13 Questions Predict Your Painting Company's Financial Future

Welcome to the Profitable Painter Podcast, the show where painting contractors learn how to boost profits, cut taxes, and build a business that works for them. I'm your host, Daniel Honan, CPA, former painting business owner, and your guide to mastering the numbers that drive success. So let's dive in and make your business more profitable one episode at a time. Today I'm super excited to be speaking with Brandon Lewis, who I believe a lot of folks listening probably already know who this is. I've known him for going on a decade now, which is kind of crazy, but I'm super excited to have him on the podcast so he can bestow some of his wisdom. Welcome to the podcast, Brandon.

I'm glad to be here, buddy. And I'm telling you, just as an audience, if you're looking for anybody to do bookkeeping for you, Daniel's the only person I've recommended for almost a decade because he does good work. And that's not my opinion. It's the feedback I get from my members. Your typical accountant, in your local market. They can prepare your taxes for you. A trained monkey could do that. There are thousands of people probably in your market that could do that. But there's only one person that can give you the metrics and the setup you need so that you get data that compares you to other people in the industry and gives you something actionable you can do something with. And that's a tremendous value for someone who often is not much more and occasionally and probably often less than somebody you get in your local market. So there's a little pitch for you, Daniel.

I appreciate that, Brandon. And speaking of metrics, I was just looking at this, you know, looking at the folks that we have crossover with. You know, you're the folks that we work with that also work with you have above average gross profit, discretionary earnings. So that is a testament to what you're doing over there at Academy for Professional Painting Contractors. And, uh, before we got started, you, you, um, you sent me these 13 questions. It's kind of like your diagnostic tool to understand if a painting business owner is on track with, with their painting business. And I thought it was pretty fascinating. Um, the, the first question is on the list here is, uh, do you have the right thinking and the ability to recognize the truth when you hear it? Can you tell me more about what that actually means?

Yeah. And so to back up just a little bit, these are not like cute little opinions I pulled out of a book somewhere. I'm not new at this. To my knowledge, I have, I'm the oldest person in the space that has been continuously coaching painting contractors as my full-time gig exclusively. And so when you work with 550 painting contractors, when you have a member average of 3.9 million, when you've seen it in 7 different countries and you've conducted 2,700 diagnostics. They're just become these well-worn ruts in the road. And I don't know if any of you have ever gone to the Oregon Trail. You can actually see the ruts, hundreds of years old. You can see the ruts and it cuts not just through the dirt, not just through the mud, through the limestone. And so these things that I'm about to share with you, if you'll open up your mind and suspend your disbelief, I would swear on a stack of Bibles as a Christian, like, these are the things you need to be focused on. So I take out a pen and a piece of paper, and as we go through them, if you find that your answer is I don't know, no, it's missing, uh, these are the things that are a 5-alarm fire that you immediately need to address in your painting business. So the concept of right thinking is something I read years ago in a Napoleon Hill book, and it basically says The first beginning of, of gaining wealth— and I would say wealth is both time and money— is your ability to recognize the truth. Because if you can't recognize the truth, if you can't look at something and, and understand when a concept has been presented to you, if it makes sense, if it's common sense, if it seems to be correct, then your judgment is flawed. And that's the screen through which you will get all the information that's coming to you. And when I present things that are accurate and that will actually change a business with, with owners, I get one of two things, Daniel. I get either what I call the Rubik's Cube response, or I get the live skunk response. And the Rubik's Cube response is I will tell an owner who's about to make a bunch of money— they probably would make a bunch without me, although they'll get there further, faster, and ultimately end up in a better spot if they use me. I will say something and they'll go, well, tell me more about that. Well, could I do that? Well, that sounds like something. Well, how do you do that? Like they immediately grasp the concept and you could see mentally they start working with it. And the folks that are forever mired in poverty, when you present that same idea to them, that same concept, which is usually very fundamental, basic, fundamental, rather basic and simple, they put— they just run from it like a live skunk. Well, I don't think that'd work in my market. Well, that can't do that. Well, you see this? Well, the reason I can't— and basically what they're trying to do is out outthink the work. You see a lot of people that want to outthink the work. And so my, my not-so-smart students are often putting money in the bank while my really smart ones are giving me 15 reasons why they can't get started. And so as we go through this presentation, everything that I'm going to give to you as an owner works. And so you've got to ask yourself, as I present these concepts, how are you mentally treating it? And that is a learned behavior. And if you treat these new concepts as more like a skunk and less like a Rubik's Cube, if you're not processing the how, if you are processing the why I shouldn't or can't do that, that's a warning sign. Yeah.

