An Excerpt from Getting Out of the Bucket: Starting a Business

Starting a painting business is easy. Starting a painting business that will be successful isn’t.

There is much more to operating a successful painting business than putting paint on the wall. Issues such as marketing, estimating, sales, administration, and production management are all crucial components to success.

While each business owner will have different goals and expectations for his business, the basic principles necessary for success do not vary. Whether you want to have a one-man operation or a twenty man shop, sound business principles are a necessary component of achieving the goals you establish.

If I had to start my painting business all over again, I would take the following 5 steps:

1. Learn about owning a small business. There are many resources, including books, tapes, forums such as Paint Talk, and of course, Out of the Bucket.com.

2. Identify where I want to be in 1 year. For example, what kind of revenue, what kind of profit, what kind of income. And then I'd develop a plan for accomplishing this.

3. Invest in marketing-- signs, business cards, web site, and fliers/ door hangers. The bulk of the money would go into fliers/ door hangers and I would hand them out myself. I would invest at least $500, and more if I could afford it.

4. Learn to sell at the right price, which implies that I know what the right price is. I would learn more about the financial side of the business.

5. Develop some simple systems for the basics of the business. Such as, how will I prep an exterior job, how will I prep an interior job, etc. I would include some administration issues as well. And I would put this in writing.

These 5 steps do not exhaust the possibilities, but after 22 years in business I am confident that the above steps would save a tremendous amount of time and money.

There are certainly multiple paths to business success. It is possible to be successful and act in complete defiance of the above suggestions. However, the above steps are proven—they do lead to success. From my perspective, anything that makes the journey easier is certainly worth investigating.

To learn more about Getting Out of the Bucket, click here.

With Help Like This...

One of the most common questions from new painting contractors is how to bid jobs. And there is no shortage of “experts” eager to share their “knowledge”. However, often that “knowledge” is inadequate, and sometimes it is downright wrong. For example, consider the advice offered here.

The first suggestion is: “Find out what your competitors are charging for the same service by having them come and do an estimate for you (I wouldn't tell them what you're up to, though).” This advice is wrong, both morally and practically.

Morally, this is dishonest. Such actions are misleading, waste the time of the competitors, and the information is gained under false pretenses.

Practically, the information gained is meaningless. What others charge does not tell us anything about what we should charge. This is a classic case of the blind leading the blind, or more precisely, the blind leading the dishonest.

Along the same lines is this little tidbit: “Going rate for painters is 29.00 if you roll and 31.00 an hour if you spray. I charge 25.00 hour but I roll. It keeps me in the ball game.”

Charging $25 an hour might “keep you in the ball game”, but what kind of game are you playing? Professional contracting is not a game—it is a business. If you treat it like a game, you will likely find yourself sitting on the bench.

The Mob

I recently appeared on a panel to discuss a proposed high rise project in Houston. Home owners in the neighborhoods near the project don’t like it. They have been lobbying City Hall to stop the project, and City Hall has been attempting to do so.

I was the lone defender of the project appearing on the panel. The audience consisted primarily of home owners from the neighborhoods, with a few college students and a few of my friends.

Early in the discussion I pointed out that the tactics of the neighborhood civic associations were much closer to the Politburo than the free market. An audience member soon stood up and demanded that I be removed from the panel. And what was I saying about the Politburo?

Later, the same “gentleman” asked me a question, and before I could answer, launched into a long diatribe about the number of people who opposed this project, and how dare I say that they are wrong. My first inclination was to laugh, but since this was supposed to be a serious forum, I resisted the temptation.

I pointed out that he was saying that the majority is always right, a fact refuted repeatedly throughout history. He was also saying that might makes right, that the majority may do as it pleases because it is the majority. This is another fallacy. Of course, my answers provoked more hostility from the audience.

Many people feel very strong when they are a part of a group. They find comfort in knowing that others share their ideas. And when someone challenges those ideas they are quick to lash out in anger. They act solely on emotion, and any attempt at injecting reason and logic into the discussion is met with angry and ugly attacks.

