Mike Gore-Hickman: Scaling a Painting Business from $500k to $2 Million and beyond

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.

This is Daniel, the founder of Bookkeeping for Painters, and I'm here with Mike Gore Hickman. He's the founder of paintergrowth.com, the only guaranteed way to scale your painting company. Previously a painting contractor and now one of the top contractor coaches in the industry, and he's helped now over 400 painting contractors scale their businesses in predictable ways. So welcome to the show, Mike. How you doing?

I'm good, Daniel. Thank you for having me, man. Excited for this.

Absolutely. Glad to have you here. Can you briefly kind of share your journey from being a painting contractor, um, to, to being where you are now?

I would love to. So I ran a student painting company similar to you did. I don't believe student painting companies get enough credit because they are wonderful value add to the painting industry, bringing people, you know, like me and you into the painting industry who otherwise would have never been painters, right? So I got my first taste of painting at 20. I ran my painting business from 20 to 23. By my third year in painting, we were doing, we were pretty close to $200,000 per month in production. So I had about 16 painters. I used a couple of subs, had a production manager, great quality, great customer recommendations, ended up breaking all of the systems that the Student Painting franchise offered me. So I had to like recreate and rebuild all the systems to handle a larger business because they weren't really, they were prepared for like, you know, one or two crews, not 7 crews. So I got, first of all, an introduction in learning systems and then learning how to build systems by the time I was 22. So after that, my wife moved out of the city, or my girlfriend at the time moved out of the city, and I decided to shut down my business and follow her. We had only been dating for 3 months at the time, and now it's 10 years later and I have, we have 2 beautiful daughters together.

That's awesome. It's funny because if you would have told me 10 years ago that you did that with some— like after 3 months you moved and changed your whole life, I would have raised an eyebrow. But I'm the same way. I met my wife and 4 months later we were married. So I'm right there with you. It's weird when it happens, but it happens when you know, you know. Yeah, but that, that's amazing. With the College Pro program, you said that you did, you were doing up to, you got to a point where you're doing $200K per month in that program.

Yeah, not quite, just about, but $185K I think was our best month.

Okay. Nice. Yeah. Yeah. That's because in that program from, you know, I did this, I didn't do the exact one you did, but I did College Works, which is I think similar. You know, the top performers were doing $100K per year, at least back in 2008 or whenever I did it. But yeah, so that's incredible that you were at doing that level in that College Pro program. That's awesome. So I guess, and it's one of the things you said is you basically broke all their processes because their program is designed for basically an owner-operator. To kind of do $100K per year and you're doing double that per month. So what were kind of the main things that you had to recreate to actually make that system work for you?

Yeah, well, I mean, all of their, their tracking. So everything was— there was no real software. They had a CRM, which was nice to track leads and previous customers and stuff like that, but everything else was pretty much Excel-based. So the production, the production schedules, for example, were kind of built up to 3 crews. The— they had very few owners who had brought on production managers because it typically wasn't needed with, with just a couple of crews. So I had to kind of create the process on how I would— how— what responsibilities a production manager should, should have and how to create that job responsibility. And then how should I hire from within or should I promote from within or hire from outside. So those are a couple of things. And it was actually life-changing that as soon as I brought on that production manager, I know there's a lot of painters who are kind of like teetering on that level of like, should I bring on a production manager or not? And, and part of what I want to talk about today was like how to scale beyond $500K. And I mean, anywhere from like that $500K to $1 million, you can do that without a production manager, but it gets pretty hairy. Whereas if you, as soon as you bring on that production manager, it might seem expensive because they're not necessarily like pushing paint, but that, you know, $80K a year that you're investing in that production manager completely frees up your time if you train them right. And so that can revolutionize not only your business, but your life and how you spend your time.

Yeah, absolutely. That is something that I have seen. It's kind of like the big step, the big, you know, the first big hire. Obviously you have your, your crews that you're probably hiring first, but that production manager, that's where you really take your hand. Let, let somebody else drive your business. Obviously you might still be involved in sales, which is key, but the production manager is a big hire.