One of the things that really impresses me about you and your— the folks that work with you, because I've gone to a lot of different coaching events over the years and your events, which I've been going to for a while now, every year the, the, um, the size of the business grows. So I think the first year I attended, if you had a million-dollar painting business, that was like, you're a big dog. And then yeah, now if you are a $50 million painting business, now you're— that's a big dog. Like, you know, the tens of millions of dollars we're talking about now, if you're a big dog. And, and could you split them out by groups And, uh, so it's just really impressive to see that growth, not with just your members themselves, but the members themselves actually growing in their business and apparently having that right thinking, that ability to take what you're, you're preaching and put it to, to use and implement it.

Yeah, that's my number one joy, uh, for doing this. That's why I stick with it. I look at them like my kids. I mean, some of them are older, and I'm not saying they're, they're kids in a childish fashion, but I take my fiduciary responsibility for my clients very, uh, seriously. And you develop relationships with people over time, and the last thing you want to do is let somebody down. And to watch these folks go, in many cases from being mired in poverty, recovering from bankruptcy, having substance abuse issues, you name it, uh, to living in a mansion on the hill, uh, and being some of the most affluent people they know and having a quality of life they never imagined they could have— like, that's You know, it's, uh, I'm not one to, I'm not very sentimental, as you know, Daniel. And, and so, but to watch them grow up is just, it has just been the, the honor of, of my career in the painting industry. Yeah.

Yeah, definitely. So the first thing you said was having this right thinking. I, that's something that I come across pretty frequently is like you know, someone comes to you for help, and then you say, well, have you taken a look at this? And then you get a bunch of excuses as to why that won't work. And it's just like, okay, well, why? Why are you, you know, engaging with me if everything that I'm throwing out there is, is not possible? I know it's possible. So it's just getting the mindset right, I think, is basically the takeaway from what you're saying here.

Yeah, what was it, Thomas, uh, I think it was Thomas Jefferson that said, the man that is good at making excuses is seldom good at anything else. And I found that to be the truth.

Yeah, that makes sense.

Cool.

So the next one on the list is, can you even remember why you got into the business in the first place? And is that goal sufficient to motivate you into hard, consistent change?

So yeah, so you, you get lost in the weeds, man. I mean, and this is not just for the painters. This is for me. This is for you. The day-to-day grind just gets you to where you become an automaton and you're swimming in this sea of other people's dreams, wants, and desires. And it sweeps you up. And a lot of folks, I get on the phone and it's like, you know, just 2,700, like you, you know, you get like your instincts should get better after doing 2,700 hour-long diagnostics. If they don't, there's something wrong with your programming or hard drive. And so I can hear it. I can hear it in people's voices. They're not motivated. They don't really want to change for whatever reason, although that can change from— I see it change like a child is born, a wife is found, a spouse is found, a health crisis, nearing retirement. They read a book, they heard something one day, they just got finally fed up. There's usually some kind of pivot point that sends people on the journey, often of 10 years, 12 years of watching my videos. I talked to a guy that just joined yesterday. I've been watching you for 12 years. I'm like, what took you so long? We could have— you could have been in a completely different place if we'd gotten started 12 years ago. But people come into this game in different times. But you've just got to ask yourself, do you remember why you got into this? Do you remember what your vision was for where you would ultimately be? Do you have any written goals? And I would submit to everyone on this call, if you don't have those, write them down on a Word document, a piece of paper, I don't care, just a cocktail napkin. Pin them up beside your desk. Look at them for a few moments and make them as strong and as visual as you can. Because study after study shows that just the simple fact of writing down goals, not even reviewing them, writing them down changes your business. And writing them down and reviewing them is even more powerful. And if you can write them down review them and set aside a little bit of time every week to work on them in larger blocks, you can have a completely different painting business and a completely different income. Many people, I kid you not, can be making 2 to 3 times more money than they are today, month over month, in 30, 60, 90 days from now because you fix these fundamental systems. And they're the biggest levers. And when you, when you don't focus on the the minors, when you major on the majors and you use those fulcrums, the most influential, you know, goalpost-moving levers, things just change. And there's no doubt about it in my mind because I've seen it happen consistently time after time.

Yeah. Yes, it definitely seems like mindset is a big thing. Like, and I like to read biographies and that seems to be a common thread, like the folks that really think big understand why they're doing something. They have the right thinking. They're thinking about how they can make something work as opposed to, you know, what the reasons why they shouldn't do it. Having that mindset seems to be a prerequisite, prerequisite to success. And you see this again and again throughout history, like the folks that have like the biggest, you know, the biggest goals they're, you know, there's— those are the folks that are succeeding. They have a growth mindset.

Well, it's like if your car is stuck in a ditch, you need— if you can get two things, you need it. It's preferable if it's really stuck that something is pushing the back of the car, right? Uh, and that's usually your own, you know, determination and effort. But boy, it sure is helpful when something is also pulling that car. And that means that you've got a goal, you've got something you're trying to accomplish, you've got a vision, And when you've got both the push and the pull working in tandem, and preferably in the same direction, it just moves the car out of the ditch quicker. Yeah.

So the next one gets into a little bit less of mindset, more practical. Uh, it says, as an owner, have you mastered time management?

