three days to
quote it, like you're out therequoting it within three days and
then three weeks to produce ityeah, that's an easy way to
remember where you should be forthe timing, so I love that.
Speaker 2 (31:25):
Yeah, and that's also when, if you're finding that
you can't hit those numbers, youhave a capacity problem
somewhere.
Like if you're not able toanswer the phone live and book
the quote within three minutes,then you either need to you know
a call center we would requirea call center, obviously with
franchising.
But you know A call center, wewould require a call center,
obviously with franchising.
But if you're not able to dothat, then you have a capacity
(31:46):
problem there.
If you can't get a quote donein three days, it's time to hire
a salesperson, right, and ifyou can't produce the work.
Speaker 1 (32:01):
if you're six, eight weeks out, you need to hire more
crews Period.
That makes sense.
So we talked about theconstraint of not having enough
customers and then this one'skind of getting out you don't
have enough of a team to producethe work that you have.
So if you're not hitting those,those benchmarks of three
minutes, three days, three weeks, you'd be looking at hiring
more training or maybe trainingin your current team, whatever
it is to, to get your capacityup to produce the work, because
(32:25):
when you produce the work,that's when it becomes revenue
on your profit and loss.
Speaker 2 (32:30):
Yeah, absolutely, and I think there's again a mindset
shift that people have is, Ithink when we hire we feel like
immediately I have to givesomebody 40 hours and the best
operators I've ever seen, youknow, have deep lists.
You know Brandon calls it ablack book of painters.
But you should be constant, youshould always be interviewing
(32:52):
painters, you should beassessing them and you should be
, you know, keeping just likeyour customer list, having a
list of painters.
I had a franchisee in FreshCoat who had over 100 painters
in his um, basically in his book, when he needed if he had got a
big project in it.
Basically he let him know andsaid, hey, you're on my list.
(33:15):
And then as we grow and I needsomebody, and if I call you and
you're on a project, there maybe an opportunity to become more
of a full-time.
But these are part-time, theseare W-2.
They're not subs and he wouldjust.
You know, when he had a bigproject he had no problem.
He said I'd never have aproblem finding painters.
I mean, like I said, he hadover 100 names in that book.
(33:36):
You know we have a tool called30 Painters in 30 Days.
It's designed for you torecruit and talk to at least 30
painters in a period of time.
It doesn't mean you're going tohire them all, but you want to
make a list of them.
Now, some of you make a listwith a big mark that says never
hire.
It's like we're not hiring thisperson but at the end of the
day, most of the time it's justhey, if I feel like I know, I
(33:58):
can, you know, make those calls.
I have that list.
I've had.
I mean because I've had peopleturn down a big project, because
I just don't have the people todo it.
Like you know, okay, yourmarketing worked, you got the,
your networking marketing worked, you got the opportunity to do
a large project and yet you'relimiting yourself because you're
afraid you can't hire, and youknow.
(34:20):
So having the names of that,having the names of good subs,
you know, depending on yourstate and what your rules are,
but all those things give youmore freedom and flexibility to
be able to grow and scale yourbusiness.
Speaker 1 (34:31):
Yeah yeah, that makes a lot of sense and I feel like
I'd be remiss if I didn't goback and talk about Mama gross
profit.
What do you, what do you lookfor in gross profit?
Do you have a certain like like, what should folks should be
shooting for, or what are yourthoughts on that?
Speaker 2 (34:46):
The most important thing is knowing where you're at
and job costing like jobcosting every project knowing
where you're at and whereveryou're at, we need to figure out
(35:09):
how you can be higher.
And so obviously, differentsegments of the industry lend
itself to slightly differentgross margins.
You and I were talking aboutthe ratio of margin to customer
acquisition costs.
Well, the customer acquisitioncosts in commercials is much
different than the customeracquisition costs in res repaint
(35:29):
.
So you know you start needingto look at your business in
segments.
But in general, that's thenumber we throw through and you
threw out.
I always say you really shouldalways be targeting 50, you know
, for you know in general, justbe targeting it and working your
way towards that, but it'swhatever it takes to be
(35:49):
profitable.
Speaker 1 (35:51):
Right, it's a good starting point.
50% it's.
It's an easy, especially ifyou're getting started.
It's an easy thing to wrap yourhead around with markup, like if
you're just getting starteddouble everything double
everything, yeah, and then fromthere it's that's the the way to
start, like, if you're justgetting started, double
everything, double everything,yeah, and then from there that's
the way to start, and then youcan build it from there.
(36:12):
And then there's folks that Iknow we work with that hit like
65% gross profit consistently,which is crazy good, but it
obviously takes many, many yearsand a lot of hard hard work and
, uh, you know prooftestimonials solid sales process
and solid production process.
But, uh, cool.
(36:33):
Um well, I want to be cognizantof our time and, uh, you've
been super generous with it.
I really appreciate, um,everything you've shared.
It's been super informative.
I've learned a lot and I'mpositive that the listeners have
as well.
Do you have any last thoughtsor anything that you have going
(36:53):
on at the Academy forProfessional Painting
Contractors you'd like to letfolks know about?
Speaker 2 (36:58):
Yeah, we've got a couple of things going on.
Obviously, you know, our bigannual event, which has always
been well attended and people Ithink find a lot of value with,
is our summit.
That'll be coming up in January, I think right at the end of
January.
I think we start the 29th ofJanuary and 26th Hard to believe
we're thinking about 26 already.
