From Brushes to Books: Building a Profitable Painting Business

Welcome to the Profitable Painter Podcast. The mission of this podcast is simple: to help you navigate the financial and tax aspects of starting, running, and scaling a professional painting business. From the brushes and ladders to the spreadsheets and balance sheets, we've got you covered. But before we dive in, a quick word of caution. While we strive to provide accurate and up-to-date financial and tax information, nothing you hear on this podcast should be considered as financial advice specifically for you or your business. We're here to share general knowledge and experiences, not to replace the tailored advice you get from a professional financial advisor or tax consultant. We strongly recommend you seeking individualized advice before making any significant financial decision.

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 and 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. Super excited today to speak with Russell Peach over at Peach Painting. Welcome to the podcast, Russell. How's it going?

Yeah, Daniel, everything's going great, man. Appreciate you having me on the pod.

I'm excited to dive into things. You've built an incredible business over there in Tampa Bay, Florida, just, just down the road from me. I'm in Orlando, but I'm excited to get into things. Just to give people kind of context, like, how did you get started in the painting industry and what's been your journey along the way with like some major milestones?

Yeah, for sure. Definitely. I'll tell you the whole startup. So this year in a couple months, it'll be September. Well, September this year, I'll be hitting 10 years in business. My first 7 years, I was, uh, well, my first 2 years I was doing full home remodels. And, you know, swinging the hammer, doing subfloors, doing some roofing stuff, custom cabinetry. And company was called Peach Maintenance at the time. Then just wasn't sustainable. It was really hard hiring, training people. So we ended up— I learned how to paint through one contractor. I was just getting— I was being a subcontractor for everybody, learned how to paint, and I'm like, man, I love this. It's just one thing. I can actually hire people that I don't have to pay $30, $40 an hour. To know how to fully rehab a house. So it seemed like a more sustainable, scalable way, just offering one service. So we ended up refocusing, just niching down just on painting. We were doing commercial apartments, so Interior Turns ended up taking that up to about 200 apartments a month, which was pretty, pretty good for the time. But it was less than half a million, about $400,000 or $500,000 a year, and kind of kept it flatlined there. Always wanted to break in the residential painting industry. Didn't know podcasts like this or conferences like PCA Expos all existed, so didn't know how to break into it. But I ended up learning about it. That was about, I'd say, about 3 years ago, and dove deep into residential painting. Ended up burning the boats, jumped, uh, completely off-boarded all my commercial accounts and jumped right into residential painting. So now we're just doing interior painting exterior painting and cabinet painting as of now.

Awesome. So basically you kind of started out trying to do a lot of different things, found out that that's hard. So let me focus on one thing. And so you're focusing on painting, doing the commercial side, doing apartment repaints, and then a few years ago found out about what you can make in the residential repaint side. So got into that, focused on that. Doing interior and exterior and cabinets and got rid of all the commercial and just focused on residential. And from there, I mean, you've blown up in terms of revenue. You mentioned in the third year you were doing— the third year of business, which was about 7 years ago, you were doing about $400,000 to $500,000 in revenue. What is it looking like now since you've shifted focus into residential?

Yeah, well, good question. It was actually up to about year 6, year 7 that I was only doing about $400,000 to $500,000. So year 7 to 10, You know, the first year after that, first year we jumped into residential, we doubled up. I think we hit like right about $1 million the first year residential painting. Next year we only had like a— we grew only to like $1.5 million. Next year, which was last year, we only did about $2.5 million. Now this year we've already surpassed our full last year's revenue. So we're hoping to hit $7 million this year just on the painting side. I also have a flooring company that trying to hit $2 million on. We're a little bit behind our goals now, but it's still quarter 3. We still have 2 more quarters to catch up, but I'll be happy with $6 million out of the painting company this year.

That's awesome. So huge amount of growth over the last 3 years. I mean, you're $1 million to $1.5 to $2.5 to $6 or maybe even $7 million this year projected. So that's amazing. That sounds like a lot of work, but I love how you, you seem to be learning quickly, like you did a couple of years not focusing on any particular service, narrowed down onto painting that was working okay, working better. But then you like found commercial— I'm sorry, found residential niche and then started niching just on residential. And then that's really where things took off, I guess. What attracted you to residential? What was it that drew you to getting away from commercial and getting into residential?