So I like to do a lot of hiking. And if you go just maybe 3 or 4 minutes from my home, you can go to the headwaters of the Cumberland Creek, which later turns into this massive lake in Chattanooga called the Chickamauga Creek, primarily feeds this area and it runs into the Tennessee River and it is small. And if it is not rained, there's hardly anything there. But, you know, you hike about 17 miles down the trail and there are these big, beautiful blue holes and swimming holes. Of course, you go further down, you end up in larger bodies of water. But time management is the headwater from which all progress flows. And most painters have never read a book, never taken a time management course. They don't time block calendar-like things in their painting business because almost everything we do in a painting business is exceedingly repetitive. We're going to write estimates, we're going to send invoices, we're going to hire people, we're going to train folks like it's the same 12 or 13 functions over and over again. If those things are scattered all around your calendar, if you're using your calendar, uh, as a sponge for everyone else's needs instead of a shield to protect your dreams, you're going to end up in a really bad spot. And people often ask, well, does your program work? And I always say it has never failed, not once, not one single time since I've been doing this, unless people don't do the work. And the chief killer of that once they have a little bit of right thinking and even mediocre motivation, is just their inability to manage their time. You know, you give someone an assignment, it's something that would make a big difference. 2 weeks goes by, there's no progress. A month goes by, there's no progress. Meanwhile, they're doing things in their business, but they're just not important things. And every painting contractor has the exact same amount of time every week. It's just that the ones that are successful can budget that time and put it toward things that move the needle permanently. Or in large, large leaps, whereas the people that are stuck, they just can't get out of that doom loop of doing very repetitive, inefficient tasks that frankly don't matter that much. And I always tell our owners, if the way you're managing your time and what you're doing worked, number one, you wouldn't be on a call with me. And number two, you would have already fixed your problems. And so sometimes when your situation is not where you want it to be, The only thing you really know is that your methods don't work. And so when you come into a conversation with an expert or a mentor, you know, you need to look at what you're doing and go, okay, I know I want to hold on to all this and I want to believe that this is true, but the fact of the matter is the destination you're presently in is the sum of all that activity. And if it's not getting you where you need to get, you've got to reevaluate what you're doing and how you're doing it.

Yeah, and you and I just actually came back from the PCA residential conference, and there's a lot of great information, but I feel like a lot of times it can be overwhelming on the amount of information you get of all the different things that you could be thinking about in your painting business. And one of the things I like about what you do is you help folks focus. You give them exactly what they need. Like, you, you diagnose what the issue is and you give them what to focus on. And to fix whatever issue they're facing. So basically it sounds like you kind of give them that, that thing, whether it's generating leads or fixing their production process, whatever it is. And then it's basically up to them on whether they set aside time to do that thing or not. And, uh, the folks that are successful that implement it are successful with the program. The ones that don't set aside time appropriately don't, don't find success.

No. And it's weird to be a coach. It's kind of like being an athletic coach or a physical fitness coach. I can break a sweat for 12 hours and you won't lose a pound. I can— I can give you the tools, I can give you the methods, I can give you the best classes, the best equipment, the best instruction. But if all you do is listen to me yak and you don't get out and break a sweat in your business, nothing changes. And that is just the steady application of time. I mean, it's always amazing to me when you go and see these remarkable canyons in Tennessee or wherever you go, and it's just a little stream of water. Often it's not very— it's like a foot wide, and there's this huge cavern and this huge hole. And it's just the consistent application of the water running across white rock. Well, you know, you put a couple of drops on a rock, it doesn't seem to do much, but given enough time, it does. And, you know, I try to get to put more water on it, to apply more pressure, because you can definitely do a lot more cutting in a shorter period of time if it's concentrated and pressurized. And so just like we pressure wash a house, right? You could throw a glass of water on there. It's not the same thing. And so we just want to make sure that we're putting that consistent effort in. And you can't do everything at once. I see people, they just get overwhelmed about everything that they need to do instead of focusing on the one thing they can do at a time. Which I always find to be kind of odd because they don't do that when they paint houses. They don't worry about the 15 houses that need to be painted next. They're always just worried about the house they're painting. Well, business projects are very much the same way. Give yourself some grace about things that you can't do. Sit down, cut off the distraction, put down 4-hour blocks. We know from every, every form of research just about that you don't get much done in 20 and 30-minute increments. Like you have to sit down and tackle very difficult projects, especially if it's new. in order to see progress. So those, those larger blocks of time consistently applied are really what lift up, every metric in the painting business, and that includes the quality of life of the owner.

So this next question might be one of my favorites of this list. Do you know even the most elementary of your financial numbers?