I stood up to the mob that night. They didn’t like it. But that is their problem, not mine. The mob can be wrong, and on this particular night, they were.

Sometimes the same is true of our paint contracting companies. Sometimes what everyone else thinks is the right way to run a painting company is simply wrong. And when you consider that most contracting businesses will fail, chances are pretty good that they are wrong. Sometimes we need to stand up to the mob.

© BEP Enterprises Incorporated 2008

Thoughts on Naming a Painting Company

While there are a lot of options when it comes to naming your painting company, there are a few basic rules you should follow. While this list is hardly exhaustive, it should give you a good start.

Avoid names that imply low prices, such as Discount Painting or El Cheapo Pintura (for our Hispanic readers). If your name says that you are competing on price, don’t complain to me when you can’t make any money. Customers will expect cheap prices.

Don’t use names that might imply a less than desirable character, such as Drunk Painting Company, Watered Down Paint Company, or Blow and Go Painting. I think the reasons are obvious for avoiding such names. But in case they aren’t: you don’t want the public to think that you will be drinking their booze, using WalMart’s worst paint, or leaving a mess that even Mary Poppins couldn’t clean up.

I personally don’t like the idea of naming the company after the owner. To me, it sounds too “mom and pop”. Mind you, there is nothing wrong with mom and pop, but it’s not the image I really want to project. I think a name other than “Bob’s Painting” projects a larger, more professional company. Plus, it can create intrigue and interest as customer’s try to figure out where the hell you got your name.

For example, my company is named Philpaint. Several times a week someone calls asking to speak to Phil. (Less frequently, someone will call asking to speak to Frank—I don’t know why, but I find it humorous.) But I digress.

We have no Phil in our company. Never have, and as a matter of principle, never will. (This is another aside, but if we had someone named Phil everyone would think he owned the business, and that wouldn’t be good for my oh so fragile ego.) The “Phil” in Philpaint comes from my last name. Pretty clever huh?

When we were thinking about renaming the business from Phillips Painting Services, someone mentioned that he liked the sound of Microsoft. He thought the way they took parts of two words—microcomputer and software—to make a new word had a nice ring to it. So I figured that if it was good enough for Bill Gates it was good enough for me. Besides, if I have .001% of his success I’ll be able to retire a very wealthy man.

I realize that these last few paragraphs probably won’t prove very helpful to you, but sometimes I just enjoy telling a story. And since this is my blog, I can do that.

© BEP Enterprises Incorporated 2008

Business Structures

Many painting contractors operate as a sole proprietorship. I believe that this is an invitation for disaster.

As a sole proprietor your business is inseparable from you—they are one and the same entity. You are personally responsible for everything your business does. This means that if your business gets sued, it is really you that is being sued. Your personal assets are at risk in this situation. In short, a sole proprietorship provides no personal protection.

Partnerships are little different, except that each partner shares the risk. Partnerships also carry the risk of the relationship going sour, and the “divorce” can be messy and expensive.

A corporation or LLC provides personal protection. The corporation stands as a distinct legal entity, separate from you as an individual. This is true even if you are the sole owner of the corporation. If the business is sued, only the business’s assets are at risk.

Corporations can also provide certain tax benefits for the owners. For the individual, income is taxed; for the corporation, only profits are taxed.

You should always consult with an attorney and/ or accountant before making important decisions regarding your business. But operating as a sole proprietorship in these litigious times is a risk nobody should take.

© BEP Enterprises Incorporated 2008

What is the Best Roller Cover?

As a long time participant on various forums for painting contractors, there seems to be no shortage of questions and discussions regarding the best roller cover, what kind of primer to use, and similar issues. While technical issues certainly have some merit and can be helpful, they seldom matter in the long-term.

It is a statistical fact that 90% of small businesses fail within 5 years. Painting contractors don’t fail because of the primer they use or what they pay for a gallon of paint. They fail because they don’t know how to run a business.

