Boosting Painting Business Profits with Strategic Vision and Goals

Welcome to the Profitable Painting Podcast. My name is Daniel Honan. I'm a CPA who helps painting business owners make more money and save big in tax. And joining me today is Richard Dunton, and we're discussing how to set SMART goals for 2025.

Yeah, I can't believe we're in 2025 already. It feels like time just flies by, and here we are, it's already the end of January. So if we haven't set our goals for 2025 yet, now is a great time to think about what we want to accomplish in the new year.

Agreed. Yeah, it's a great time to, to, to see, to think through things, especially since a lot of painting business owners at this point, kind of slow season for most folks. So it's a great time to take a look at what do you actually want to achieve in the new year. And so today we're going to dive into some ways to think about this and how to set some goals.

Yeah, you know, when I try to set goals for myself, I was actually really surprised to learn that one of the hardest things is understanding like where I want to be in the next, you know, 10 or 15 years. Uh, we can accomplish incredible things in the next 12 months And we can accomplish like life-changing, you know, monumental things in the next 10 years if we are putting those steps in place. So when I think about what I want to do in the next 12 months, I actually start in the future and I think of, okay, what are my dreams for the future? And I try to give myself permission to really be audacious and really think big, right? I try not to limit myself. Which is hard, right? Because we're very practical people. We deal in the here and now and the reality of the situation, and we try not to be overly optimistic. But when it comes to dreaming, we want to do the opposite. We want to think about, you know, if I could accomplish anything, what would my life look like 10 years from now? Where would I want to live? Like, location-wise, what kind of house would that be? How many bedrooms would it have? How many acres of land would surround it? Um, how much money would be in my bank account in my dream? What number would give me that feeling of security and allow me to do the things that I want to do? Uh, you know, when it comes to work, how many hours per week am I working? Uh, I, you know, for me personally, I probably want to work at least some hours so that I feel that satisfaction of accomplishing things, but still have plenty of time to pursue hobbies and golf and, you know, play with the kids. And it can even be, you know, as granular as like, what kind of car do you want to drive? What kind of vacations do you want to go on with your family? I know it sounds a little hokey and it feels almost like we're not spending our time wisely, but I think it's worth to spend 5 or 10 minutes really getting that picture in your head so that, you know, you know where you want to go. You're setting the destination.

Yeah, I think it's super important. I've, I've read a lot of biographies, and one of the common themes is these folks like Jeff Bezos, even Napoleon, um, Sam Walton, they have a very clear picture of what they want to accomplish. Yeah, I think there's a saying, it's belief before action. You actually have to believe in these things you want to accomplish and really be able to visualize it. And it reminds me of Jeff Bezos, you know, back in 1994 or 1995 is when he had the idea for starting Amazon. He wanted to start an everything store on, on the internet. Obviously, when it first started It was not the everything store. It was a bookstore online, basically, but he started with books and over many decades, he's turned it into the every— basically everything store. So now that's why I have to spend my weekend— weekends burning or getting rid of Amazon boxes because we now purchase everything from Amazon. But he started with that idea. From pretty much the beginning, and it took him, took him a while, but he eventually got there. Um, one of the cool things, he actually originally called Amazon Relentless. Like, that was the one of the original names he was wanting to call the business. So if you go to relentless.com, it actually takes you to Amazon, which I think is kind of cool.

I did not know that. That is kind of cool. I bet he, he's sitting on a pretty valuable URL. Like, I think someone would probably spend—

Among other things.

Yeah, among other things.

Yeah, among other things.

Absolutely. So I know it sounds a little weird. We might not be used to doing something like this, but having that end result in mind is super important for me, because then I'm going to start working backwards, right? So if I want to be in a certain place in 10 years, what does my income need to look like in 5 years to get halfway there? And then once I know my 5-year target, I'm going to look at my 3-year target that's going to support that. And then I'm going to look at my next 12 months. What do I need to do in the next year so that I am one-tenth of the way to where I want to go? And that's what I'm going to use to set my goals for 2025. So when we talk about setting goals, I think we have to talk about the difference between like a goal and a wish, right? If I say I want to make more money, that is not a goal. That is a wish. It is a very nice wish. But wishes do not come true unless you're in a Disney movie. And so unless you're a Disney princess, I think we need to focus on goals that are Specific, measurable, attainable, related, and timely. And you've probably heard the acronym, you know, SMART goals. But that's what separates, you know, a goal that we're actually going to accomplish with a desire or a wish.