Yes. So we're at this PCA forum and I tell— this is like a broken record of events. People come up and they want to have these casual conversations with me, which I can hardly do anything for them. I really need to sit down in a diagnostic to talk to them when they're not distracted. But I'll ask them, well, how much money did you make last year? What's your revenue year today? What's your average gross profits? How many full-time equivalents do you really have if you're running subcontractors? Uh, your close rate, your average transaction size. Um, What's your, your marketing expense per transaction and what's the percentage of it and which one of your lead sources are doing well and which one's doing the worst relative to that metric? And people are usually like deer in headlights. And I always know when I ask somebody how much money they made and they are very confused and often it's, well, I pay myself this and I took this draw and I got this $60,000 truck and I got $30,000 in cash that's under the mattress. It's like if you don't know the chief metrics, and especially that one, like 2 to the number, you're in trouble. Like, that's like a canary in the coal mine, and you need to look at that thing. And if that bird's dead in the cage, you're in trouble, right? You need to do something different. You need to get out of there because it's, it's just, it's a sign that you need some help and that you need to take immediate action.

Yeah, absolutely. That makes a lot of sense. There is a study that was done a few years ago, folks that are trying to lose weight, right? And there were people that weighed themselves every day, and then there's people that weighed themselves every week. And as you might imagine, the folks that weighed themselves every day lost more weight than the folks that just weighed themselves once a week. So if you're constantly measuring and looking at those numbers, they tend to get better because they're top of mind for you.

So it's just— and I would, I would even go one step further. The outputs are all interesting, like your weight's interesting, but that's just a result of the inputs. The thing that you want to measure downstream from that are what type of exercises are you doing, at what duration are you doing it, and what type of caloric intake do you have and what's the makeup of that diet? I'm a big physical fitness guy. I'm pretty good shape for somebody as old as I am. And, um, but I'm, I'm very consistent in what I do. And so I don't worry about the outcome. I know what the outcome is going to be. Like, I know what it's going to be. I only got my only job and your only job as a painting contractor is to track the inputs and put it another way. If you were flying at 30,000 feet with a pilot and it was just you and the pilot and you asked him, how high are we? He said, I don't know. How fast are we going? I don't know. How much fuel we got? I don't know. 'Which direction we head? I don't know, but I'm sure we'll get there.' You would go grab a parachute, and you would— it'd be wise, as long as you weren't over a body of water, to probably get out of that thing. And so many painters fly their company like that without an instrument panel of any sort, and they're always arriving in destinations they don't want, in conditions that they hate. And it's because their instrument panel is broken and they're not looking at any of the key metrics. Yeah.

Another next question is, can you accurately estimate your projects?

So this was a mistake I made when I first started coaching, which is very similar to what businesses do, where, you know, you think that your strengths are the only thing that matter and you don't really even know your weaknesses. When I started my painting business, I instinctively knew I needed to find production rates because I'd never painted. I instinctively knew that because I bought labor wholesale and sold at retail, I had to track the performance of our painters. But that is not commonly known because people take the standard, you know, kind of approach in the painting industry of painter, crew leader, owner. And you think you're doing the same job and it's the same job description. And in fact, it is not. And so if you're not using production rates, and production rates are not unit pricing, it's not $2.50 a square foot. It's not the square footage of the floor. It's not you guessing how long you think it's going to be. It's not you using square footage or linear footage. Or unit pricing and then backing into it by dividing it by your hourly rate. It's none of those things. The reason that every major painting franchise in existence can take someone with zero experience and using production rates can make them more accurate than you are in 2 weeks versus 20 years of guessing is because it, the method works, right? And one concept I throw out to all the painters out there is we all know that a gallon of paint goes about 300 square feet on drywall. Brushing and rolling. If I said it went 600, you would say I was a fool. If you said— if I said it went 100, you'd say I was a fool because it's not true. But for some reason, we think that labor is elastic and it'll go whatever we say it's going to go. And that's just not the truth. An hour of a painter's time when applying paint will go so far, whether it's a square footage, linear footage, or a specific object like a door or window or something of that effect. And so you've got to be really good predicting how, how far the labor goes, and you've got to be able to, um, you know, come up with a scoreboard to show your painters.

Yeah, and to your point about franchises teaching their franchisees the basics of production rate estimating, I did College Works when I was in college. So I was 18 years old, didn't know anything about business or much of anything at all, really. And like you just said, they literally just sat us in a class for a few days to review how to do production rate estimating. And then I did production rate estimating for several months and booked nearly $100,000 to produce for the summer. So it, it is, it is just, if you don't know what it is, you got to look it up. PCA has guides on it. There's software that uses it. It's just one of those things like, you got to get on board with the production rate estimating and stop using— it always makes me laugh when folks are using, um, like the square footage of, of a, of a house, like the— they're measuring the floor, but, you know, and to determine how much to paint the walls is just kind of backwards.