Forgive me for being blunt, but the odds are that you will be out of business within 5 years. And I personally believe that the odds will increase significantly if your worry more about roller covers than you do marketing, sales, cash flow management, systematizing, and more.

In other words, running a painting business isn’t really about primer and caulk and roller covers. It’s about marketing, sales, and finance.

If I don’t generate enough leads, I can’t sell jobs. If I don’t sell jobs (at the right price), I can’t pay my salary. If I can’t pay my salary, my cats won’t eat. And if my cats don’t eat, they won’t be happy. (Unhappy cats are not pleasant to be around). In short, if I don’t take care of business, it really doesn’t matter what roller cover I use.

Building a business is not easy. Statistics prove it. But it can be done, and statistics prove that as well. Building a business requires focusing on the right things—business things. Things like marketing, sales, and administration. In the end, business isn’t about primer or caulk. It’s about business.

© BEP Enterprises Incorporated 2008

I Ain’t Got No Overhead

Many painting contractors believe that they have no overhead. They are simply wrong. To claim that one has no overhead means:

1. There is no advertising
2. There is no insurance
3. There is no equipment
4. There are no vehicles
5. There are no phones
6. There are no salaries
7. There are no office supplies
8. There are no accounting or legal expenses
9. And the list could go on

All of the above items are overhead. I’ve spoken to hundreds of contractors over the years, and I’ve yet to meet one who doesn’t have most of these expenses. And anyone who truly doesn’t have any overhead doesn’t have a business. They have a job and a delusional fantasy.

What is perhaps most interesting is the fact that for the typical small painting contractor, overhead comprises nearly 50% of the selling price. How then can a contractor overlook such a large part of his expenses and brazenly state “I ain’t got no overhead”?

I think the primary reason is financial ignorance—they simply don’t know what they don’t know. They don’t understand what overhead is. They don’t understand that overhead is an inescapable fact of owning a business.

The sad thing is, this ignorance is also a primary reason for the failure rate among painting contractors. After all, if you are not recovering half of your expenses, it is pretty hard to pay the bills, draw a reasonable salary, and make a profit. The money to pay overhead has to come from somewhere, and it is usually the owner’s pocket.

The truth is, if someone truly ain’t got no overhead, they ain’t got no business either.

© BEP Enterprises Incorporated 2008

If You Choose Not to Decide

Life happens. The world moves on, whether we want it to or not. The seasons change, the tides rise and fall, and Presidential politics nauseate us. These are events that occur, despite our wishes, hopes, or desires.

As painting contractors, we face other inevitable events. Low priced contractors compete for business. The economy fluctuates. Customers don’t understand what is required to produce a professional paint job. While these too are inevitable, we have some control over their outcome.

As business owners we have many options: the market we serve, the prices we charge, the image of our company, our sales process, our company culture, and much, much more. And the options we select will ultimately determine the results of our efforts.

But a funny thing often happens on the way to the Forum. As we are being drug before the lions, we forget that we have a choice. We forget that the business we own, and virtually every aspect of it, is something that we create. And that creation is the result of our choices.

Too many painting contractors plod along, year after year, repeating the actions of previous years. I know, I’ve been there and done that. It is probably not a huge surprise, but if you do the same thing year after year, you should expect the same results year after year.

Aristotle identified the fact that all humans are born tabula rasa (literally, blank slate). We possess no knowledge at birth. Everything we know is learned. And what we learn is a matter of choice.

The information required to build a better business is readily available. It is up to you to seek out that knowledge and implement it. That is a choice that each of us has. But if you choose not to decide, you still have made a choice.

© BEP Enterprises Incorporated 2008

The Sky is Falling

It seems that everywhere we turn we hear news about how bad the economy is doing. Gas prices are at record levels, foreclosures are soaring, and the financial markets are in turmoil. Depending on who you listen to, we are either in a recession or on the brink of one. The problem is, the latter is simply not true.