Yeah, so I love this question because I get asked this a lot. And just to backtrack, I know you said we found out that what we can make off of residential, it was a little bit about that, but I would say our margins were 65 to 70% gross profit on commercial. So we were making good margins. It's just the the top line revenue wasn't what we wanted it to be. So the reason that we really dove deep into residential is our commercial was not able— we weren't able to build out a calendar for 4 weeks, 6 weeks. It was— it took a special person to be able, or special painter to be able to profitably paint apartments. You have to blow and go. It's hard work. You got to be in and out. And the labor force has just shrunk entirely to find those special people. So we jumped into residential because we can build out not only our calendar 4, 6, 8 weeks out, but also now our labor force went from here to just completely 10x'd, being able to find people that are able to paint houses. So between that, then of course now we're able to book more jobs, take on more crews. All equals more profitability as well. Now the gross profit margins sometimes are less than what we were doing, but instead of doing $500 jobs, we're doing $5,000 jobs. So it kind of all balances out in a, in a general sense. So that, that's all really what attracted me and just being able to scale the team a lot further.

Okay. So it sounds like your constraint when you were doing commercial, the bottleneck in your business, the constraint in your business was your labor. You couldn't find the right people to do the work well enough, profitably enough to actually grow much past $500,000. Is that right?

Yeah, that's right. And then secondary to that is we didn't have guaranteed work all the time because some months we would do 200 apartments and then the next month we'll have 120 apartments. Now that's 80 jobs. That's a huge delta. Sometimes we would have, sometimes even 200, 250 apartments in a month. And we have 10, 15 painting crews that really want to work only for us. And at the time, of course, you just want to have people working directly for you, only for you, and not just getting work from everywhere because we scheduled them out with such a short timeline. But so we'll have 10 or 15 crews one month, and the next month we'll only have 120 apartments to paint. Now we have 10 or 15 people on standby, but we can only use 6 people. So now we keep that 6 people, then the rest of the people that were relying on us for work, they have to go find work somewhere else. Now the following month comes in and you're back to 200+ apartments, but they already found a job with someone else. So now I'm back to the drawing board. So it was just such a very— such a variable that the amount of work that we had. But wasn't at scale. So it was a mixture between the two though.

Gotcha. So it was like almost like you would swing back and forth between not having enough people, but then not having enough work or, you know, you didn't have enough job flow, enough leads coming in for the commercial side. So the acquisition was for leads was that it just wasn't as dependable. It sounds like—

yeah, well, because it was all— it's all relationship. You can't really run PPC, you can't run Facebook ads for stuff like this. And then when you get in with the community, you want to be the only contractor for painting that they use. You don't want them to use 3 different painters because sooner or later they're going to start liking this other painter more. He'll have more availability. Next thing you know, that account is gone. So when you get a full account, you want every single paint job that they, that they have to offer. So it's like I could go try to get more apartment communities this month and it might help me this month, but the next month I won't have enough crew members and vice versa. So it's always a— it was really tough unless you're— unless like right now I could probably go back to it and I could probably use some of my residential painting crews in the commercial, but it's just, it's too much of a headache and too much management now.

So.

Gotcha.

Okay. And so then you're like, all right, well, Residential is cool because I can, I can use, you know, paid ads or different marketing to more reliably get consistent work, and then I can have a more stable workforce. And that also might be a little bit less demanding. Is that right? Because you were mentioning just the, the, the, to hit the margins you need in commercial, or at least the commercial you were doing, you had to do it so fast that it was hard to find skilled enough workers to to execute that level of work. And so residential, not as focused on speed. So was the thinking like, one, I can get more consistent lead flow just based off of paid ads, and then also I can maybe find labor a little bit easier, it's more stable. Was that the thinking there?