But yeah, it'd be like if a flooring contractor came in and measured the roof. Yeah. Or the driveway. I mean, it just makes no sense. But what it is, it is contractors have tricked painters to do this so that they don't know what they're making and they don't, they don't know what it should cost. And, and maybe you heard somebody in 1997 in a paint store say what they charged and this is how they do it, and so you just adopt it randomly. And, you know, that's, that's crazy. That would be like if you were programming, programming a computer and somebody handed you some code and you just stuck it in your computer and thought, well, this is going to make it run real well without verifying it or really understanding the conceptual underpinning, if it's even even has a chance of being accurate. But again, that is it. You're not dumb if you've done that. It is common, it's ubiquitous in the painting industry. No, don't beat yourself up on it, but do immediately take steps to correct it. Yeah.

So the next question is, are your painters shown the scoreboard, and is there ample inducement to reach job profitability and customer statics to customer satisfaction goals.

So if I ask most of your crew leaders out there, even painters, if you're running a business, what they did for you, most of them would say they paint. Well, if you ask my painters, they would not say that's what they do. You know, we had 4 rules at my, my company. I will do everything, uh, within my power to make sure that projects come in on labor and material budgets. I will give the customer a satisfaction experience, uh, so that I get high scores, uh, and, and, and and remarks at the end of the project through the customer satisfaction surveys. I'll follow the company processes and procedures, which were not onerous at my company. I found painters, you need to give them the core goals and then hire the right people and let them go do the work. Don't micromanage them. Give them an opportunity to lead on their own projects. And finally, I will not lie, cheat, or steal. That covers everything else. You give them an employee handbook, they're not going to read it. Uh, but if you say you can't lie, cheat, or steal, that covers just about everything else. And so when they go out to do a job, they need to know how many labor hours are in the budget, what the material budgets are. And then there needs to be either performance pay or a save labor bonus, uh, so that the more productive they are, the more money they make. And it's not just enough to give them money. A lot of people aren't motivated by money, so they need inducements in company meetings where they're rewarded, where they're recognized, where there are contests, um, and, and those sorts of things. The sense of community painters often overlook. I mean, they overlook the the pricing and, and the rewards and the scoreboard. But further still, as you advance, bringing that confluence of influences around them so that you're making sure that no matter what motivates them, that you're giving them a little bit of everything, because not everybody responds to the same things for motivating them to perform.

So next question, do you have control mechanisms at the crew leader and office level for predictable production?

So there are really two major controls. There are the systems and the paperwork, whether it's digital or otherwise, that you give your crew leaders along with their budget. Uh, in ours it's called the Ultimate Crew Leader Packet. They have a, you know, meet the crew leader sheet. They have a, a labor hour tracking and material tracking sheet. A lot of our guys digitize this, but honestly, you could run it with paper because projects are temporary, right? They come and they go. There are some things that are fine for managing things that are temporary, right? It's going to last 10 days. It's going to last 12 days. We can file this thing away. It's not like living eternally and ongoing. Some things you need software and databases for, some things you could do with or without. It makes not a big difference. And it has You know, a process for a dual column checklist to, it gets rid of like 95, 97% of callbacks, payment collection envelope, customer satisfaction survey. When you do it on paper in person, you get them back about 70 or 80% of the time. If you try to survey them after the fact, you're lucky to get 15%. The feedback's more important than the method by which the feedback comes because you want the feedback. It's also good to use in the sales process, change orders. Problem-solving sheets, equipment checklists. Look, what do they need? Not the tools, not the brushes and the rollers and the sprayers. So they can take this information, they can take the material, leave, go do a project, and come back with a check or a credit card having been swiped and a happy customer. The other control mechanism has to be what we call the project management and scheduling course in our program. And that's what happens every time there is a project from beginning to end. It's the same repetitive stuff over and over and over again. And if you don't have some control mechanism, and if you don't have one that allows you to schedule effectively and to stay on top of things, which honestly you can do with a simple spreadsheet for up to about 20 or 30 painters. Once you get past that, you probably need to step it up. But very primitive, simple controls with talented people can allow you to run a pretty darn big organization. With what I would call semi-formal organizational structure. You know, as you get to enterprise level, some of this stuff has to be, you know, scaled up. But for, I don't know, 98% of painters out there, this would be perfectly sufficient. But you need something. And finally, I would say you can't run production from your van. You have to learn to run production from a desk. And if you could never leave your desk for 6 months, would you still be able to run your painting business? Would your family still be fed? Would the customers still be happy? Would the painters still get paid? And if the answer is no, you've got serious work to do.

Yeah, I like, I like this next question because something I see with the folks that you work with, when I see their numbers, oftentimes their customer acquisition costs are pretty low. And I think this is probably how that they're achieving this. And the, the question is, how many past clients and unconverted leads do you have? And if you painted for me 18 months ago, What have I heard from you since?