It can be scary too, bringing on someone like that and trusting someone and, and knowing that they're gonna make mistakes, right? And you have to let them make mistakes because if you're there coddling them, preventing them from making mistakes, they're never going to be able to truly take over your role.

Yeah, that I've, I'm sure that's something that you've seen is for folks struggling in this area of between $500,000 and $1 million is making that first hire and giving up that control. What kind of tips or what makes that psychologically easier to make that step?

I think it sounds kind of corny, but preparation is will make it easier. And specifically how to prepare if you're, if you're in that position in your business right now where like you're running 10 ways from Sunday and you have solid production, you have sales coming in, but you wish you, you know, wish you had more sales coming in. You would have more sales coming in if you had more time to focus on marketing and sales, but production is taking all of your time right now. So the first step is, is, is a simple priority management exercise. So you need to get clear on what you're doing. Throughout your day, exactly what the tasks are, what the outcomes are, and starting to compile what your— what tasks you want your production manager to do. And I actually have a priority management template and exercise and training video prepared for this. So if you want to go through my priority management training for free, you can go to paintergrowth.com/bfp, Bookkeeping for Painters, and you can download that template. But basically you wanna know what you're doing, figure out what you sh— what parts of your day should be the priority, the production manager's responsibility versus your responsibilities. And then once you go through your entire week and you have that list of things that you don't want to do anymore, you want your production manager to do. Now you can start putting those tasks into a job description, right? And the outcomes that those tasks are representing. So, uh, the, the next step, once you have all of those job descript— that job description with all of those tasks, Now we're gonna look at our team. Do we have someone who can handle this, who wants to step in and wants to handle this? Or do we need to start looking outside the business?

I like that because I think a lot of folks, they might know that job descriptions are important, but then it's like they go to their computer to, to, to write out this job description and it's just kind of starting from a blank page. But I like how in your process you just described, it's basically going a step before that is what are you doing right now in production management? Kind of brainstorm those things, put those things on a piece of paper, and that drives what you're actually putting in your job description. So that seems like that would make it a lot easier to tackle that first step of getting a new production manager hired is kind of developing it that way. So I like that idea a lot.

Yeah. I mean, most entrepreneurs, most painting contractors, you know, that in that first to mid-tier level, not necessarily owner-operator, but, you know, 2 to 3 crews running 100 million miles an hour, often don't know what they're doing with their time. Like, it's like, oh, I got to check on the site, you know, that I got to— this customer wants to talk to me and then I got to go pick up this check and then I got to go pick up paint and then, oh, they screwed up the paint order. So I'm going to be at the paint store for 45 minutes. And like all of these little things that you're doing throughout the day are very low-impact activities. And I have some videos around like low impact versus high impact, your $50 an hour or $500 an hour tasks, etc. But the average owner is spending 60 hours a week on low-impact activities that don't need to be done. Like I was talking to one of my clients and I was like, okay, what are you? He's like, I'm so busy, Mike. I'm so busy. I'm like, okay, well let's look at it. What are you doing all day? He's like, well, every single day in the morning I go visit every crew and I get each crew started for the day. I'm like, first of all, why? Like that takes half of your week just doing that. So we started figuring out, okay, how can you do this remotely? How can you empower your painters? How can you pass some of that responsibility on your painters? Because a lot of the time you don't even need a production manager. You just need really good foremen and you need expectation setting with your current team. And they can— people can handle a lot more than you give them credit for. If you set the expectation and compensate for the outcome that you want, you'd be surprised how much responsibility your painters can actually and sometimes want to take on.

Yeah. So some folks, they feel like, oh, I'm so busy. I'm getting so much done and it feels good. I'm completely guilty of this too. It's like, I feel like I'm accomplishing so much because I'm doing all these tasks, but you have to kind of back up a little bit. It's like, are these things actually, should I be doing these things? Are they, you know, high leverage activities that I need to be doing that is really going to be driving my business forward? Or is it something that I could give to, you know, an administrative assistant or someone else that can do those, you know, $25 an hour tasks and I need to be focusing on the $1,000 tasks that are gonna be get, you know, getting revenue in the door. I think a lot of folks, they, they say, oh, I'm so busy. I'm so busy. But like, what are you really doing? I think that's a key thing to, to, to, to analyze is What are you doing? And then what value is, are those tasks bringing into your business?

