If you’re like many painters, you’ve probably toyed with the idea of starting your own business and taking on the role of boss. Who wouldn’t want a profit-able, marketable business they can sell or pass on to their kids? The whole boss thing looks pretty good from the outside, too. Nice vehicle, cleaner clothes, longer lunch breaks and a lifestyle that looks like it runs on more money than a journeyman earns. And while there are successful painting businesses out there, building one in the real world is probably a lot different than you imagine. If you’re thinking of making the transition from solo or employee painter to business owner, success depends entirely on going into the venture for the right reasons. And the best way to have the right reasons is to identify the wrong ones first.
Bad Reason #1: “I Want to Make More Money”
I get to talk to a lot of painters, and the most common reason they give up as a business owner and go back to painting solo comes down to lack of profits and too much work. They expected to make more money as an owner but they actually earn less than a journeyman, at least at first. And the painting business is more likely than other trades to deliver this unhappy out-come. Why is that? It all comes down to lack of value delivered as a business owner.
In the long run, the free market only ever pays for value. If you want to earn a profit as the boss of a painting company, you need to bring real value to the venture as a manager. And simply calling up some painting buddies, giving them the address of the next painting job, then writing some pay cheques does not constitute value. Your painters could have done that on their own.
Painting has one of the low-est barriers to entry of any trade because the tools are inexpensive and you don’t necessarily need a big, fancy vehicle to get into the game. It’s actually harder for a painting company owner to deliver value than with other trades because it’s so easy for individual painters to work on their own. So what legitimate value can you bring to the table as the owner of a painting company? See “Seven Ways to Create Value” on page 27. Just because you call yourself a business owner doesn’t mean the market place will pay you.
The paint business remains, in spite of its challenges, a tremendous opportunity for a hard-working entrepreneur. But getting into this business for any one of these six bad reasons will lead to owner dissatisfaction.
Bad Reason #2: “I Want to Work Fewer Hours”
Creating a business is about building a system, and this never hap-pens easily. You’ll make mistakes, people will let you down, and things always take longer than you expect as you build. On top of all this you also need to keep yourself and your family fed while you’re creating your business. All this is why you’ll probably need to work at least 50% more hours as you start a painting business than simply working as a painter. It could be more. How long will you have to keep this up? It depends on how efficiently you build your business system, and how well it works when it’s done. The fact is, you’ll need to work way more hours building your business rather than just painting. Eventually, if you do your work well, you may be able to work fewer hours, but only if you design your business to function without your constant involvement. Starting a business always involves way more work than you expect.
Bad Reason #3: “I Love Painting”
Whenever I hear people talk about starting a business, the enthusiastic reasoning often sounds some-thing like this: “I want to start a (insert business idea here) because I like (insert product or service enjoyed here).
“I want to start a restaurant because I like to cook”, is a common example.
“I’m starting a clothing store because I love to dress up.”
“I want to make video games because I love to play”, is a common delusion among teenage boys.
This sort of dangerous nonsense is probably responsible for more failed businesses than any other mistaken notion. Enjoying your work as a painter is no reason to think that you’d enjoy life as the owner of a painting business. The two are entirely different. In fact, if you absolutely love painting it’s probably a sign that you shouldn’t start a painting business at all. Very few painting business owners actually do much painting. Sure, you need to know all the details behind successful painting, but only so you can hire, manage and sell painting jobs better than the other guy. Love of painting is not sufficient reason to start a painting business.
Bad Reason #4: “All I Need Is a Few Painters”
Imagine you met a farmer with a great new dairy barn. He takes you inside and shows you the stalls, feed storage and milking equipment. Everything’s impressive, except for the fact that he only has two cows. You can be the best farmer in the world, but two cows simply don’t create enough value to support the operation. Same goes for a painting business. It takes a minimum number of painters to support your work as a business owner. You can do everything else right, but if you don’t have enough cows in your barn you’re going down. Your profits as a business owner come from the fact that you’ve got to pay your crew members less than the value they create for you. It’s this spread between value and pay that makes your profits, but of course the spread can only be so wide. If you’re not managing enough painters, you’ll be caught in that nasty place where you need to paint to keep eating while also somehow finding time to manage your crew. It’s hell. So how many painters does it take to support you as a business owner? That depends, but start looking at simple numbers. If you pay your people $8 less per hour than they generate for you in value, you’ll need to employ six painters to generate $48 an hour for you. This might seem like a big hourly rate at your end, but it’s actually a bare minimum when you have to cover all overhead costs, marketing, company vehicle, bad debt and expenses. Don’t under estimate the number of painters you need to support your business.
Even the smallest business has a surprising number of hidden expenses that leak money out of the venture. Eventually, those expenses will demand to be paid even when they are ‘invisible’ at the outset.
