PCA Articles

Prior to joining the supplier side of the paint industry, I was part-owner of a successful painting company for 11 years. Over that time span, we worked tirelessly to optimize every facet of our business. From performing thorough onsite inspections, writing comprehensive proposals, or delivering memorable customer experiences, the commitment to these core principles led to double digit growth year over year, which became more challenging as annual revenues climbed into the millions. I was very fortunate to have a business partner that was an exceptional operator who understood that the company’s success was inextricably tied to the creation of, and adherence to, good systems.

The foundation of these systems was the analysis of job outcomes, most commonly referred to in the industry as “job costing.” In simplest terms, this practice involves capturing your material and labor costs, and reconciling them against the proceeds realized on the job. What did you spend? What did you charge? Pretty straightforward. Most successful painters will tell you that implementation of this simple practice was the moment when they really took control of their business, and took control of their profits.

Too often, one solution to higher profits is mistakenly reduced to “spending less money.” While it’s essentially universally known that you can’t hire a cheap but awful painter and expect anything but headaches and plunging productivity, this isn’t as readily embraced or understood when it comes to purchasing materials. Better understanding of this begins with tracking it, and this leads to the creation of systems that protect the profitability of each job.

There are 3 simple principles that every professional painting contractor should consider as they evaluate their purchasing strategy:

1. Cheaper is not better.
2. What do my materials say about my company?
3. Can I spend more and still make more?

Cheaper Is Not Better.

Two of the primary reasons painters buy “cheaper” products is because they like the idea of less money leaving their pocket and/or they think that cheaper bids will increase the likelihood of being awarded a project. While these principles aren’t entirely misguided, they lack vision that accelerates growth. Implementing job costing is a critical first step to forecasting revenue, and when you can better predict what is coming in, you’ll make better decisions about when and how to spend. There’s no question that better paint and tools improve efficiency, but investing into them is more feasible when work and revenue are steady. Job costing and revenue tracking make this possible. As far as the fear of spec’ing bids with paint that is too expensive, one easy solution is to provide customers with options. A simple “good,” “better,” and “best” approach gives

you and them budget flexibility and it allows your customer to tell you what matters to them most on their project. For some, cost is the primary consideration while for others it may be quality. Providing options and corresponding price points to accommodate those options dramatically increases the likelihood of being awarded any job.

What do my materials say about my company?

From the moment painters step onto a jobsite, their qualifications to perform the work are being assessed by the customer. This may include taking note of how they present themselves (nice looking service vehicles, professional appearance, painter’s whites, etc.._) but perhaps most importantly, the condition of their jobsite. No matter how good a painting job is, a messy, unorganized jobsite littered with dirty looking tools will undoubtedly negatively impact a customer’s perception of the quality of the work. Quality tools and quality paint that is systematically and neatly organized on a clean jobsite will resoundingly tell the customer, “these guys know what they’re doing!”

Can I spend more money and still make more money?

The answer is YES! And again, job costing holds the key to this. In the “good,” “better,” “best” example above, an easy illustration of this is the sound practice of marking up materials. As professional painting contractors buying higher volumes of paint, your pricing should reflect volume discounts, and marking up these discounted prices as part of your estimate is still better value to the customer than if they were to purchase it on their own. By implementing a fixed markup percentage on whatever paint you purchase for a project, and giving customers “good,” “better,” and “best” paint options, you’ll make MORE money if they select better paint. Not only because you are making that % on higher priced paint, but also because superior paint covers better, lays down better, and ultimately enhances productivity and efficiency – critical factors that affect profitability. This same strategy can be applied to tools and sundry purchases as well. While it’s not practical to mark up every roll of tape, every sanding sponge, tube of caulk, etc…an easy starting point is to isolate these expenses on a dozen jobs or so and determine what percent of the overall project cost they are. Then, account for that percentage when submitting all estimates. While this will vary by the nature of the project, it will usually fall in the 5% – 7.5% range. This eliminates another source of unaccounted for costs, and you will likely have materials (poly, caulk, brushes, etc..) that last for several jobs, yet are still being accounted for at a fixed percentage on every job. The resultant “surplus” can then be applied to other sundry items, tools, or even premium paint that was previously viewed as a “want to have” not a “need to have.”

When painting companies embrace the mindset that their investment into the materials they buy is fundamentally an investment into their people, productivity soars, employee satisfaction soars, and most of all (surprise, surprise!), profits soar too!