100%. 100%. And really tasks can be broken down into marketing, sales, production, and administrative, right? And that administrative is kind of a catch-all. You have finance, you have human resources, you have scheduling, but you know, sales, marketing, production, admin. It is true. A lot of admin activities can be handled by an assistant or oftentimes even a virtual assistant. You know, people don't give that, that enough credit. Like, you know, Eric at Pathfinder, he just did a livestream the other day. He has virtual assistants do his calling his leads, setting up estimates, doing setup calls, scheduling his clients, checking in with customers before the job, checking in with customers after the job. Like, All of these things can be done virtually. And what ends up happening is the owner will just end up not knowing how to do that, not knowing how to take on that responsibility of hiring and training a virtual assistant, and they'll end up spending their entire Saturday or Sunday doing those tasks. Yeah.

So yeah, that's definitely key. And I think Eric even, I believe he uses a virtual assistants that are not even, you know, English is their second language, I believe. Hopefully I'm not misspeaking there, but I think so. It's like, it's definitely possible to delegate some of this stuff, you know, so you can focus on higher productive tasks.

And I don't even necessarily, I don't like to use the term VA. I find that the term VA is not like discriminatory, but it's kind of, it's not, it's not, it's not accurate representation. So when I hire someone from the Philippines or from South America, like they are not a virtual assistant, they are a team member. They have a responsibility, they have a scorecard, they have a job description, they have outcomes, they get bonuses, they're on all our team meetings. Like they're part of the team. They're not just a quote unquote virtual assistant that I hand random tasks off to. So I think that's also like a, misnomer is calling them virtual assistants when they are in fact overseas employees who are human beings and who just want a good job. And we have the ability to offer them good employment and, you know, above market rates from what they would earn locally. Yeah.

One of the things you, you just mentioned was a scorecard, and then we talked about job description, you know, which is kind of a key first step developing that job description. But one of the things you mentioned was having a scorecard for an individual to help. And you've also mentioned, you know, making sure that their pay structure incentivizes them to accomplish what you want them to accomplish. Do you have any ideas, especially for maybe a production manager, what kind of scorecard might they have to kind of align their actions with their pay and what you want them to accomplish?

Yeah, good question. So whenever creating a compensation structure for someone like this who's like a very key role, what I like to do is give them an option, give them a few choices in their compensation structure based on their risk tolerance to help them get bought into their comp structure. So when I brought on Ryan as my production manager, what I did at the time, and I don't know how I thought of this, I was 22 at the time. I'm like, this is a good idea. I got to do it. Or 21. But what I did is I created 3 scenarios. So scenario 1 was low risk, low maximum reward. So it's the highest base salary with the lowest amount of variable, but his maximum earnings was the lowest, right? Lowest risk, lowest possible earnings. Say it was like 80% base, 20% variable, something like that. Then the middle was like 60% base, 40% variable, and he had the, he had the total potential to earn you know, 20% more than what his base was if he chose the first one. And then the third one was like 50% base, 50% variable. And on that one, he had the maximum opportunity to earn because he was taking on the most risk, but he could make the most money because there was a higher percentage of the variable. So what he, and probably what most people will end up choosing, is the middle tier. It's the one he chose. And I kind of like put the most time and thought into that one because I was pretty confident that was the one he was going to pick. But it was like a, um, It was a salary, right? It wasn't hourly. So I can't remember exactly what the numbers were. Also, it was 10 years ago, so it wasn't, wouldn't be super relevant today. But you have your salary plus a percentage of production that he would get. I think it was 5% of all of the work that he produced on top of his salary. And then he also had bonuses for paint percentages. So if he kept paint below 10%, he would get the difference. So if it was like 9% paint, he would get that extra percent up to 10%. And then he also got a bonus every time we got a Google review or 5-star Google review. So those were his incentives. And I could have passed the Google review incentive onto the painters, but ultimately he was responsible for keeping the painters happy and ensuring quality. So he was talking to the homeowners, he was setting up the crews, he was delivering paint. So he's responsible for the outcome of the job. And I compensated for that and it turned out to work really well.