Oh, absolutely. Yeah, that and then just making sure that one month that we're not just, the, the cash flow. You know, you're, you're a CPA, and I'm sure it's frustrating to see a company up here riding high on, on their deposits, and the next month they're down bottom, and then just up and down that graph. So we wanted to just at least be straight-lined and then going up on the graph. Yeah, between everything you said, plus, plus, plus that.

Absolutely. And the, the cash flow, because I'm assuming your, your payment schedules for commercial weren't the best I don't know, man, 60 days, 90 days.

Yeah, it was net whenever they felt like it, basically, is what we call it.

That's rough. Yeah, that's, that's tough. A lot of folks, you know, that are in residential now, they're thinking, man, I wish I had some commercial. But then they get into it and they're like, oh, uh, this sucks, you know, I don't have any money.

Yeah, I think that some people think that it's all sunshine and rainbows. They see the six-figure contracts And then they don't realize you bite more than you can chew. It can literally put you out of business. There's other ways to leverage it. A lot of people don't know about lines of credits or getting an AR, getting a loan for your AR. But there's other ways to do it. But back then I had no idea about lines of credits or nothing like that. So I was straight bootstrapping everything and I'm 20 years old, 18 years old, and I'm just paying my guys and I don't even have any food to— I don't have any money to even pay for food for myself. I'm just paying my guys. and I got like 6 figures out accounts receivables. I know I'll get it one day, but I don't have it now. So it was really tough and just really volatile.

Yes. Yeah, definitely something we see a lot. It's, it's, you really have to have really good financials where you understand how much money you've made because the cash flow is so sporadic. You have to have really good financials, accrual-based accounting basically, and then have that line of credit or factoring your invoices. Some sort of plan, backup plan if you run out of cash. But it seems like the most successful painting businesses that do commercial, they're actually doing residential 60%, 50%, 60% of the time to help them with the cash flow. Because residential side, you take a 50% deposit and you get a lot of cash up front, and that can help like kind of save you on the commercial side because you have your payment schedules are so bad. But the residential cash flow is so good. So some folks like to balance the two where they're doing 50% residential, 50% commercial or something like that.

But yeah, there's ways now to that I know now, but it really depends. There's a few things that I want to say on that because it depends on your scarcity mode. If you're scarcity and you're scared to negotiate terms with whatever contractor or whatever property management group you're working for, You're probably just going to say, hey, Net 30, okay, no problem. I need the work and I want to keep my guys busy. I'll take it. And then deep down in the back of your head, you might be like, uh-oh, I don't know if I have enough money, but I'll figure it out. You know, but now we're going to be starting to dip heavily into commercial by the end of this year, within this, this quarter, quarter 4, and definitely in 2026. And a big part of our focus is going to be just we don't need the work. We have so much work on our other side of the company. So if whatever contracts we're doing, we're going to be negotiating terms, 25% upfront, draw schedules, et cetera, which is going to help cash flow as well. So there's different ways, but if I needed the work, absolutely needed it, didn't have anything else, I'd say, hey, pay me whatever, net 30, net 60, great. Got to keep the guys busy. Got to keep the business alive.

No, that's a great point. You're stable on the residential side, so you're kind of using that as leverage to negotiate with your commercial projects. You're like, don't really need it because I could get you know, can get work on the residential side. But if you want to work with us, 25% down. And, and, uh, you know, they can, they can pay or not, not pay, but it's up, you know, because you have that other option of just doing residential, you, you're in a stronger position to negotiate. So I love that.

Yeah. And the second part too, I see a lot of the other successful commercial painting contractors just doing massive commercial, like doing $20, $30, $40 million a year where Usually cash flow is not the— at that point, cash flow is the easiest. It's all people problems, management problems, leadership, crews. So it's either— so it's tough when you're going from like $0 to $5 million or so trying to jump into that commercial game unless you're heavily negotiating terms.

Awesome. Love it. Okay, cool. So let's talk about making the transition to residential. You grew very quickly. You your first year in residential, you were at $1 million in revenue. And this, you know, a few years later, you're projected to hit $6 million. So that sounds like a lot of work, a lot of pain. What are some of the biggest challenges that you faced during this period, last few years of scaling that quickly?