So if you haven't ever had achance to attend the summit, I
highly recommend it, but on anongoing basis.
(37:20):
One of the things I'm reallyexcited about and I got started
here at APPC when I started twoyears ago is our high
performance peer groups.
No-transcript.
(37:52):
Obviously, the APPC.
If you need systems everyone inorder to achieve the kinds of
things we've been talking about,daniel, the key thing is we've
got to have systems.
You can hire people, but if youdon't have good systems for
them to operate, bottom line isthey're not going to be able to
achieve the kind of levels ofprofit that we're talking about.
And the most important thingthat really I think improves
(38:14):
people's profit is being moreefficient, and systems are what
make us efficient.
So, again, the APPC.
We have systems for everyaspect of the business and
they're done for you.
They're very easy to implement.
You know, if you and if youfeel like you need additional
coaching to be able to get thatdone, we provide that as well.
So you know we're here to help.
(38:36):
You know, both Brandon and I andour team are very passionate
about helping paintingcontractors and that's why I'm
still here.
You know, I've been infranchising.
I was always passionate abouthelping business owners, but I
really love this industry andI'm I'm happy to to help people.
We'll be at all, I think, allthe PCA events this year.
So hopefully, if you, ifsomebody is going to the any of
(38:58):
the residential, commercial andthe expo will around for that as
well.
And women in paint I have to puta little plug in for women in
paint To me.
I was so glad to see the PCApull up women in paint and I've
been really happy to be asignificant part of it and I'm
looking forward to having thatopportunity I think I'll be
(39:20):
speaking at it again coming up,so I'm really looking forward to
that event.
It's great to see us lifting upall the women in the industry
and it's a resource thateveryone needs to tap into.
You know, no matter what theownership structure of your
business is, there are a lot ofreally talented women out there
that can help you with yourbusiness, so don't hesitate to
(39:41):
hire women.
Speaker 1 (39:44):
Absolutely.
And just to caveat on what yousaid, I've been to the APPC's
events in January.
They've all since, I think,2018 or 2017 for a while, and
it's amazing to see like thegroup of painting businesses
that have grown just from.
(40:04):
You know, when I first startedgoing like a big business was
like 751 million in revenue, andnow they have folks doing
millions and tens of millionsthere, and it's the same people
that have grown over the last 10years or so.
So it's really cool to see whatyou guys have been doing over
there at APPC, and we also havea lot of clients that are part
(40:29):
of those peer groups that youmentioned as well, and I know
that they get a lot of value outof it.
So definitely highly encourageanyone listening.
If you're looking for guidanceon scaling to the next level,
you definitely take a look atthe academy for professional
painting contractors awesome, uhwell, I really appreciate your
(40:50):
time today, tara, and for thelisteners, we will see you next
week thanks, daniel.
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.
(00:45):
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, former painting business
owner, and your guide tomastering the numbers that drive
success.
Let's dive in and make yourbusiness more profitable, one
episode at a time.
Today, I'm super excited totalk with Tara Riley.
(01:08):
She has a huge amount ofexperience.
I'm really excited to dig intoall the knowledge that she has.
Welcome to the podcast, tara.
How's it going?
Speaker 2 (01:17):
It's going great.
Thanks, Daniel.
I really appreciate you havingme on.
This is such an important topicfor our painting members and
it's just great.
I'm so glad to talk profits anyday.
Speaker 1 (01:27):
Yes, excellent, and a lot of folks have probably
heard of you already.
But if you could kind of givefolks like, what's your
background in the paintingindustry, How'd you get started?
What would have been some majormilestones along the way?
Speaker 2 (01:39):
Yeah, great.
So officially I got into thepainting business when I took
over as president of Fresh CoatPainters, the franchise about 11
years ago.
I had worked in the tradesprior to that, so I have about
20 plus years of experienceworking in home services,
different trades butspecifically painting was when I
(02:00):
took over Fresh Coat Paintersand obviously that gave me a
wealth of information about, youknow, not just one business but
many businesses and scaling.
So you know, franchising is aninteresting world but I fell in
love with the painting businessand even though I've exited from
Fresh Coat and now work withthe APPC, you know I still love
helping our painting contractorsout there.
It's so much fun.
Speaker 1 (02:21):
Yeah, so much fun.
Yeah, and that's so you've.
You basically dove into thefinancials and the operations of
hundreds and hundreds ofbusinesses Cause under Freshcoat
you guys had a couple hundredor so and then, with Academy for
Professional PaintingContractors, you're also working
with dozens of other paintingbusinesses and you've been able
to basically dive into theirnumbers, dive into their
(02:42):
operations and figure out whatworks and what doesn't.
Is that fair to say?
Speaker 2 (02:46):
Yeah, absolutely.
I think at Freshcoat we had,you know, we, when we grew the
business, we grew it from about15 million to a little bit over
70 million.
In in the 10 years I was there,we had about 170 units.
So we, you know what was fun inthe franchising world.
We were launching newbusinesses.
So we understood what it tookto launch businesses from
scratch and ramp them up.
(03:07):
But we also had scaledbusinesses and my passion, as
you know, daniel, is aboutscaling.
You know.
It's really about working withbusinesses and understanding
what are the barriers that stopyou from having the business you
want.
Now this goes back all the waythrough my career in franchising
, whether it was in painting orother businesses that I started
with.
It actually started way backwhen I worked with McDonald's,
(03:29):
you know, and trying to figureout how to grow a restaurant
profitably so thatowner-operators would have, you
know, the lifestyle and theprofits that they wanted out of
a business.