A recession is defined as 2 consecutive quarters of negative growth. The fact is, the economy is still growing, albeit at a slower rate. But why should the pundits let the facts get in the way—they have an agenda to push.

The state of the economy is a big concern for many painting contractors. New construction is slowing, and many contractors are turning to repaints. This puts additional pressure on those contractors in the repaint market. With greater frequency I am being asked what a contractor should do to survive this recession.

The first thing to do is to get a firm grip on reality, which is always sage advice. We are not in a recession. We may be heading towards one, but we aren’t there yet. So don’t panic. Take a deep breath and step away from the television set.

The second thing to do is to build a strong business, that is, do the things I’ve been talking about for years. Develop a strong marketing program, learn to sell more effectively, empower your workers, etc. Of course, these things take time. So if you have concerns you better get busy—starting yesterday.

Each year I am amazed at the number of contractors who start asking how to survive the winter slow down. They act surprised that winter has arrived, though even a casual glance at a calendar would have warned them. Mired in myopia, they plod along, ignoring the inevitable. Sadly, even birds and squirrels do a better job of preparing for the winter than many painting contractors.

Such contractors are in a constant reactive mode. Rather than build a strong business and be proactive, they respond to events as they occur. They constantly shift direction, zig zagging their way to the precipice. And when they reach the edge they start shouting for help.

I suppose that there will always be such contractors. I imagine that there will always be those who are happy that they have a job for today and give little thought to what happens next. For them, sooner or later, the sky really will be falling.

© BEP Enterprises Incorporated 2008

The More Things Change

I’ve been active on various paint contractor forums for 8+ years. During that time I’ve seen changes within the industry. And I’ve also witnessed several constants.

The most glaring constant has been resistance to sound business practices. The resistance is expressed in numerous ways—“You don’t understand my market”, “That won’t work in a small town”, “Nobody around here does it that way”. All of these claims have the same hidden meaning: The principles that successful businesses use all around the world simply do not apply in a given town.

This is akin to claiming that the law of gravity doesn’t apply in Topeka, that supply and demand only works on Wall Street, or the sun sets in the east in Laredo. Despite the absurdity of such claims, they persist year after year.

Another constant through the years has been the parade of names associated with these claims. Refusing to embrace sound business practices, the claimants invariably go out of business, only to be replaced by a new group of ostriches.

I can only shake my head when I see someone start making claims like the above. I’ve seen where that attitude leads. I’ve seen the outcome for those who refuse to learn business skills. I’ve seen it every year this decade, and I will continue to see it. The more things change, the more they stay the same. Plus ca change, plus c’est la meme chose.

© BEP Enterprises Incorporated 2008

Marketing a New Painting Business

A frequent question from those starting a new painting business is how to obtain work. With few, if any references, no market presence, and often little money for advertising, the new business owner is in a quandry.

While I would recommend developing a business plan (including a marketing plan) prior to launching a new business, this does little good for someone who has already opened the doors.

Perhaps the easiest and least expensive method is door hangers. When I started my business 22 years ago I distributed thousands of door hangers. When I didn't have a job to do, my job was handing out door hangers. It wasn't fun (particularly in Houston's very hot summers) but it worked.

The following can serve as a crude marketing plan:

Select a small area to target (1,000 to 2,500 homes). Get the door hangers out as quickly as possible. When a job is sold, get a sign in the yard immediately and leave it there as long as possible. At the same time, market to the neighbors with more door hangers or direct mail (check out QuantumMail.com for inexpensive postcards). This provides consistent and regular exposure in a small area and increases the effectiveness of each piece.

As money permits add the following to your marketing plan: vehicle signage, customer retention, and newspaper ads or inserts. Again, keep your marketing focused on a small area to maximize exposures.

No marketing plan is perfect. Nor will the results be immediate. But persistence and consistency will produce results in time.

© BEP Enterprises Incorporated 2008