Biggest challenges is time because 24 hours a day is not enough, it seems like. But no, the number one issue is going to be people. And, and of course, you know, if you're somebody like me, you have an open heart and you want to give people benefits of doubt, or you want to trust more than maybe you should. So put a lot of eggs and put a lot of trust into certain people. So maybe they're the right people in the wrong seat. Maybe they're the, you know, the wrong seat, right person. But either way, I think the, the people has been the biggest thing. Systems is another part of it. Of course, when you're just falling on your face and whatever. I learned my lesson here. I lost money on this job, but I'll fix the system, make sure it doesn't happen again. Um, but something that helped me with systems and just the massive growth, there's been a lot of coaches. I've spent so much money on coaches to help us compress time. Um, but I'd say at this stage of business, it's just a people's game now.

And what do you consider this stage? What, what kind of level do you— is it just people problems?

Yeah, I'd say probably $5 million plus.

$5 million plus.

Okay.

So it sounds like the biggest challenges from going from, you know, basically starting in residential, you did first year $1 million to about $6 million now. The biggest challenges you faced so far has been people and systems. Did you face the systems issues first and then now it's more of a people issue or was it vice versa?

Yeah, that's a great point. Yeah, that was the first thing that I was facing is all systems. And then it just snowballed into the, into the people with the systems, like revamping a sales system, you know, takes a long time, takes a lot of money, a lot of effort into rolling it out. Project management system, getting the right crews, whole office backend of things, accounting, you know, appointment setting teams, all of that. That's just getting the right structures, the right system, build out our SOPs and making sure that they, that we're overseeing it. You have the manager over. Each part of the company to just oversee and make sure everybody's doing what they're doing. And then you slowly find out that maybe I put the wrong manager in this seat and then it goes into, into the people problem, basically.

Yeah.

But are you wearing a lot of hats at the same time while you're starting it up though?

Yeah. Are you a fan of Traction, the EOS?

We're not running an EOS model. I'd like to. We've just been in such a massive growth spurt that I've just you know, that's a whole nother thing. But I'd like to get to that point though. My cousin is actually EOS instructor. Like he goes in and implements EOS to a lot of different companies.

So, okay, you're using some of the terminology. So I thought maybe because like, right, people are in the right seats. That's a common thing that they say. But yeah, okay.

I've read bits and pieces of it, but just haven't been an implementer. I'm a strong visionary, but my implementation skills definitely need to be polished. So that's why I know where my focus is, where my strong suits are. And I fill the seats on where my weak spots are.

Yeah. So let's talk about systems, I guess, you know, getting, you know, you were starting from no residential experience to running a million-dollar residential painting business in the first year. What were the main system, I guess? Yeah, the main systems that you kind of built in that first couple of years that got such great results apparently that really were the result or really drove the results of what happened in the first year or two in residential.

Yeah, absolutely. So the first one probably wasn't the most sustainable and it probably wasn't the most scalable, but it was our old sales system that we were running. And I was always a fan of if you can get the work, I already have all these years of experience in painting, but granted it's a different type of painting, but painting is painting. So if I can just wear another hat and if I could sell it and then if I can also project manage it, I can hire the people, we'll make it happen basically. So I wasn't so focused on the PM side of things as I was just on the sales. So CRM, sales, and then of course marketing, because with no marketing, no leads, you can't sell. You can be the best salesperson, have the best sales system, but if you don't get any, any opportunity, it doesn't even matter. So between sales and marketing, and then those were probably the number one focus that first year.

Yeah. What was your primary acquisition channel for marketing in the first year or two?

Yeah, first year we were only Facebook. It was probably 99% Facebook. The rest was just like either referral, which was nonexistent because we're a brand new business, or Google, which was nonexistent because Again, we're a brand new business.