Yeah. So basically sounds like you incentivized him to have high quality and also high efficiency. That's kind of efficiency and quality were the metrics.

Yeah. And that's really all there is to painting.

Yeah.

Right. Have your painters produce quickly at a high quality without using too much paint. And you'll have a good business, right?

Yeah, so easy as that. Yeah, so I think that's, that's key, you know, because, you know, uh, maybe you don't want to do the paint, uh, bonus or the Google review. Maybe you want to do, um, you know, just labor as a percentage, and maybe you want to do NPS, Net Promoter Score, or something like that. Uh, you can just use the same framework that you just talked about for covering efficiency and quality and kind of help build that bonus structure to make sure your team is aligned with what you want them to accomplish. I think that's awesome. And you said you came up with that when you were basically a newbie. Yeah. Yeah. That's awesome.

I mean, a lot of guys think that you need to have years and years in the trade to be a good painter, to run a good business. But I think that that's fundamentally untrue. You can run a great business first thing. Actually, I have a client of mine right now. His name's Orlando. He's in Tennessee and he just started his business at the same time that he joined our program. He's in his second month and he's going to book $100,000 this month and produce $45,000. Wow. In his second month of his business ever.

That's awesome.

Yeah. And he's like, he's like 25, 24. He's just absolute bonkers. But we're setting him up with the right systems from day one so that he doesn't have to go and learn it the hard way. Right? Coaching is kind of like, sorry, one more quick story. This, 'cause this is just fresh off the top of my head. We have another client who's a very high-level Brazilian jiu-jitsu competitor. He competes, he's, he's young, he's in the early 20s and he competes at literally national level Brazilian jiu-jitsu. I think he's like purple belt or brown belt or something like that. And I asked him, I'm like, hey man, what would, where would you be in Brazilian jiu-jitsu if you didn't have a coach. He's like, oh, like white belt for sure. There's no way to learn what you need to learn in the technical aspects of it without a coach. It's impossible. And I think that that is so true for sport, but it's also so true for business. But people don't look at it the same way. They think that, oh, coaches are just for sports. I'll learn everything I need to in business just by doing. But you don't understand like what the, the, the benefit to having a coach and not having to learn all of those mistakes the hard way and just being told the right way to do it. The first time, it will put you years ahead, 10, 20 years ahead than if you're trying to do it the hard way. But it's just business doesn't get the same respect for coaches as sport does.

Yeah, I mean, you, you can for sure go without a coach, but how much time is that gonna cost you, right? Like someone invented Brazilian jiu-jitsu, but how, how many decades did that take him to do?

Yeah. So how many people were involved in, in the, eventual, you know, building of it. Yeah, yeah, you're right. You know, you can, you can, a lot of people and some people can figure it out on their own and some people are just gifted and talented and they can use the, the, the web, the internet and the resources that are online and, and figure that out. But some people just need to curate it and you just spoon fed, like that's why university exists. That's why we're like an alternative education company so people don't have to go to university anymore.

Right. And even, you know, or you just want to shortcut the time it's going to take because time, you know, over time you could scour the web and figure it out, make. But if you just have someone that's done it before that knows what you need to do, that's just the shortcut key there. Just get that person to tell you what to do or provide the resources. You don't have to recreate the wheel. There's, you know, tens of thousands of people that have done this. Hundreds of thousands of people that have done this. So, yeah. Yeah. So we talked about job description for the production manager, the scorecard for the production manager, and something else you mentioned was processes, you know, having those, one of your success stories that you mentioned, you know, he had those processes going into that, that big success that he saw in his first month. What sort of processes should a painting business owner make sure that they have in place before they make that production manager hire?