Yeah, 18 months, 18 years. You know, I lived in a house for 15 years. I didn't move. And if, if your customers move, you should still keep up with them. But, you know, my background is I worked on U.S. Senate, U.S. House, state and local races. I wrote a book called How to Raise Money for Political Office. I have ran 14 campaigns or legislative efforts. They've all been successful. I publish our state's largest conservative news alternative. And so in those, that industry, the list is the business. It, it's not something that you can do without and still eke out a living. It is the core of the business. And most of your best ideas that come into an industry are not from within the industry. They're from other industries because there tends to be an echo chamber, uh, of slightly better ideas that are exactly the same in the painting industry. And so I brought that in. And what we discovered is, you know, the second transaction size is 60% larger than the first. They close at about 60 to 70% versus 25 to 32%, uh, for net new leads. Uh, you, your sales force, it makes more money seeing fewer people. And then finally, the acquisition cost is about 5 to 10%. Well, the issue is, you know, marketing feeds sales, sales feeds operations, and operations feeds your income. And so if you start out just like in physical fitness with a really bad diet, there's only so much anything else you do can produce. But if you start out with a good diet, um, everything that flows downstream from that's going to be good. And finally, from an equity standpoint, when you go to sell your painting business, when you can tell people, hey, look, I got this list of 1,500 people. It produces $2.5 million worth of revenue and repeat referrals every year. All you've got to do is run these two reactivation campaigns. And do mailed and emailed newsletter marketing, both of which we furnish as turnkey, done-for-you services at The Painters Academy. When somebody goes to buy that and there's this big chunk of revenue that's basically guaranteed, and then maybe 12 or 13% comes from operational marketing, and there's a very small sliver that comes from risky net new marketing, that's what gets that multiplier of direct-to-owner benefit up from 2 times what you made the last year to as high as 4 I've seen. And I've helped about 30 businesses, um, sell their businesses, right? I don't sell them for them, but I build them up, build the teams, build the systems, help them find a broker, go through the, um, process of negotiation and prospective buyers. And then finally, even going all the way through the training process, um, for the new owners. And about half the time I end up coaching the new owners as well. And so having seen that process play out both in my own business and, you know, a couple dozen others, it really makes me understand the power of that list, both for your personal finances, for the stability of your business, and at the end of the day, your equity.

Yeah, that's huge. Next question is, is your sales process persuasive or are you emailing a PDF and petting the dog?

Yes, that is what most people do. Email is the worst way to conceivably deliver an estimate. Presenting on site is the best. Doing it digitally is second best. Printing an estimate is the best. You should do both in tandem. Just in sales and marketing, it's almost always not either or, it's all of the above. And so we have very powerful pre-positioning, presenting, post-positioning, and follow-up tools. What you have to realize is you're selling something that is remarkably expensive and you're selling it in an industry that's very high risk because your lived experience, if you're a homeowner that always uses home services and doesn't do things yourself, is that if 10 contractors come out and if you sign a contract with 10 contractors, about 30% of them are going to deliver what they've said they will, and about 70% of them will disappoint. And so when you show up and just give people verbal promises, of what you're going to do, it doesn't work. The other thing I would recommend, all of our messaging that's in our sales process is based upon surveys of a couple of different surveys of 1,200 and I think 900 and something former painting clients, uh, people that had bought painting services and people asked in that survey, what do you think is important? So often as contractors, we want to tell people what we think is important. Well, it, what you think is important doesn't matter because you don't say yes, you don't sign the check, you don't swipe the credit card. And finally, you just can't tell them you're a good person. You've got to bury them in third-party proof in a variety of ways, in a variety of mediums before, during, and after the sale to convince them that it's not just your verbal promises. And I would close by saying this about your sales process. It's not about building value. It's about reducing risk. If we were in a trusted segment and if we were perhaps selling something that was low priced. Build value by all means. But when you're in a, in an industry that's not trusted, generally speaking, and when you're selling something that is very expensive, you've got to wipe away every conceivable doubt that the experience they'll have with you will be similar to the above average experience, or not the above average, but the bad typical experience that they've had with other contractors in the past.

Yeah, and one of the things that I think is lost on folks sometimes is when you invest in your sales process, that gives you a really good return because it lowers your marketing. You could spend the same amount of marketing dollars and get more revenue because if you have a more persuasive sales process, you should be closing at a higher percentage. So that that investment into your sales process should have a good return on investment for, for years to come. So it's, it's just like a no-brainer.

Yeah, it's like marketing is, is the water and sales is the pipe that it has to flow through to operations. And if that pipe is constricted, uh, if the water pressure on the other side of it is low, um, then, then not a lot is going to be making its way to operations. And so all along the process, from marketing to sales, to operations, and then through the reactivation and retention processes coming back in this feedback loop to marketing again. All those major components, if you're going to make high income with the least amount of effort, each one of those has to be really open so the flow can go through. If any of those are constricted, you'll see it in your income.

Next question. Are you taking advantage of all your operational marketing opportunities?