Yeah, that makes sense. So you went for the like outbound marketing from, from the start, which a lot of folks don't do. And, you know, because they usually are doing the repeat and referral slow growth approach, which is the benefit of those is that it's usually less expensive marketing, but it's just slower growth. But you went for, okay, I'm going to go I'm going to find people to sign up. And so that is benefit is, you know, fast growth. The downside is that it's more expensive to do that for marketing, but it can still obviously work. So did you have fear on— because some folks have fear like putting so much money into the marketing. And I guess what gave you the confidence and what were the numbers looking like when you were starting to put you know, a lot of money into Facebook ads to, to get the sales going.

Yes, there's a few things I want to say on that, man. Absolutely. So the fear was non-existent for me. I was 22, 23 years old and I nosedived. I bought into another business because my commercial painting business was just self, self-running and I, I lost a massive amount of money at a very young age. So I already— I'm not gun-shy anymore. I already, I already took that hit. I already knew what it felt like. And guess what? I knew what it took to bounce back, and I knew what it took. I, I know where I'm at now. Like, that happened back then, but look where I'm at now. So why would I think about what if it doesn't work? Because what if it does? And I'm always in the what if it does though, you know? It's always a glass half full kind of thing. Yeah. So the next thing is that I'm a speed-to-lead guy. A lot of people will say, sure, it costs more money. You got to spend $5,000, $10,000. Right now we're spending over $20,000 a month just on Facebook alone, Facebook and Instagram. But back then, you know, maybe $5,000 a month, $4,000 a month. And I would argue that, yeah, it does cost more. Yeah, it does cost more financially, the actual monetary exchange. But what is really more valuable? Is your time more valuable or is it going to be the monetary actual cash? I would say your time is— we don't know when our last day on earth is going to be. So maximize every moment that you have and speed things up. So I'm just— that's how I am with everything. And granted, it's not— some of the things I do are just insane and crazy. And a CPA like you would probably be like, Russ, what are you even thinking right now? And I'm fine with those conversations. It's all in my head and it's a vision that I have. And it always finds a way to get right back on track. But that's, that's always my, my idea with it. I would rather spend money than spend time. And a big part of it, I know that some people might be listening and be like, man, I just don't have the money. And it's totally understandable. Not everybody has the money. I was, I wasn't born with money. I bought my own first car. I started a landscaping business when I was 12 years old. I was always self-made. I don't have any parents' money or anything. It's completely me. So I understand it's not like I came into it with handouts. But what did help me is I had a strong commercial painting business before I jumped into residential. So that fueled the fire into residential. I was taking the money from the commercial account, dumping it into Facebook marketing, dumping it into a sales coach, into CRMs and ways to get systems to help me speed the lead there. But if I didn't have that, I'd be knocking doors, I'd be putting out yard signs around town, door hangers, cold calling whoever, walking into businesses. There's any ways to be aggressive and just— and if you can't spend the money, there's a lot of other ways to be aggressive and still speed up your growth.

Yeah, that's awesome. I love what you said where it was like we're talking about the fear. You're like, what's the worst that could happen if I put a bunch of money into the marketing and it doesn't work. I mean, you know, I learned, I probably learned something, but it's, you know, so a lot of the fear, if you just dig a little bit deeper, it's like, what's the worst that's really going to happen? You know, you lose some money, you probably learn some stuff and probably do it better next time. So I love that. And then talking about, you know, spending money instead of time. So kind of digging into the details a little bit there for what your marketing spend was looking like. What do you, and this was a while ago, so you might not quite remember, but what were you spending on Facebook to actually get a customer in the door?

To be honest, my backend, I had no idea. I just know that if I'm at or below 10% cost of marketing, I'm a happy guy.

Okay.

But I never tracked cost per acquisition back then.

Yeah, okay, well that's useful, 'cause if you just know your average job size, like, Like, if it was $5,000, then it's probably $500, you know, for what you were spending on marketing. So which, you know, that, that, that's great because I mean, and I knew you were running really high margins in commercial. Did you— were you able to maintain those high margins in residential as well? Because you said it was like 65% gross profit on commercial. Did you maintain those margins in residential?

