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Average Earning Percentage

What Should You Be Earning in Your Painting Business?

In the dynamic landscape of the painting business industry, determining a realistic earning target is a cornerstone in achieving both financial stability and business growth. As I sat down with Jacob Ransom of Ransom Digital in a recent podcast, we delved deep into the earnings sphere of painting business owners and discussed the optimal revenue goals one should set to not only sustain but thrive in the industry. Drawing from my extensive experience with over 155 painting business owners in the US and Canada, I have compiled the key takeaways from our discussion to help you set achievable financial goals for your painting business.

Understanding the Average Earning Percentage

According to National benchmark data, a painting business owner takes home about 15% to 18% of their business’s revenue on average. However, this figure might not align with your financial aspirations, especially if you are playing an active role in your business. To determine your ideal earnings, it is important to recognize and value the different roles you perform in your business.

Defining Your Roles for a Business with Revenue Under $1.5 Million

For businesses accruing less than $1.5 million in revenue, the owner typically wears four main hats: Business Owner, Salesperson, Production Manager, and Admin Person. Here’s how to assign revenue percentages to each role:

  • Business Owner: You should aim for a 15% share of the revenue, representing the financial reward for your entrepreneurial initiative.
  • Salesperson: Allocate 7% to 8% of the revenue to recognize the efforts put into sales and customer acquisition.
  • Production Manager: Another 5% to 7% should be reserved for overseeing the production process and ensuring that the projects are executed seamlessly.
  • Admin Person: Target a share of 3% to 5% of the revenue for handling the administrative tasks that hold the business together.

To calculate your overall earnings target, simply add up the percentages assigned to the roles you fulfill in your business.

For example, if you are the business owner and only sales person, 22-23% of revenue should go to you as cash flow (this may be in the form of payroll and/or distributions depending on your entity type).

Setting Targets for a Business with Revenue Over $1.5 Million

If your business surpasses the $1.5 million revenue mark and you find yourself in the CEO position, overseeing the entire operation, a different financial blueprint applies:

  • CEO: Aim to receive a compensation constituting about 5% of the business revenue.
  • Business Owner: Besides your CEO compensation, you should target a 15% share from the net profit of the business.

In this scenario, your goal should be to secure at least a 20% cash flow, breaking down to 15% as the business owner and 5% for your role as the CEO. This assumes you perform no other roles, such as sales or production management.

Wrapping Up

Determining realistic earnings targets is a nuanced process, with many variables at play. By identifying and attributing value to each role you play in your business, you pave the way for a structured and financially robust business setup. As you work towards your accounting professional, remember that consistent assessment and financial prudence are your allies in reaching your desired financial goals.

Embrace the journey of financial planning with a discerning approach, and steer your painting business to new heights of success. Remember, the right financial strategy is your roadmap to a prosperous business future.

About The Author

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Daniel Honan

I am a former painting business owner and military intelligence officer with an MBA and a degree in Accounting. So I’ve been in your shoes. Everything from cold calling for estimates, in-home consults, managing crews, to running payroll. With my accounting, intel, and painting industry experience, I’ve put together a back-office system to help painting contractors crush it by helping them know their numbers and what they mean, save big in taxes, and streamline and automate their processes to save time and money.s a unique mix of business and service contracting expertise to bring solutions that grow our customers profits an average of 34% every year.