That's pretty harsh. You're calling people Disney princesses just because they want to— hey, I want to make more money. So you're kind of calling me a Disney princess, it sounds like. But All right. Oh, tough love there.

I mean, yeah, no, that's cool. No, I didn't. I didn't say you are a Disney princess if you have a wish. I said only Disney princesses have their wishes fulfilled. Okay.

Gotcha.

Daniel, if you achieve all your dreams without putting forth effort and setting SMART goals, then I think we can conclude that you are Cinderella.

Right. Yeah, no, um, this, this makes complete sense. Right now, doing a lot of meetings with clients that we're working with, and the topic of what are your goals for 2025, and, uh, you know, oftentimes they'll throw out like, oh, I want to hit $500,000 in revenue, or whatever their revenue target is, but A lot of folks haven't quite put in, okay, let's actually break that down. What does that mean in terms of marketing spend, hiring? You know, do we have enough production, enough of a production team to produce that amount? So kind of breaking down that goal more specifically can really help you with planning and actually achieving that goal.

Yeah, so that, that's the S, right? That's specific. The M stands for measurable. And Daniel, I know you've said repeatedly that what you can measure, you can improve. And so if we don't have some metric or some way of measuring our progress, it will be very, very difficult to know if we're going in the right direction. So our goal needs to be measurable. You know, if our goal is to increase revenue, that's pretty straightforward, right? We can see Has the number improved over, you know, last year? So having that, you know, specific metric is important. And then the next one is A for attainable. We want to set goals that are realistic. I also think that they should be a little bit ambitious. Don't make it too easy, but don't make it impossible to obtain either. Otherwise, we'll just get frustrated. When it, you know, inevitably does not happen. But, you know, it's okay to push yourself a little bit. Increasing revenue by 30% over last year is attainable. Increasing by 3,000%, that might not be realistic. But who knows, maybe, maybe you're that good. The R in SMART stands for related. So we want to understand how this goal relates to us achieving that dream. You know, increasing revenue for the year is directly related to us making more money, which is directly related to us having that house, going on those vacations, you know, reducing our stress. And then T is for timely. So our goals need to have a timeframe. In this case, it's the next 12 months. An open-ended goal with no due date kind of starts to become a wish. So have a, have a set time that you want to achieve this by. I know we mentioned as an example that increasing top-line revenue by 30%, that could be a good goal. Another goal we might set, Maybe I want to increase my average customer review. So right now, maybe I'm looking at like 4.5 out of 5 stars on Google. Maybe I want to get it up to 4.8 by the end of the year. Maybe our goal is to reduce our working hours so that we're only working 40 hours a week, which I know for some of our listeners would feel like a vacation compared to the 60, 70 plus that they're working now. But those are all goals that, that would fit within that SMART framework. Once we determine what our goal is, we need to come up with 3 to 5 strategies that will support that goal. So we're breaking it down to another granular level. For example, let's go with the goal of I want to increase top-line revenue by 30%. All right, what are 3 strategies that we can implement that are going to get us to that goal? I wrote down a couple examples, and this is not all-inclusive, but we might look at, say, uh, strategy 1: I need to increase the amount of leads that I get by 50%, which totally makes sense. The more leads you get, The more work you get booked, the more revenue you earn. So increasing leads would, would help us obtain that goal. Another strategy might be, I want to increase my closing rate by 10% or 15%. This is a different strategy than the first one because now we are taking the leads that we get and we're converting a higher percentage of those into work booked, and that's going to increase our revenue. A third strategy might be, I want to increase my average price by 10 or 15%. Again, another pathway. We are taking the work that we do get booked and we're increasing its value, and that one's directly affecting revenue. So the examples are increase the leads, increase the close rate, increase the average price. We've got these strategies. We're not done yet. Each strategy gets broken down into action items that we need to execute. So for example, strategy 1, increase the amount of leads. What do we need to do to increase our our leads by 50%? Well, we're going to need to increase our advertising. That seems pretty obvious. But how are we going to do that in a way that we are, you know, getting the most bang for our buck? This might be a time where you sit down with your financial reports or your financial planner and you really dig into, you know, what is my customer acquisition cost? What does it cost me in advertising to get a customer? Am I spending enough on acquiring customers? We talk a lot about, you know, your, your sales and marketing should be about 15% of revenue. Are we spending enough to get those leads? And if we are, where should I be directing my advertising budget? Because not all marketing channels are equal. You know, to get the, you know, the most bang for our buck, I would be sitting down and looking at our different marketing channels. Let's say we had 3 different marketing channels: Facebook ads, AngieList leads, and direct mailings. What is our average return on investment? So if we spend $20 on Facebook ads, are we getting $100 of new work. That would be a 1 to 5 ratio there. That's pretty good. How about Angie's List? Angie's List is getting more expensive every year. And sometimes, you know, I've heard the leads that, that come from there aren't as high quality as maybe they used to be in the past. Are we still getting a good return? For every $20 that we spend on Angie's List, maybe we're only getting $60 in work booked. Direct mail is an interesting one because this seems to be cyclical, right? There was a time when, when direct mail advertising was very, very popular, very effective. Then we enter in the digital age, email comes, people start to kind of ignore the stuff that shows up in their mailbox. And now we're seeing it go the opposite way again, where people are sick and tired of email and websites and, you know, getting a A printed postcard with, you know, a glossy finish, that, that means more than it used to. So, you know, what does it mean today? What are we, you know, what kind of return are we getting on it in 2025? Once we figure out the marketing channel that's giving us the best return, then we know where to focus our money.