No. So I was, I was strategic with it. I wanted to go in with making less money at 40% gross profit, 45% gross profit, whatever, to build the team. How can I build the system? So it goes back to what we were saying of what's the worst that can happen? Like, what if it works? You know, there's no losses, there's only lessons. So right now, my first year of business, I want to take as many lessons as I can. I'll sell jobs at a lesser cost so I can build the crew and I'll take my quote unquote losses or lessons from the crew leads because I was running W-2 painters at that time, from the crew leads, from these new, from these new painters that we bring on board. Anybody else that's on the team, I'll take my lessons. I just need the opportunity. You can't learn. Everything sounds good in theory. You can read these books. You can go to seminars, conferences. Everything sounds good in theory, but it doesn't mean anything if you don't do it and you don't implement it into your own business. So I just need as much opportunity as possible. Now fast forward, that was 40-45% gross profit. Fast forward now, now we're back to about 60-65%. I think, I think last month we finished out like 63% overall gross profit on painting. So we don't usually sell below 60% gross profit now.

That's awesome. That's, that is top tier gross profit right there. 63%. There's only been a handful of times where folks are hitting, you know, 60, 65%. So that, that's awesome. You're definitely in the top tier there. So, but it sounds like you started with 45% gross profit margins just getting into it just so that you can learn, you know, how to do things, how to execute, how to get, getting those jobs in. And then as you move through the last few years, you've been just getting better and better, improving gross profit, and now you're at 63% gross profit, which is awesome.

And so—

Yeah, go ahead.

Yeah, but you know what, Daniel? Like back then, I mean, there's jobs that I took on 20% gross profit. There's jobs that I lost money on or just broke even on. I didn't care. I was the project manager. I was the sales guy. I was doing the office paperwork. I did everything. So it was my time. I wasn't paying for people. So if I just need to get a job on calendar, if I have a crew, I need to keep them busy and I need to learn everything. So I didn't even care if I broke even, basically. So just to— sorry to cut you off, but it did not matter at that point.

It just—

we had to get the opportunity.

Yeah. Yeah. And that makes sense. I mean, you're learning and just you're basically— you're trying to accelerate things, right? You didn't want to waste your time. So you're pulling for those leads into now, getting that quick growth. And, you know, learning as you go as quickly as possible so that you could accelerate faster. So it makes sense from, from what you're saying. And one of the things that we often look at is as you're, as you're scaling so quickly because you're, you're at $1 million, you're at $1.5, then $2.5, now $6 is the gross profit to customer acquisition cost ratio. Which gross profit sounds like initially it was like 40, 45%. And then customer acquisition was the 10% for marketing spend plus which you were doing the sales initially, which usually a salesperson is like 7 or 8% of what they close. So your, your customer, your gross profit to customer acquisition cost sound like it was just under 3 to 1, right around 3 to 1 ratio, which is like the minimum for scaling quickly. And then, but now since you've kind of built the systems, built the people, you know, built the reputation, now your gross profit at customer acquisition cost is probably like 6 to 1 since your gross profit's so high or maybe even higher. So it's just really cool to see how you've, you know, so quickly like learned, implemented and just built an amazing business. So kudos, kudos to you for accomplishing that. It's just amazing.

Yeah, no, I appreciate that. But it kind of has to be at that point too, because the only way for somebody like at $5 million plus or trying to hit 8 figures, etc., because remember, we're running a flooring business too, and I might hit $2 million, maybe $1.5 million, $2 million. $2 million is our actual goal for flooring. And to be able to have people in key leadership spots, we have to be able to pay them well if they're going to be the rock stars that we need. So right now we have what? We have a director of operations, we have an operations manager role that's kind of taken over the director of ops role. We have 2 PMs and we have 4 people in our office and of course our full sales team. So We have to be able to sell at more profitable amounts to be able to pay these people what they're worth. Otherwise we're just gonna have subpar leadership and people that are not standing by our vision and not delivering the top level of excellence that all of our clients deserve and what we promised them during our sales presentation. So that's, you know, 40, 45% gross profit. I know Jason Phillips, he's my main mentor with sales. He argues heavily against the 40 to 50% gross profit, you know, bucket that people try to be in because he has such a strong leadership team. And that's why I implemented in my head why I pay my people as best as we can pay them, because it all starts from the sale. Gross profit, we can pay them as much as we— as much as they're worth.