Yeah, Jim, Jim Rohn used to say, easy to do, easy not to do. And even our clients that are $5, $6, $7 million, $8 million, $10, $20 million that track their metrics ruthlessly find that somewhere around 12 to 15% of their leads every year come from yard signs. Door hangers and asking for reviews. And when I do diagnostics for people, it amazes me, even though it's so rudimentary, they are either not doing it or somehow they've managed to make mistakes in doing those key processes and things like putting the yard sign out and taking it back up. Like, I mean, if you're doing it, if you're doing a 2-person or a 2-day job rather, and you leave a sign in the yard, I mean, most of the time it'll be there for 30 days. The owner won't take it up. But if you take it up, It doesn't make any sense. And so you got to leave those things out there. You need to be doing 40 doors. We have a very specific door hanger that's different than the rest of the door hangers out there. I'm a big direct response person. I've done physical marketing for, I don't know, 20-some-odd years now. So I'm a little bit more persnickety about it than most people because I think the differences matter because I've seen it in the results. But those little simple things and even other operational sales like upselling and offering financing that can be done by crew leaders. That can be done by people if you give them a little incentive and then monitor it in the meetings and then reward the people that perform and coach the people that don't. We call that an operational tailwind. And essentially, if you do it properly, for every job you do, you can get half an estimate and they tend to close about like referrals at 50% if you've got a good sales process. So when you know that you can get a quarter of a project for every project you do, that makes the strain on your net new marketing so much less. Than if you don't. Yeah.

I think the first time I was exposed to you, it was from a direct mail piece. It was like a huge manila envelope with a CD, like a, you know, old CD case. Not old, but like back in the day, this is like 10 years ago. And it had like a bunch of, of your, your your materials in there and everything. I was like, what? Coming— this coming in the mail, I was like, what is this? Who's sending me all this information? And so I threw the CD in, and it was you talking about running a painting business and everything. I was like, oh wow, this is, uh, it's pretty elaborate.

But definitely, yeah. What I would say— I know we're close on time, but right now, if you call people, email them, text them, uh, or do social media, it all comes through this device, the phone. Uh, mail and physical material is the only thing that exists outside of that universe now. And email delivery is in the absolute crapper right now. Text delivery is in the crapper and going in the crapper faster. Uh, voice is in the crapper for delivery. And so when you've only got X number of ways to reach people, you can't be ridiculously prejudicial about what you use. You need to use it all in tandem because study after study shows that if you just mail, if you just email, if you just text, if you just call, you get X for each one of those individual things. But when you use them in tandem in a compressed fashion, you get 1.2, 1.5, 2X. And so that is something I learned in campaigning is that there needs to be a crescendo leading up to the offer of the event, because that's really what maximizes the turnout and it's what maximizes the leads. Relative to marketing and painting.

Next question. Have you forged and maintained B2B referral relationships in a programmatic fashion?

So it was huge for me. I started a thing called the Chattanooga Trades Association, and it was remarkably effective. I've still got friends that I see all the time, dear friends from that, even though I don't run a business anymore. So much of B2B is just making a friend. And if you're organized and if you get out in front of folks and you make friends with roofers, plumbers, electricians, HVAC people, landscapers, etc., you should have the Noah's Ark strategy, in my opinion. That's— you should have 2 good relationships with every home service category in your area, and they should consistently hear from you, both with your newsletter, preferably in a meeting if you can do it, and then finally through personal communication. Some— face-to-face, uh, some through text, email, or a call. And you build those relationships over time and they can be remarkably productive. Instead of door knocking a house, how about door knock somebody that can send you $70,000, $80,000, $200,000 a year? If you're going to spend your time marketing, uh, why market to the end user when you can market to someone who's in the homes of thousands of end users a year? It's a very common strategy. It's how ServPro built their entire business. It's the basis of pharmaceutical sales. It's the basis of, uh, of manufacturing your sales reps, and it's a great training ground for the next thing that I ask in there. And it's just tremendous. And it is far more stable than online marketing. You should be doing that stuff. But when it comes to marketing, you should always invest in the highest ROI activities that produce the largest, best jobs first and work your way backwards. But what most painters do is they spend all their money in the lowest ROI stuff and they never get to the big ticket items. And then they wonder why their company is foundering after 7, 3, 17 years, and it's because we've been majoring on the minors. You can't solve every problem in your painting business by swapping a credit card. Sometimes it takes shoe leather and effort, and you need to lean into that or have your people do it.

Next question is, are you surrounded by commercial repaints, but it's not a major part of your portfolio?