It's something that I've beenpassionate about for a long time
, even, you know, just runningmy own restaurants I've had.
I had that in my background,but but you know, yes, we had
Fresh Coat.
We had that experience.
We had, you know, theopportunity to help.
(03:51):
You know, like I said, hundredsof business owners and at APPC
we've got well over a hundredmembers.
Right now, I personally coach15 groups of various sizes and I
also run our peer groups, andwhat's really nice about the
peer groups is we really diveinto the numbers with our peer
groups.
I obviously do with my coachingas well, but so there's another
like 25 or 30 members that arein our high performance peer
(04:12):
groups that we get to see theirmonthly numbers as well.
So I I'm a numbers gal.
You know that I'm a nerd whenit comes to numbers and and
because why are we in businessif we're not there to make money
right to numbers?
Speaker 1 (04:25):
and and because why are we in business if we're not
there to make money?
Right, yeah, absolutely.
Well, I'd love to dive into theyour your topic, which is uh,
how do you scale, or what thethings that prevent you from
scaling?
Can you just what?
What are, what are some typicalthings that prevent folks from
scaling to the level?
Like you know, maybe you couldtake an example of, there's a
common hurdles that happen likearound 500 K to 750, there seems
(04:51):
to be kind of a break pointthat's preventing folks from
getting to the next level.
Can you just give me yourthoughts on what?
What are the typical thingsthat prevent folks from getting
to the level that they want tobe at?
Speaker 2 (05:03):
Yeah, you know that's a great topic.
You know, and we all knowthere's that we call it an
inflection point that's what Ihave always called it.
Where people get there's sortof sticking points right, we get
stuck, and that is absolutelytrue.
We saw that at Fresh Coat.
People get stuck right aroundthat 500,000 mark and to me, and
it's also, these things happenin all service businesses.
It's not just painting, butwhat happens is it starts with a
(05:26):
mindset issue, right?
So the role of the ownerchanges dramatically in that
when we start flexing from that$300,000 to about that $600, you
know 300,000 are workingheavily in the business doing it
themselves.
(05:47):
Nobody can do it better than me.
You know, if it needs to be getdone, it needs to be done by me
, and our energy at that levelis going as an owner is going
into doing things.
To get to that next level, youhave to start to hire people,
not just painters.
But you have to.
You can't we all have.
(06:10):
You know, I'm sure mostpainting business owners have an
S tattooed on their chest andyou know cape and boots in the
closet.
They can do everything, right,we're Superman.
But the bottom line is you'rehuman and there's only so many.
You have a limit to your humancapacity and as the business
grows, the demands in the bigbuckets of being able to produce
, being able to acquire leads,to being able to sell and to
administer your business allgrow along with the size of the
(06:33):
business.
At some point you can't do itall and you need help feeling
comfortable with that a lot andthat's my number one barrier
that I've seen with businessowners in general uh, is that
just not having a good comfortlevel with being able to hire
somebody, delegate, you know,and not just delegate and
(06:54):
disappear.
That's one of our fears, youknow.
That's one of the things.
If you don't know how todelegate and follow up and and,
and you're not comfortable inthat role, it makes it really
difficult to get from that$300,000, $400,000 to $700,000,
because that's where your rolechanges as an owner.
You change from working onthings to starting to work on
people.
It's like you're investing yourtime.
(07:15):
Instead of investing your timein doing lots of things, you
start to invest your time intoacquiring and developing people,
and that's a challenge for alot of folks and that's to me
one of the biggest barriers inthat first inflection point.
Speaker 1 (07:30):
Yeah, that's a common thing I hear is for folks in
that range is, you know, there'sno good people, or like I can't
find anybody to help me, orlike just very, the labor market
is down or something like that,something to that effect.
What are your thoughts on thoseexcuses?
Speaker 2 (07:49):
And that's a limiting belief that many, many people
have.
And I think, in terms ofcoaching, I've had to coach a
lot of people through that andyou know the thing is that if
that's what you believe, you'reright, you're going to, you're
absolutely.
You know.
Whether you think you can oryou can't, you're always right.
You have to get through.
That's the limiting belief thatstops people from growing.
(08:13):
Look, I've learned there arepeople out there and there are
people in your social network.
I mean, if you think yes andhow, in that role, and start
thinking about who can I hireand believe you're going to find
them, you'll find them.
I've never had problems findingpeople, whatever level I'm at.
You know.
If you have a question aboutthat, just turn around and look
at people you know that arerunning million dollar painting
(08:34):
businesses, that are running two, three, five $20 million
businesses.
How did they get there?
They have people so, magically,the people only exist in that
particular community, or maybethey're just better at it than
you are.
I mean, hey, look, we know thefear, but I say that, um, you
know, my comment on that is acouple of things.
One of the I think one of thebigger fears of hiring people.
(08:56):
Is this automatic?
There's a checkbook fear, Icall it.
If I'm going to hire somebody,I don't I think about all of a
sudden this is just an immediatedrain on my cashflow, like I
feel like I'm grabbing mycheckbook.
You know, I've got a checkright here.
I got it and I'm going to writea check.
If I'm going to pay somebody,you know, $40,000 for the year,
(09:16):
I'm like I'm writing a check for$40,000 and just handing it out
no-transcript.
(09:45):
If I'm going to invest insomebody, I want, I want that
person to be self-liquidating,in other words, the the
incremental growth of mybusiness, because, I've added,
this person covers their costs.