Yeah.

So talking about people, so what are some of the key roles as, as you've grown from $1 million to $6 million? What are some of the key roles that you've, you've been able to put in place that you've really just opened up your growth?

Sure. So office manager, she handles all of our, all of our expenses, all of our payroll. She does like all of our QuickBooks and kind of a bookkeeper as well. We have 3 people in our call center that are just making and taking calls all day, every day. That's for new leads or inbound calls or clients calling the office, etc. Then we have— right now we have like a— he's a hybrid between like an operations manager and a project manager, but he's soon going to be just an ops manager where he'll oversee everything, all of the, all of the production. And then we're going to kind of get rid of that director of operations role. Then we had a sales manager for the first, I think, 5 months of 2025. And it was a mutual, mutual thing that we, we brought him back down to sales, to sales. So now I'm, I'm acting as sales manager and while, while being the business owner, of course. And then I think right now we have 4 sales reps. We're bringing on a 5th and 6th sales rep next month. And yeah, that's mainly the positions. We're bringing on actually another project manager. So we have 2 project managers plus bringing on another one next week, which he'll be a hybrid between a project coordinator and a project manager. And then all of our production, we're 100% subcontractor-based.

Gotcha.

Do you have compensate? Because compensation packages are— can often really drive performance. Do you have any things that you've learned on compensating team members, whether it's the salesperson or the production manager or whoever, that, that you've learned that's really worked? Or things you've learned that's not worked?

Yeah, well, what doesn't work is to keep pushing your team to perform at a high level and get as much profitability and and not compensate them at all for it. Learn that a little bit. Or just throwing random bonuses here and there because it's all feeling-based. That didn't work. That was my story of my life for a while. Just, hey, this guy's been doing great. Here's $200. Hey, here's— you know, you've been crushing it for a while. Here's $500. But it's not— there's no— it's all feelings-based. So now we're rolling into, of course, a percentage of change order. Like, I'll go with project management, percentage of change orders. Then we have accumulative monthly goals for project managers and then operations manager, because the operations manager needs to make sure all of his PMs are meeting or exceeding budget. So we have a cost, we give them a cost on every job, and as long as he meets that cost or falls below that cost, we'll combine all of the jobs within one month and give him X amount, whether it's $500, $1,000, $2,000 bonuses if he meets his goal. Because some jobs, you know, understandably, we might have a $1,500 cost on it, but there's no way we can have somebody do that job. So he has to produce it for $1,800. So he'll be over budget there. But then the next job might be the same cost, $1,500, and he knows he can save a couple hundred bucks, be at $1,200 right there, and they both level out with each other. So we do that within a whole month. So that's the PM and then the ops manager will both get similar rewards for that, plus a certain amount percentage for change orders. Now for our sales, we have if they break X amount of sales, dollars sold in a month or X amount in a year, though the monthly will be just one lump sum bonus. But the yearly, once they break like $1.5 million, they'll get an extra percentage. Break $2.5 million, they'll get an extra percentage, so on and so forth. Our call center, we have a few different goals. They make a bonus, small bonus for every single appointment that they set, and then they make a small— it's not really that small, but they make a bonus. We're around 50 to 52% set rate. If they break 60% set rate in a month, I give them, give them a decent bonus. And if they break 70%, then we give them a really good bonus. So it's incentivizing them to strategize, mastermind, and come up with the best strategies. Even if our SOPs— there's ways that we can tweak them because we always want them to tweak our SOPs. So if you find a better way to do something, you just let us know, implement it, test it out. And if it gets us closer to our goals, then great, you're going to be compensated accordingly for it.

It's awesome. So it sounds like pretty much most of your team is in— you've set up bonus structures that incentivize them to hit your goals.

Yep.