So I put this last because so many of the fundamentals really need to be in place before you approach this market. People will come to me all the time and say, Brandon, I, you know, I don't like my business. I really just need to get into commercial. And I start looking at the fundamentals and I'm like, boy, this would just make you go broke faster. No, this is not what you need to do. Uh, but once you have these fundamentals in place, or most of them, um, commercial repaints are remarkably lucrative. They're larger, they repeat, there's less competition. Once you Get an account. It's very difficult to have it stolen from you because painters are way too lazy to go after commercial. And the other thing is how it insulates you. The residential market has ups and downs. The commercial market has ups and downs, but rarely do they have ups and downs completely the same together. And just as you should diversify your marketing, you should defer— diversify your markets. Who are you approaching? And there are always verticals in commercial that will have money when residential doesn't. So when you have a slowdown over here, you have, you know, this going on over there. And finally, commercial is an excellent prospect for keeping your pipeline full during the winter with interiors for a number of reasons. Number one is they're spending the budget from the year prior. The next year's budget gets released around January most of the time. So right in the dead of winter, they're spending their final money from last year and their allocated money for next year. And so many sectors in the commercial industry end up having shutdown work or their people aren't there or their schools and the dormitories are empty, whatever it happens to be. And so there's a lot of interior work that goes on in commercial and it's great for throughout the year. But boy, it can be a real game changer for preserving cash flow and keeping your guys working during a time when, uh, you know, organic demand is at its nadir, uh, for painting contractors.

Makes a lot of sense.

Well, yeah, it's amazing. It really does. It does. I almost thought I came up with it myself.

Well, you've been super generous with your time. I know we get to hop off here in a couple minutes. Or do you have any last thoughts or asks of the audience that, that you could do here?

I'll give you two. Number one is if you've listened to these questions and you don't have a lot of yeses, or if you're a little murky on some of this stuff, the final question you got to ask is, okay, if the answer is no to a lot of this, now that I know what to do, do I know how to do it? And if I try to do it, will I do it right to begin with? And, you know, how many years do I have on this planet anyway? I would encourage you to find someone or some program to go with. It's self-serving to say that, but I have done— of the 2,700 diagnostics I've done, I've probably done about 400 for a second time, meaning I pull up their old diagnostic, we keep it in a file box electronically, and I'll look at it, and I always go through the motions of doing the diagnostic the second time, and 9 times out of 10, nothing has changed. 3 months, 3 years, 10 years have gone by, and most people just can't manufacture things from scratch. Further, there's so much friction, uh, even when I provide people with the tools and the methods and the coaching for them to implement. When you try to create that stuff, boy, it's just— it's like putting a, a weight around your waist while you're trying to, to, to walk uphill. Like, it's just far more difficult, uh, to have you know, all that uncertainty around you. So I would look for that stuff. But I will say this, like, everybody thinks that this whole process is very complicated as a painter. And it's because when you've painted one house, you have a perspective. If you've painted 550 houses, hopefully you have a different perspective, a different method, and a different approach. And I've done this so often, it's crystal clear to me what needs to be done. Einstein said, if you can't explain something simply, you don't understand it. Well, this is something I understand like the back of my wrinkly, freckled, hairy hand. I understand it. I know how to do it. And so if I can ever help you, just email me, brandon@paintersacademy.com. You can go to our website for those of you that are, you know, you're nervous of some redneck talking head. You go to paintersacademy.com, get some information, or if you want to binge watch 12 years of videos of me teaching this kind of stuff and picking up some of it on your own, I do occasionally have somebody implement stuff at a distance, and it's the biggest compliment anybody can pay for me is to send me an email and say, hey, I did this stuff and my business is better. Tickles me pink. And so, uh, you can go to the YouTube channel for Painters Academy. I'm always happy to talk to somebody. You know, if you decide to join, that's great. If you don't, you know, it's not going to take a T-bone steak off of the Lewis's plate. And so if I can help you, I'd love to. Uh, and I just like having conversations with painters because it's a, it's a fun gig when you get to see them succeed.

Thank you so much, Brandon. Really appreciate you coming on and sharing some of your wisdom. And I definitely encourage folks to check out Painters Academy. And I know you have the Paint Profit Summit coming up in January, which is—

Yes, it's our 10th anniversary. Um, it's in Chattanooga, Tennessee, the last weekend in January. Just type in Painting Profit Summit. You'll see all the details online. Um, not only have we been doing it for 10 years, but because we did it in 2020 and no one else did, we are now officially the longest running painting industry event in America. And so if you want to come to that puppy, uh, feel free. Sorry, PCA, you took a year off. You 100 and some odd years in the crapper. And so, but we're, we're now the longest continually running painting event in America. And there's a reason our guys are, are very open, uh, they're very nice. It's a, it's a very respectful, helpful environment, and it's all contractor driven. You only, almost only exclusively hear from contractors from our event because my thought is people hear from me all year long. They need to hear from each other when they're together and they have a great time doing it.

Yeah, I can't wait to do it again this year. So I'm looking forward to it. Looking forward to it.

And please, please tell your beautiful wife and give your kids a hug for me. It's always great to see the Honan family roll into Chattanooga.

Yes, sir. I appreciate it. I thank you for your time, Brandon, and we'll let you go. And for the audience, we will see you next week.

Take care, buddy.