Plus, I'm going to make 20% offof it at least, or more, and
that's my rule of thumb in termsof hiring.
So we always when, when we'regoing to do the math to see,
okay, how much and people areshocked at how little
(10:07):
incremental sales you reallyneed to pay for somebody.
It's not a big number, it's not.
You think it's.
Oh, I'm going to have to doublemy business.
No, no, usually the number tocover that might be an
additional 10,000 a month orsomething at the latest, at the
highest, yeah, I think thousanda month or something at the
(10:27):
latest, at the highest.
Speaker 1 (10:27):
Yeah, I think that's a useful exercise is, once you
you're deciding to make thathigher, identifying how much
additional sales you need tomake to cover that and which
kind of tells you like I guessyou need to basically grow the
pie bigger.
For you know you're taking asmaller cut of hopefully a
bigger pie once you bring themon, because you're going to be
able to focus your attention onthings that are going to grow
(10:49):
the business, as opposed to justhiring them and then hanging
back.
Unless that's your goal is tohang back, and I'm assuming here
that you're trying to scale,trying to grow.
Speaker 2 (10:58):
Yeah, absolutely, and you may.
Daniel, you're bringing up agreat point, because there's
really two values to hiring.
One would be the scalabilityand growth.
The other is lifestyle.
So, as an owner, if I'm killingmyself when a lot of our owners
are, and I'm trying to relievesome pressure on that and give
(11:19):
myself some more freedom andflexibility, I hire somebody to
take on some of the tasks andactivities that I've been doing
gives you know, I may not.
I may be okay with that, I maybe okay with taking a lesser cut
of you know of the business,but, like you said, if we do it
right though the math works outreally great.
We take a smaller percentagepiece of a bigger pie and you'll
(11:40):
actually find out that thedollar amount we're taking is
bigger.
You're actually making moremoney and working less, and
that's what we shoot for.
We shoot for the math to sayyou're literally going to work
less and make more.
Speaker 1 (11:54):
Sounds like a good deal.
Speaker 2 (11:56):
That's what we're looking for.
Speaker 1 (11:58):
Yeah, so mindset limiting beliefs are definitely
a thing that hold people backfrom growing.
What are some other constraintsor bottlenecks that are
preventing folks from getting tothe next level?
Speaker 2 (12:13):
I think scarcity mindset, it's still in that
mindset, it's knowing that youhave to, you're going to send
your money out hunting.
We like to say, right, soyou're, you're going to invest
in the business and understandthat, that that you've got to
trust that the money's going togo out and bring friends back
with it.
Right, so we're looking for,like, if we're going to invest
in marketing.
(12:33):
So the next, usually the next,the people capacity is the first
limiting belief, like I need toadd some people.
But then realizing that I mayhave to invest if I'm trying to
grow aggressively and I'm tryingto make the math work on, you
know, paying myself back forthat investment.
Now I may need more leads.
(12:53):
If I've been relying on, forinstance, just repeat and
referral business, am I gettingenough leads to I get this
increase in sales or do I needto invest more?
The big I mean the big gap thatwe see is people don't
understand the value of theirbusiness.
They don't understand the valueof their lists.
(13:15):
You know it's a.
It's a big, just gap that I seeout there in the, and it's not
just in painting, it was in allthe trades.
But the most valuable thing inour business is our customer
list and there's a number ofpeople out there that can't even
just conjure up a list.
But if you have a good list,then are you communicating with
(13:38):
it?
Because if you want repeatreferral business, first of all
you'll get some.
But just because the windhappens to be blowing, you know.
But if you actually nurtureyour list, you'll increase that
amount of repeat referralsignificantly.
We've seen that.
I've seen that in the numbers.
So that's the first place tostart.
(13:58):
And then you know, if you wantto grow more aggressively than
that, then you're going to haveto put some money into outbound
marketing and more of a coldmarketing.
Right, you're going after notjust repeat referral, but now
I'm going after those moreexpensive cold clients.
But here's the beauty of thatthey're only cold once.
Once they come in, now they'rein your list.
(14:18):
And the beautiful thing is, ifyou're working your list the way
you should be, then it makesthe value of that cold marketing
even higher, because everycustomer you acquire now
increases your list.
I tell a lot of our clients sayhey, you know, there used to be
that old joke like the personwith the most toys wins Well, in
(14:41):
our world the person with themost customers wins right and
the more customers you have onthe list and that are viable
customers, the more you can win,the more you can leverage that.
So you know that's the equityof a trades business is
absolutely the customer list.
Speaker 1 (14:59):
Yeah, and it's crazy how much it reminds me of that
story.
I think it's Henry Ford whothey were like generating a
bunch of sawdust from building,building uh model t's or
something like that.
And then he's like what do wedo with all this?
Actually they were just likethrowing away the sawdust, but
then they ended up taking thesawdust and like using it to uh
(15:23):
sell another product.
I forgot what it was kingsfordcharcoal, he that was that's
right, in fact, the kingsfordcharcoal.
Speaker 2 (15:28):
That was the.
In fact, the Kingsford charcoalbrand came from Ford.
He put a friend of his inbusiness making charcoal and
buying the because they had alot of wooden parts, I guess in
those old model teas.
And yeah, that's a great storybut it is, it's, you know it's.
How do we make, you know, howdo we make a viable business out
of a scrap right?