And so for the production manager, basically, if they are at or with or below the cost of services for all the projects overall for the month, whether that's, you know, cost of services or, you know, 35% if you're hitting for 65% or 65% gross profit margin or 60% cost of services for a 60% gross profit margin, whatever your target is, if they hit that or go below it, then then they get a bonus for that month. Then for the salespeople, they have certain targets, bonuses for if they hit their sales goals for the month and also for the year. And then call center, they are incentivized for each appointment setting it, but also overall set rate, you know, to incentivize the team to improve the processes. So, yeah.

Okay.

Oh, that's like, okay, that's, that's awesome because you're kind of like, you know, gross profit's important. So you have the production managers protecting that. Obviously you want to keep driving sales. So you get the salespeople incentivized that way. And you're also helping with the sales, with revenue by incentivizing the set rate because that can— you improve your set rate by a few percentage points, that's going to have huge results on your revenue because you set, you know, 10 more appointments per month, that's going to be X amount of extra money coming in on the top line revenue for the salespeople. So, yep. And so you're basically incentivizing the team to hit those revenue goals, those profitability goals.

Do you have any more that I forgot about on operations? So one is going to be collecting payment on time. At the final walkthrough. So the problem that we were running into is we were running so many jobs. We have a project manager running 15, 20 jobs a week, and he got touch-ups at this job, touch-ups at that job, touch-ups at that job. Ultimately, we have a crazy amount out on accounts receivable that just needs small things here and there for us to receive final payment. So our crews are upset. They're not getting paid because they need to go back and touch it up. Me, I'm looking at our P&L and I'm like, what's going on over here? We're not collecting. Rolling this out, another incentive for them to collect at the final walk, and then secondary to get a 5-star review at the final completion. And then the 5-star review will kind of go into NPS, which is Net Promoter Score, when the project's completed. That'll be more of an operations manager incentive to make sure that it's above, I think, like 90%, 95% NPS is what we're looking for. I don't remember the exact number that we have in the SOP, but basically just to make sure that we're delivering the top-tier experience that, that we're known for and that we're trying to give. So those are the other two incentives I forgot about on, on the ops side.

I love it. Yeah. Collecting payments on time, making sure that cash flow stays good. Because if you don't have cash, you don't have a business. So that's super important. And then obviously customer experience. So I think you're hitting like all the— you've incentivized the team. With bonuses on pretty much all the key things that you want in your business. You want revenue, you want cash, you want to be profitable, and you want happy customers. I mean, if you have those things in a business.

Yeah. The biggest thing is that I just want them to have the opportunity to almost in a general sense, write their own check, self-generate your own leads. You get extra couple percentage points for self-generating your own leads. So just go pound the pavement all day. You could write your own check and then all these other incentives, just write your own back, basically.

Yeah, that's awesome.

Cool.

Well, hey, Russell, you've been super generous with your time. I've learned a lot. I think this has been super valuable for the audience. Do you have any last thoughts or ask of the audience before we let you go today?

No, man, I appreciate anybody listening. I love giving back to the industry any way possible. I'm not sitting here. I don't sell anything to the industry or anything. I just I love to hop in. I go to conferences all the time and just mastermind groups. I'm in a lot of group chats, so I'm always masterminding with other business owners. So if you ever want to hit me up, ask any questions, feel free to do so. Facebook is a little bit tough to get a hold of me. It's just my Messenger is always flooded. So I'm Russell Peach on Facebook, Peach the Painter on Instagram. So you ever have any questions, concerns, I just love helping the industry. I didn't have a mentor. I didn't have coaches. The first 7 years of business if we backtrack to that. So if I can just help anybody in the industry, it's just a personal fulfillment thing that I just love to do because I never had that when I was growing up. So happy to— feel free to reach out, happy to give any insights. But Daniel, I really appreciate you having me here and definitely I was glad I was able to drop some gems here.

Yeah, no, it was great. I really appreciate you, Russell. And you definitely have— I always see you at the events and it's always great to see you and You always have some great insights to provide. So I'm super excited that you came on the podcast. And for all the listeners, we'll see you next week.