Episode Summary
In this episode of Success Beyond The Brush, Scott and Mark tackle one of the biggest misconceptions plaguing small painting businesses: confusing revenue with profit. Just because your business “did” $500,000 doesn’t mean you, the owner, made $500,000. The guys break down what revenue actually means, how to calculate real take-home pay, and why ignoring your financials is one of the fastest ways to get stuck—or go out of business.
They unpack the four key financial metrics every contractor should track, why gross profit under 40% is a red flag, how labor burden gets overlooked, and why accurate job costing and bookkeeping are non-negotiable. If you’ve ever wondered why your revenue keeps going up but your bank account isn’t, this episode is your wake-up call.
Key Topics Covered
• Revenue vs. Real Profit
– Why “I made half a million dollars” is almost always inaccurate
– The difference between top-line revenue, net profit, and owner’s compensation
– How business structure (LLC vs S-Corp) impacts the numbers
• The Four Numbers That Actually Matter
Scott’s essential KPIs for managing a healthy painting business:
- Revenue — the fuel of the business
- Cost of Goods Sold (COGS)
- Gross Profit
- Expenses & Net Profit
• Understanding Labor Burden
– Why a painter making $25/hr actually costs $30+
– What to include in burden: taxes, insurance, PTO, training, benefits, unproductive time
– How inaccurate burden leads to fake gross profit numbers
• The Danger of Not Knowing Your Numbers
– Contractors bragging online while unknowingly operating at a loss
– How bad bookkeeping, misclassified transactions, or unpaid bills distort reality
– Why monthly reviews of financials are essential
• Growth, “Death Valley,” and Break-Even Planning
– The common revenue ceiling around $750K for owner-operators
– Why hiring overhead staff temporarily depresses owner income
– C4C’s concept of “Death Valley” and breaking through to $1.2M+
– The importance of calculating true break-even (including owner’s draw and debt payments)
• Does Cutting Expenses Actually Help?
– Why “saving on paperclips” isn’t the path to better income
– Why increasing bill rate often has more impact than cutting overhead
– The realities of dynamic pricing and being a “lifestyle business”
• Accurate Bookkeeping as a Strategic Weapon
– Why a well-structured chart of accounts matters
– Common mistakes contractors make in QuickBooks
– Real-world situations where messy books hide serious problems
– How proper bookkeeping reveals fraud, double charges, incorrect vendor billing, and more
Key Takeaways
- Revenue isn’t income — and saying “I made $500K” doesn’t mean anything until the expenses, labor burden, taxes, and COGS are calculated.
- Gross profit under 40% = trouble. Target 45–50% to stay healthy.
- Labor burden matters. Your labor rarely costs what you think it costs.
- Know your break-even — including owner’s pay and debt.
- Cutting expenses isn’t the path to wealth. Revenue and bill rates are far more powerful levers.
- Accurate bookkeeping is foundational. Clean numbers = intelligent decisions.
- Growth requires planning, not luck. Most contractors hit a ceiling and stall without understanding their financials.
Episode Quote Highlights
“How in the world can you run a business when you're not actively looking at this information?” — Mark“Revenue is important, but what you actually put in your pocket matters more.” — Scott
“Under 40% gross profit, you will struggle to pay your bills.” — Scott
“You can’t double your business because you heard someone online say it. You need a real plan.” — Scott
🔗 Links from This Episode
✨ Free Discovery Call with Scott Lollar
👉 https://consulting4contractors.com/discovery-call/
🏗️ Consulting 4 Contractors Website
👉 https://consulting4contractors.com/
⚙️ Operations Module Demo (YouTube)
👉 https://youtu.be/0IUmPWk4GRI
📲 C4C on Instagram
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