Speaker 1 (15:48):
Yeah, and folks treat their customers like now on to
the next one, like getting morecustomers, but kind of ignoring,
like hey, you have this personwho just paid you five $10,000,
probably should use try to getmore value from that
relationship.
Speaker 2 (16:05):
Yeah, that's the.
I consider that thetransactional mindset we think
of the business and that limitsus in a number of ways, Like so,
when we see the customer as atransaction versus an equity
stake in our business, we treatthat customer you know, we, we.
It affects several things inthe business.
(16:25):
One is quality assurance.
It's, you know, how do we, youknow, how do we do we ever
market to that customer?
There's so many things.
You know we don't worry aboutgetting a, you know, getting a
Google review, putting a, youknow, putting a yard sign out.
I mean all those things thatswirl around realizing the value
of that customer versus I'mjust, I'm just onto the next
(16:46):
painting project and thatcustomer is down the line.
I think people misunderstand howoften people will paint if they
know how easy it is.
You know people think, oh yeah,they're only going to paint
once every 10 years.
Well, that's not really true.
You know, I've, I've, I had,we've had customers in our
database for fresh coat thatpainted something every year and
not I mean I'm talking resrepaint, not, not commercial,
(17:09):
not property managers, I meanjust a single, you know,
residential customer so yeah,absolutely yeah.
Speaker 1 (17:16):
we have painting businesses that do millions per
year and it's mostly referraland repeat work and folks just
painting every other year yearjust getting more work done.
So yeah, it's, yeah, I thinkyour, your focus on the
understanding, the value of yourother list is definitely a good
(17:38):
focus.
So once you're it sounds likeonce you're kind of, you know,
gotten the low hanging fruitfrom the list, then it's time to
move to outbound, more outbound, aggressive tactics, I'm
assuming, like Facebook ads ordoor-to-door or direct mail,
like going out and findingpeople.
Speaker 2 (17:57):
Networking.
A lot of people underestimatethe power of networking.
So I think you should be doingwhat I call your operational
marketing, which is loving yourlist, making sure you have yard
signs, your vehicles are wrapped, all the things you can do, you
know, it's just you know.
And and marketing to your ownlist.
Then, it's, you know you shouldbe networking, and networking
works both in res and commercial.
(18:17):
Then, um, you know, obviouslydigital outbound is the simplest
, you know.
So, google, lsas, um, you knowit's.
You know it's funny that spacechanges so rapidly.
I mean this, all this gray hairon my head came from digital
marketing.
I'm pretty sure it's how muchit's changed.
I mean, I can remember one ofthe one of the first trades
(18:40):
brands I worked in was a cabinetand floor refinishing company
and we still required a yellowpages ads.
That's how old I am, by the way.
There was no internet, or theinternet was just sort of it was
out there but nobody wasadvertising on it.
I mean we were still doingfreestanding inserts in the
newspapers and you know lots of,you know in marriage mail and
direct postcards and you knowall that.
(19:00):
Uh, and you know it was that inthat group we started to you
know, started to have landingpages and we started realizing
oh and vanity numbers and westarted thinking, man, a lot of
calls are coming from thisinternet thing.
This is more than 20 years ago.
But in the last 20 years, theamount of change just when I was
(19:22):
at Fresh Coat.
Year to year, the rapid changein digital and the constant
change in digital.
It's not for the faint of heart, but it is also the fastest way
to get to people.
So you know, first I canremember telling people whatever
you do, don't advertise onFacebook.
Oh no, meta is the place to beright now.
You know you've got to be onMeta.
(19:42):
Oh my God, you know it's crazyhow fast that changes.
But that means the averageowner needs help.
By the way and this is the othermindset you know, in order to
grow, you've got to acquireexpertise, you know.
So the capacity capacities arethings like human beings to do
things.
Can I get leads?
You know, and we'll talk.
We were talking about thisearlier, daniel is.
(20:04):
You know, how do we know whereour gaps are?
Right, you know.
So whatever it is we, whateverour gaps are, we got to figure
out how we're going to fill them.
And I think we were talkingabout how do we determine where
the gap is.
You know, you have an acronymfor gap which I like.
I just think of it as okay, doI have enough of something?
And so I start.
(20:25):
This is where you know we cantalk profitability, but I this
is where I start like, how muchcan you produce every week?
This is a.
There's two big numbers that Ilook at for every client.
One is first.
Number one is gross margin.
You know, are you job costing?
Do you know what your grossmargin is?
Are you on top of that?
I refer to gross margin as mama, as far as the KPIs go.
(20:47):
Yeah, you know why do we callit mama?
Because if mama ain't happy, noone's happy, your business
isn't happy.
And, as a coach, if your marginisn't right.
That's the first thing we'reworking on, because you know,
I've had I literally have hadfranchise owners and clients who
come and say I need, I got towork on my marketing and I'm
(21:12):
looking at their gross margingoing.
No, you don't.
You want to dig the hole deeper, faster, because if you're
spending money on marketingright now and you're only
turning a 28% gross margin, wehave a serious problem right now
.
That's not sustainable.
So we got to fix that first.
But assuming that we're turninga good gross margin now, it's
okay.
What, how much money do I wantto make?
And that's this is anothermindset thing.
I work with people in coachingall the time.
(21:33):
It's like begin with the end inmind.
It's okay to have a goal, tosay how much money do I want to
make?
I think I think a lot of peoplethink business just happens
like that.
You don't.
It's in the Netherlands and Idon't really control anything,
I'm just out there operating.