Yeah. And I think a lot of folks recently, last month or so that I've been talking to, they they have a lot of inbound marketing, meaning they, they get leads from repeat work, like folks that they've worked with in the past that want to do work with them again, or they get referrals, people telling them about their services. And so they're not spending a lot on marketing right now, so, but they want to grow quickly or like faster than they have been in the past. And so they're looking at more outbound strategies like Facebook ads or direct mail or door-to-door. And sometimes you don't have the customer acquisition cost to look at historically on your, on your financials because you haven't done it before. So you might actually have to do some research if you're adding a marketing channel, like if let's say you're adding Facebook ads. To your, your marketing because you've never done it before, you've only done repeat work and referral work, but you want to grow faster, so you're going to add in Facebook ads to get, to get that growth going. That might be something you'll have to do some research. And, um, you know, right now I think Facebook ad leads are costing about $60 to $80 per lead. And then, you know, making sure you understand everything that goes into nurturing Facebook leads, like getting them set on the calendar as quickly as possible. And usually Facebook leads are going to be a little bit harder to close. So you might— your close rate might be affected negatively. And this is generally true for outbound work. You know, when you're doing outbound marketing, it's usually harder to close people because you found them instead of them coming out and finding you. So it's a little bit more difficult, but it's necessary for growth. So Sometimes you might not know your, your customer acquisition costs because you, you haven't done this type of marketing before. So getting smart on those different channels, um, will really help you determine, you know, this, this, how to implement this strategy and how much you actually have to put into increasing your leads.