Bad Reason #5: “I’m a People Person Not a Numbers Person”
Even the smallest business has a surprising number of hidden expenses that leak money out of the venture, and eventually these expenses will demand to be paid even if you can’t see them at first. The total cost of running a truck, for instance, is actually twice what you pay in gas, all things considered. Employees cost wages, but there are also benefits to be paid, vacation pay, sick days and possibly severance. Even some-thing as insignificant as the cost of paper towels and hand cleaner adds up big-time. It’s fine to be a people person, but you also need to be something of a stickler for numbers and accounting if you expect your painting business to succeed. If you hate numbers, definitely don’t try to start a painting business.
Bad Reason #6: “I Want a Simpler Life”
There’s no professional life simpler than being an employee or solo con-tractor. Even the boss of the smallest business has way more hassles than meets the eye. Naturally, good management will reduce these hassles, but they’ll never go away. In fact, your entire role as a business owner is all about smoothing out the bumps and making things happen properly in a world that’s hardwired for trouble. As a painting boss, you’ll need to deal with unreasonable clients, unreliable employees, incompetent suppliers, government regulations and a whole bunch of other troubles. If troubles follow you to bed at night, you’ll need to strengthen your mental resilience or stick to solo painting.
The world will always need business organizations and there’s room for your new painting business, too. Just be sure you really understand what the role of successful business owner looks like before you jump in. Get this essential part right and the rest is just hard work.
Three Benefits of Building a Real Business
If running a business is riskier, more demanding and more worrisome than being an employee or solo painter, why would anyone do it? A few reasons:
1. You can make more money. If you get the whole value thing right and you attract enough painters to work with you reliably, you can easily make 2x or 3x as much as a journeyman painter.
2. You like the challenge. Building and running a business is a complicated challenge that involves diplomacy, salesmanship, financial management and luck. If you’re tired of the technical challenges of painting, the variety of business challenges might be just what you need.
3. Freedom from the work-for-pay lifestyle. As a painter, if you stop painting you stop eating. There is no accumulated value to sell after a lifetime spent painting solo. If you build a business properly, you or your kids will have something of value to cash in on in the future.
Seven Ways to Create Value
You’ll never earn a profit as a painting business owner unless you bring real value to the table. Here are six essential ways to make that happen:
SELL WELL: Selling jobs at profitable prices is a completely different skill than painting, and most painters don’t like to find new jobs and clinch deals. Selling well is key to any business, and if you don’t like selling you shouldn’t try starting a painting company. And selling effectively these days always involves some kind of online presence. It’s certainly not the only part of selling, but it is the new normal for any painting business owner who expects to thrive. If the internet scares you, don’t try starting a painting business.
ORGANIZE BIG JOBS: The larger the painting job, the greater the role for you to coordinate painters, supplies, timelines and financials. Solo painters simply can’t do this on their own, so it’s a natural role for you as manager. Many successful painting companies find a profit-able niche doing jobs that are too big for anything other than an organization to handle.
STREAMLINE THE FINANCIALS: Invoicing and collecting payments will always take too much time and too much effort if you don’t design a streamlined financial system intentionally from the start. The slickest I’ve seen painting business owners use is on-the-job digital payment systems at the end of each project. Swipe the clients credit card through a reader on a cell phone and you’re done. You get instant payment and there’s no need to follow up with paperwork. Painting business owners I know who use on-the-job payment also find that clients are less likely to call back for touchups and repainting when they’ve paid immediately, too.
PROTECT YOUR PAINTERS: Part of running a successful painting business involves finding and keeping skilled and loyal employees or contractors. And a big part of loyalty comes down to creating a hassle-free zone for your painters to work within. You need to protect them from the conflict caused by angry customers and the hassles involved in gathering paints and painting tools. Eliminating everything beyond the work of painting is one way you can bring value to your work as a painting business owner. Painters will want to work for you because it’s a simple, hassle-free experience for them.
PAY LIKE CLOCKWORK: This is huge. One of your main roles as a business owner is to cushion your employees against all financial shocks. Making payroll late is a recipe for disaster because your painters will jump ship. It doesn’t matter if a client pays late or stiffs you for an invoice. Your job is to take the hit and make it up another day. If you don’t have enough cash on hand to make at least three months of payroll with no revenues, don’t start a painting business. You’ll fail.
RESEARCH & DEVELOPMENT: As the painting world advances, it’s your job to stay on top of technical advances, try them out, then introduce the good ones to your crew and clients. Don’t neglect this role or your business will slowly lose vitality and profitability as the painting world advances.
GATHER AND ANALYZE NUMBERS: Bidding profitably on jobs is the single most important skill you need as a business owner, but it’s a skill that requires informed practice. And the only way to get that practice is by monitoring the numbers to see if they lead to profit or loss. Keep close tabs on what your crew actually costs you in time, wages and benefits, then compare these costs to the offsetting revenues from your bids. While you’re at it, monitor the productivity of individual employees and contractors. You need to know who’s actually delivering more value than you’re paying them for. Some employees will contribute much more to your bottom line than others.