The bottom line is people whoplan, who write plans, who write
(21:54):
business plans and say and sayI'm going to drive to an end
result, get there.
I have very few clients I'veever worked with who actually
write a reasonable business planthat don't achieve it, you know
, and it's because this is agreat business to be in, to make
money.
I mean, that's one of thereasons I'm still here.
It's because I felt once I sawthat I was in restaurants for
(22:15):
years and with little things,tiny little margins, with lots
of work.
And I remember the first time Ilooked at a trades business and
I saw the bottom line and wentwhat have I been doing for 20
years?
I'm insane, you know.
It's like I should have been inthe trades.
I mean.
So here, I am right.
I mean her ability to scale.
It's like infinitely scalable.
You don't.
(22:39):
You're not.
You know retail businesses arestuck in four walls and there's
a ton of investment that goes toacquire these four walls and
then turn a small amount ofprofit out of the bottom, the
trades business business.
You know you, you can scale itto you, tell me what you want to
accomplish and it can be done.
I mean, it's, it's, it's, I'mlike it was mind-blowing to me,
you know, when I saw that andthis is again almost 30 years
ago, but it's like you know,this is great.
(23:01):
So.
So you've got to look at, like,if I have a goal we were talking
about, you know, let's put abig ass, big hairy goal out
there.
You know, five million, you'regoing to hit five million.
You got to be able to produce ahundred million, a hundred
thousand dollars a week, right,52 weeks in the year, you know,
you know, and some weeks,honestly, because of seasonality
, you probably have to be ableto produce 150,000 certain weeks
(23:24):
, because you're not going to,you know, may not produce that,
but we can get into that detaillater.
But you know, you, just if youlook at the math and say, okay,
can I produce, do I have enoughphysical capacity between w2,
painters, subs, whatever, um,you know, to how can I produce
this amount?
Okay, if we say yep, then Ihave enough.
(23:46):
You know, painting resources,applications, resources to do it
.
That's good.
Okay, well, can I produce that?
Or am I Well, do I have thepipeline to do it?
Do I have enough backlog or doI have enough work coming in the
door right now to be able toproduce 100,000 a week, a week?
(24:10):
And if I can, if I say yes, thenI have to look and say, okay,
if I'm not producing 100,000 aweek but I have the capacity to
do it, there's something brokenin that scheduling or, you know,
deployment of labor.
We have a problem there, right?
So we could say there's theproblem.
If I don't have the pipeline.
Then I start working my wayback towards okay, can I sell?
You know, am I what?
(24:31):
Am I able to sell?
Do I have the capacity to sella hundred thousand a week or
more?
And we would have to look atthat.
And if I have the physicallabor to do it but they're not
selling, now we've got to startlooking at marketing.
Do I have enough leads?
So you can really just work thebusiness backwards and say and
(24:51):
I love to pivot it because, atthe end of the day, the
profitable production, weeklyproduction, is.
You've got to hit that If you'renot hitting that you're not
going to hit your goal, you'renot going to be able to cover
your overhead, whatever.
So that is a critical kind of II think just sort of a flow
(25:12):
chart and you'd look through thebusiness and say you know you
had.
All of this has to be inbalance.
If you're producing, if you canproduce 200, a thousand a week,
but you're only selling ahundred thousand a week, at some
point you're going to depleteyour pipe and I've had clients
have this happen where theydeplete, they don't catch that
they're depleting their pipelinetoo fast, they're not
backfilling it and all of asudden they run out of work.
(25:32):
That's not a situation we wantto be in, because you've got
this big machine that we'retrying to feed and all of a
sudden it comes to a screechinghalt.
I've seen issues with pipelinewhere we get lulled into a sense
of complacency in a biggerbusiness.
We get lulled into a sense ofcomplacency in a bigger business
.
I've had somebody have a $2million pipeline but because of
(25:53):
timing and not paying attentionto what was the timing of this,
pipeline run out of work in theimmediate.
So we have to look at pipelineand say how much of this is
available to be completed now.
I mean, res repaint in generalis pretty much now, but you
could have.
I had a res repaint plant whohad, you know it had a really
nice look like.
It was a nice pipeline, fourhundred thousand dollars in a
(26:14):
pipeline and we were going intowinter and realized all four
hundred thousand of that wasexterior, uh, no interior.
Then it's like, oh, you know,it's like so we have to.
You know, you have to look atnow you, you know that's the
dissecting the pipeline to makesure you understand, like, okay,
what's in my pipeline?
Can I produce it right now?
(26:34):
And then going to say, you know, and then, based on that, am I
marketing in the right areas?
You know, like right now, rightnow, for anybody north of the
freeze line, you need to bethinking about winter, and
that's the other thing.
Business owners need to bethinking six to 12 months ahead,
(26:55):
and that's.
You were asking me things thatlimit people from being able to
grow.
One of them is constantly beingfocused on the now and
forgetting to be.
Your job as the owner is to beconstantly six to 12 months out.
So right now you should bethinking about how am I going to
be above, break even and andfeed my team and myself in that
I call it the dark quarter,which is really of November,
(27:17):
december, january.
With the holidays andeverything going on, it tends to
be a just a challenging quarterfor everybody.
So, yeah, so.
Speaker 1 (27:39):
So how just you were talking about booking out.
How far should folks be bookedout for residential repayment?
Do you have like a range likethey should be like three to six
weeks booked out or like, or isit just pretty much dependent
on what their goals?
Speaker 2 (27:54):
are for when they're booked out.