Yeah, I think that's good advice. Uh, you know, the market changes. And it, and sometimes it changes slowly and sometimes it changes, you know, overnight. And when that happens, we need to change our marketing to reach, you know, the people we want it to reach. So I, I think it is very important to keep a close eye on what's working, uh, and what's not. And then we can kind of emphasize what's working, really direct our efforts towards what's gonna do the most good. Because what's worked in the past may not work now. And so I just think of like, you know, if our goal is to increase our leads by 50% and we don't pay attention to what marketing channels are best and we just dump a bunch of advertising dollars into something that might not be working, how tragic would that be? Because not only are we not going to hit our revenue goal, our profit's going to be down because we wasted a bunch of money on advertising. And we might get discouraged and say, you know, hey, that was a stupid goal. That's not obtainable. Well, the goal itself is probably a good goal, but maybe the execution wasn't where it needed to be. So keeping an eye on those things, I think, is really important. So that's one strategy, right? Increasing the leads. Another strategy would be to increase the close rate. So what action items do we need to employ for this? Well, if we're going to increase our close rate, then we really need to examine our current sales process and see, is there any way that we can improve it? You know, maybe we've gotten a little bit complacent and we don't prepare as well. I know it's easy to kind of fall into that rut. But even if we're able to just improve by 10 or 15%, that increase in our close rate is going to help us achieve our, our revenue goal. When we are going through our sales process, are we clearly showing our value to our potential customer? Are we making the process smooth and easy and, and downright enjoyable for them? Are we making sure that we are presenting the proposal on site? So that might mean that we have to have a printer in our van. It might mean that we need to invest in some technologies that we can prepare those proposals before we leave the property. If we are taking the information back to our office, preparing a proposal, and then emailing it to them 12 to 24 hours later, that's 12 hours they have to call somebody else. And we've lost that initial excitement. So being able to present the proposal, talk about the price, overcome any objections in person is going to be big. And speaking of overcoming objections, have we kind of role-played that? You know, what are our most common objections? Do we have a response and like an analogy that is going to address their concern that we can easily rattle off with confidence so that we're not leaving them with any reason to say no to us. Those are all things that could improve our sales process. The third strategy is to increase our price. And it was funny when Daniel and I were preparing for this podcast, we were kind of like, Oh, increase price. That's easy, right? We just change the number on the proposal. What, how difficult is that? And then we started brainstorming it a little bit with action items, and we realized that there's a lot more to it than just charging more, right? That's kind of a glib answer. Just charge more. We can charge more, but we have to increase the value that the customer is getting. You know, people don't say no on price. They say no when they don't see enough value. For the money being paid. So how do we increase the value so that we can charge more? Well, we could improve our offer. That means maybe a better presentation. So maybe we have been a little bit lax on our dress code, but could, you know, branded whites really help give a more professional presentation and a better experience for the customer? We might improve our offer with add-on services that don't cost us a lot. So like color consultation is a big one. It may seem like a simple thing to us because, you know, we're seeing colors every single day. But for someone who doesn't know decorating and doesn't know what color they want on their walls for the next, you know, 8 to 12 years, having someone give them suggestions and, and guide them is incredibly valuable. And that doesn't cost us hardly anything to do that. Another way that we can increase our prices is simply by seeking out jobs that pay us better. So maybe we turn down partial jobs or we push to get more rooms in the house so that, you know, we can have a higher average job cost.

Maybe there's Oh, there's— oh, sorry, interrupt. There's a couple ways.

Go for it.

Yeah, there's a couple ways I've seen folks do this is they'll either on their intake form on their website they'll say, you know, we have a job minimum of $1,000, or say we only do full projects, full exteriors or full interiors, so, or full decks or whatever you're, you're doing. So you can you know, um, get rid of. Or on your qualifying call, if you do a qualification call, you ask that question like, is this a full exterior or full interior? And if it's not, then you can refer it away or say you can't help them, whatever. And, and if you're getting rid of those smaller jobs, that will increase your overall average job size.

Yeah. And if someone really likes your company because your presentation is really good they might be willing to have an extra room painted that they weren't planning on, uh, because that's how important it is to them to have your company do the work. Uh, and we also talked about maybe focusing our advertising on higher margin work, like residential repaints, um, exterior work in when the weather is good, that pays better. And maybe we market to more affluent neighborhoods. Where they have more disposable income, larger homes with more square footage to paint. Uh, not that we have to exclude anybody, but just kind of knowing where our ideal client avatar lives and, and going to them, um, will help increase what we can charge.

Yeah, absolutely. That, that's huge. Like finding in your city What are the main neighborhoods you want to work in? Because you know, that's where the folks that are, that have the money that can afford to do, you know, two coats exterior, full exterior, or full interior job, find those neighborhoods and then start lighting them up with Every Door Mailers or door-to-door or whatever you can to get in front of them to get those more ideal clients. And if they're your ideal clients, that's probably going to increase your average job size.

Yeah. And then Daniel, you had a really good suggestion, and this kind of goes to like marketing psychology of the good, better, and best.

Yeah, this is actually— this is, uh, came from Ron from Paint Tigers, and I know a lot of folks are also doing it as well. This, this is, uh, I know Ron from Paint Tigers, he did a really good job of implementing this. He increased his his average job size, which he said publicly in presentation, so I'm not giving away any kind of, uh, things that he wouldn't want me to say, but his average job size increased to like $15,000 and the average is around $5,000. So really, really impressive, um, doing this good, better, best proposal strategy.

Yeah. So how does that work with the, the good, better, best?

Basically, you have 3 options for the customer because oftentimes when you go and bid a job, the customer will— or the prospect, I should say, before they become a customer— they'll say, well, I'm gonna get a couple other estimates, we're gonna get at least 3 options, you know. So the idea here is you're providing 3 options right away for them, and they just gotta— they, they know that they want to work with you, they just got to choose what price point they want to pay. And so you have good, better, and best. Good would be something like one coat using Super Paint. So it's a good product and we're gonna do a great job. So it's, it's good. Then maybe you have another option that's, hey, we'll do better. We'll do two coats using Super Paint and still great, great product, and you get two coats. And then maybe best would be something like two coats, but you're gonna use top of the line Duration or whatever. And, you know, minimal extra service you're doing, but you're charging, you know, a higher price for that, that service. Because, you know, with, uh, painting, labor is going to be your biggest thing. So if you can change just the product that you're using and charging more money, that's going to improve your margins and also your average shop size.

I love it. Yeah, I know there's been some psychology done too, where if people are presented with 3 options, they are more likely to choose the middle option or even the high-end option over the lowest one. And I think it kind of goes to our psychology of, you know, I don't want to cheap out. I don't want to miss out that, that FOMO. I can't, I can't be the one who picks the bottom line. So that might help actually, you know, increase the amount the client was going to spend in the beginning by giving them those other options. And I like this too, because you don't have to put a hard sell on anybody. You're just presenting them with the options and then they are self-selecting, you know, something that fits what their needs are and what they want to get out of it. You're not— because you never want to like go in and assume, oh, this client, this customer, they don't want to pay for this. They don't have a lot of money. This isn't important to them. Don't, don't do that to them. They have the right to choose how much they value what you have to offer. And they might surprise you in what they choose. So I really enjoyed this podcast. I think these are some really cool actionable things that we can put into place for setting goals for 2025. And your goal may be a little bit different, but whatever it is, you know, try and make sure that it is a SMART goal so that it is related to that dream that you want to accomplish. Come up with 1 to 3 strategies that are actually 3 to 5 strategies that are going to help you achieve that goal and then break those strategies down into action items that you are going to execute. And it's all going to work itself up to the top and get you that much closer to that dream home, that dream vacation. And that's really why we're doing this, right? So that we can do the things that we want to do and have the life that we want to live. So stay focused. Continue to direct your efforts towards hitting your target. We might need to make some adjustments, right? Because was it Muhammad Ali who said everybody has a plan until they get punched in the face? Sometimes stuff comes around and punches us in the face and we need to pivot, but we still have our roadmap to success. So I appreciate everybody listening to this episode. I hope you got something out of it. If you would like to share what some of your goals are or some of your strategies for achieving them, where can they do that, Daniel? Do we have a Facebook group?

We do. Thanks for asking, Richard. So if you go to—

wonderful segue.

Yeah, if you go to Facebook, type in Grow Your Painting Business, definitely join that group and ask questions, provide recommendations for future episodes. Love to hear from you.

Absolutely. And I think one of my goals for 2025 needs to be better segues that come off more naturally.

I think, I think you're doing great.

Oh, thank you.

All right, with that, we will see you next week.