But here's the thing we knowfrom statistics that there's
kind of we call it the rules ofthree.
Right, as far as maximizingleads and maximizing conversion
(28:14):
of leads coming in and producingwork, you need to be able to.
You need immediate response toa customer, to a lead.
You know we used to say threeminutes at the outside and I
mean that but live answer with aability to schedule you need to
be able to do, to generate anddeliver the estimate within
three days.
I mean, and you should,honestly, you should be
(28:37):
delivering it on the spot.
You know you should be a onecall close.
Every delay, every little delayyou have causes your numbers, it
causes inefficiency.
Right, if you don't answer thephone live, you're losing
clients, that's.
You know you're going to have adrop in your booking rate If
you can't schedule quotes in ashorter period of time, you're
(29:00):
basically you're going to havesome of those drop off.
You'll see it mostly in acancellation rate.
If you have a highercancellation rate with quotes
because you're booked two weeksout, that's a problem.
And, honestly, completing work,you really want to be in that
three to four week window beingable to complete work and we saw
that too.
It's like you know, if you andthat's people like, oh man, I
(29:23):
only have a three, three monthpipeline, you know the thing is
that a three week, sorrypipeline, but that is what you
know.
If you, if you're farther outthan that again, you're going to
get cancellations.
They're going to find somebodyelse.
It's at risk.
Anything that the further outsomething is is the more at risk
(29:45):
it is.
I, we had, I, you know this isyou don't even think about
natural disasters, but we hadtwo clients with that, the
hurricane that went through, theappellations and stuff.
I mean we had two clients.
I had one client had a wholepipeline of work.
It literally get destroyed.
I mean houses that werescheduled to be painted weren't
(30:05):
there anymore.
I, you know same thing.
I mean just, and this, therewere several of our clients that
got caught with that.
I mean you just don't, youdon't think about that kind of
stuff.
But anything that's out in thefuture is at risk.
The further out in the futureit is, the more at risk.
It is that three-week numberand we saw that for years of
(30:26):
tracking stuff at Fresh Coat.
We would see that if you weremore than three weeks out.
Now I will say exteriors it'sokay to book exteriors in the
winter, for the spring.
Just know that some of it mightget canceled.
But you know, you're, you're,you're moving your sales along.
You know, bill, if you're in aagain above the freeze line, if
(30:47):
you're in, if you're North ofthe freeze line and you're
you're just times a year whereyou can't do exteriors, it's
okay to book those, you know,and have them, have them queued
up for the for the spring andthe summer.
Yeah, okay with that pipeline.
But you, but there's no,there's never, it never snows or
rains inside your interior work.
(31:07):
You want, you want to be ableto turn that through pretty
quickly yeah, I love the rule ofthree.
Speaker 1 (31:13):
So three minutes speed to lead, three days to
quote it, like you're out therequoting it within three days and
then three weeks to produce ityeah, that's an easy way to
remember where you should be forthe timing, so I love that.
Speaker 2 (31:25):
Yeah, and that's also when, if you're finding that
you can't hit those numbers, youhave a capacity problem
somewhere.
Like if you're not able toanswer the phone live and book
the quote within three minutes,then you either need to you know
a call center we would requirea call center, obviously with
franchising.
But you know A call center, wewould require a call center,
obviously with franchising.
But if you're not able to dothat, then you have a capacity
(31:46):
problem there.
If you can't get a quote donein three days, it's time to hire
a salesperson, right, and ifyou can't produce the work.
Speaker 1 (32:01):
if you're six, eight weeks out, you need to hire more
crews Period.
That makes sense.
So we talked about theconstraint of not having enough
customers and then this one'skind of getting out you don't
have enough of a team to producethe work that you have.
So if you're not hitting those,those benchmarks of three
minutes, three days, three weeks, you'd be looking at hiring
more training or maybe trainingin your current team, whatever
it is to, to get your capacityup to produce the work, because
(32:25):
when you produce the work,that's when it becomes revenue
on your profit and loss.
Speaker 2 (32:30):
Yeah, absolutely, and I think there's again a mindset
shift that people have is, Ithink when we hire we feel like
immediately I have to givesomebody 40 hours and the best
operators I've ever seen, youknow, have deep lists.
You know Brandon calls it ablack book of painters.
But you should be constant, youshould always be interviewing
(32:52):
painters, you should beassessing them and you should be
, you know, keeping just likeyour customer list, having a
list of painters.
I had a franchisee in FreshCoat who had over 100 painters
in his um, basically in his book, when he needed if he had got a
big project in it.
Basically he let him know andsaid, hey, you're on my list.
(33:15):
And then as we grow and I needsomebody, and if I call you and
you're on a project, there maybe an opportunity to become more
of a full-time.
But these are part-time, theseare W-2.
They're not subs and he wouldjust.
You know, when he had a bigproject he had no problem.
He said I'd never have aproblem finding painters.
I mean, like I said, he hadover 100 names in that book.
(33:36):
You know we have a tool called30 Painters in 30 Days.
It's designed for you torecruit and talk to at least 30
painters in a period of time.
It doesn't mean you're going tohire them all, but you want to
make a list of them.
Now, some of you make a listwith a big mark that says never
hire.
It's like we're not hiring thisperson but at the end of the
day, most of the time it's justhey, if I feel like I know, I
(33:58):
can, you know, make those calls.
I have that list.
I've had.
I mean because I've had peopleturn down a big project, because
I just don't have the people todo it.
Like you know, okay, yourmarketing worked, you got the,
your networking marketing worked, you got the opportunity to do
a large project and yet you'relimiting yourself because you're
afraid you can't hire, and youknow.
(34:20):
So having the names of that,having the names of good subs,
you know, depending on yourstate and what your rules are,
but all those things give youmore freedom and flexibility to
be able to grow and scale yourbusiness.
Speaker 1 (34:31):
Yeah yeah, that makes a lot of sense and I feel like
I'd be remiss if I didn't goback and talk about Mama gross
profit.
What do you, what do you lookfor in gross profit?
Do you have a certain like like, what should folks should be
shooting for, or what are yourthoughts on that?
Speaker 2 (34:46):
The most important thing is knowing where you're at
and job costing like jobcosting every project knowing
where you're at and whereveryou're at, we need to figure out
(35:09):
how you can be higher.
And so obviously, differentsegments of the industry lend
itself to slightly differentgross margins.
You and I were talking aboutthe ratio of margin to customer
acquisition costs.
Well, the customer acquisitioncosts in commercials is much
different than the customeracquisition costs in res repaint
(35:29):
.
So you know you start needingto look at your business in
segments.
But in general, that's thenumber we throw through and you
threw out.
I always say you really shouldalways be targeting 50, you know
, for you know in general, justbe targeting it and working your
way towards that, but it'swhatever it takes to be
(35:49):
profitable.
Speaker 1 (35:51):
Right, it's a good starting point.
50% it's.
It's an easy, especially ifyou're getting started.
It's an easy thing to wrap yourhead around with markup, like if
you're just getting starteddouble everything double
everything, yeah, and then fromthere it's that's the the way to
start, like, if you're justgetting started, double
everything, double everything,yeah, and then from there that's
the way to start, and then youcan build it from there.
(36:12):
And then there's folks that Iknow we work with that hit like
65% gross profit consistently,which is crazy good, but it
obviously takes many, many yearsand a lot of hard hard work and
, uh, you know prooftestimonials solid sales process
and solid production process.
But, uh, cool.
(36:33):
Um well, I want to be cognizantof our time and, uh, you've
been super generous with it.
I really appreciate, um,everything you've shared.
It's been super informative.
I've learned a lot and I'mpositive that the listeners have
as well.
Do you have any last thoughtsor anything that you have going
(36:53):
on at the Academy forProfessional Painting
Contractors you'd like to letfolks know about?
Speaker 2 (36:58):
Yeah, we've got a couple of things going on.
Obviously, you know, our bigannual event, which has always
been well attended and people Ithink find a lot of value with,
is our summit.
That'll be coming up in January, I think right at the end of
January.
I think we start the 29th ofJanuary and 26th Hard to believe
we're thinking about 26 already.
So if you haven't ever had achance to attend the summit, I
highly recommend it, but on anongoing basis.
(37:20):
One of the things I'm reallyexcited about and I got started
here at APPC when I started twoyears ago is our high
performance peer groups.
No-transcript.
(37:52):
Obviously, the APPC.
If you need systems everyone inorder to achieve the kinds of
things we've been talking about,daniel, the key thing is we've
got to have systems.
You can hire people, but if youdon't have good systems for
them to operate, bottom line isthey're not going to be able to
achieve the kind of levels ofprofit that we're talking about.
And the most important thingthat really I think improves
(38:14):
people's profit is being moreefficient, and systems are what
make us efficient.
So, again, the APPC.
We have systems for everyaspect of the business and
they're done for you.
They're very easy to implement.
You know, if you and if youfeel like you need additional
coaching to be able to get thatdone, we provide that as well.
So you know we're here to help.
(38:36):
You know, both Brandon and I andour team are very passionate
about helping paintingcontractors and that's why I'm
still here.
You know, I've been infranchising.
I was always passionate abouthelping business owners, but I
really love this industry andI'm I'm happy to to help people.
We'll be at all, I think, allthe PCA events this year.
So hopefully, if you, ifsomebody is going to the any of
(38:58):
the residential, commercial andthe expo will around for that as
well.
And women in paint I have to puta little plug in for women in
paint To me.
I was so glad to see the PCApull up women in paint and I've
been really happy to be asignificant part of it and I'm
looking forward to having thatopportunity I think I'll be
(39:20):
speaking at it again coming up,so I'm really looking forward to
that event.
It's great to see us lifting upall the women in the industry
and it's a resource thateveryone needs to tap into.
You know, no matter what theownership structure of your
business is, there are a lot ofreally talented women out there
that can help you with yourbusiness, so don't hesitate to
(39:41):
hire women.
Speaker 1 (39:44):
Absolutely.
And just to caveat on what yousaid, I've been to the APPC's
events in January.
They've all since, I think,2018 or 2017 for a while, and
it's amazing to see like thegroup of painting businesses
that have grown just from.
(40:04):
You know, when I first startedgoing like a big business was
like 751 million in revenue, andnow they have folks doing
millions and tens of millionsthere, and it's the same people
that have grown over the last 10years or so.
So it's really cool to see whatyou guys have been doing over
there at APPC, and we also havea lot of clients that are part
(40:29):
of those peer groups that youmentioned as well, and I know
that they get a lot of value outof it.
So definitely highly encourageanyone listening.
If you're looking for guidanceon scaling to the next level,
you definitely take a look atthe academy for professional
painting contractors awesome, uhwell, I really appreciate your
(40:50):
time today, tara, and for thelisteners, we will see you next
week thanks, daniel.
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