Hmm, you know, that the whole concept of systems and processes is— can be so like foreign to people, and it's such a big thing to like get— put systems in your business, you know, go get systems. It's such a buzzword, and like it can be so overwhelming for people, right? So I think when it comes to systems, the first The first system that you need to like think about adding into your business is what's going to take the, what's going to take the most off of your plate. Like, it's not like, oh, let's start creating our SOP library. Like, no, that's not where you start. You start looking at your calendar and what system or process will help me remove the most things off of my plate. And some of those systems might be as simple as like scorecards and setting new expectations for your painters, right? Like creating new checklists for your painters to make sure that, you know, Now they're responsible for picking up paint and ordering it and getting it to site, right? Instead of you, like that alone could save you 10 hours a week. So, so how can you save the most time? And then in terms of other systems that you need before you make that hire, oh man, I mean, if you go through that process that I said earlier about the, the expectations for the production manager, Try your best. It doesn't have to be complicated, but try your best to create a checklist for each one of the tasks that, that you're going to do, that you need to do. And make the tech, make the checklist as detailed as possible. I can give you an example. Say your production manager is gonna be closing out jobs, right? So go through closing out a job and record yourself doing it. Right? Literally just put your phone on in your pocket, your recorder. It sounds silly to do, and 99% of you will not do this, but I promise you it's a good way to do it. So turn on your phone recorder in your pocket and, uh, and go close out a job. Go talk to the homeowner, do the walk around, ask for your Google review, pick up your check, make, you know, make sure there's no tools. And then once you leave, go to your truck or go home for the evening. Play back that recording and write a checklist of what— turn that recording into a checklist. First I did— first I knocked 3 times and then I introduced myself professionally and then I said, asked about how the experience has been so far. Then I did a walk around with the client. These are the things that I was looking for. And then I asked this and then I did that and then I got a check, made sure it was written out to this. And so you just make a super detailed checklist for every thing that you want that production manager to do to the best of your ability. And once you have those, those checklists, they can, you know, write them into a Google Doc. Boom, you have systems.

Mm-hmm.

Then next time you do one of those things, take your checklist printed out and try to do that thing just by following the checklist. It might seem silly. You'll like be closing up the next job and you'll have this like printed out checklist in your other, in your hand. And you'll be like trying to follow the checklist and something will come up or you won't be able to follow checklist. Well, that means that the checklist needs to be fixed.

Yeah.

Right. And so you can make like conditions, if this, then that within checklists and systems. And you, there's gonna be a lot of those, but you want to get to that point where you can essentially just follow the process that you have written out and execute that task in an entirety.

Mm-hmm. No, that's, that's a great idea. Recording, recording yourself doing it first. You know, another option that might be possible is to pull up a Loom video and just talk your way through it as well. If you don't want to put a recorder in your pocket, this is something I do a lot. Of course, I have more access to a computer than someone that's probably running a painting business on the job. But like, what I do is just pull up a Loom and just walk folks through what the process is. Get it out of my head in an unstructured, just talking it out. Like, this is how everything you need to make sure you— and once you get it into some way, either voice recorded, video recorded, you can, like you said, go through and jot down the notes into a checklist. Or give it to, you know, an administrative person that you have that can translate, put it into a checklist for you, or I think there's even some AI stuff that can put into a transcript or something like that, but just getting that stuff out of your head, I think, and, and, you know, getting into some sort of recorded process. Yeah.

To really scale beyond that, like $500K to a million level, nothing can live in your head. And I can't stress this enough. Your production schedule, your sales calendar, your estimates, your setup call list, like what your, your project list, like nothing can live in your head. Everything has to be out of your head somewhere. As soon as something, as soon as you are the bottleneck for your business, that's a problem, right? So currently, if it's like, if I asked you, it's like, hey, what jobs are you doing in November? And you like start to think, you're like, oh, you know, I got that Johnson project and then I'm gonna be painting the Best Buy. And then I think I have another one. I can't remember. It's like, okay, where's this written down?

Yeah.

Right? Like I should be, you should be able to like pull up your phone Show me your production schedule. I can see the gaps in your calendar. I can see what you have scheduled, what the details are like. It should be organized.

Yeah.

Out of your head.

Yep. Yeah. And I know you had mentioned before that processes is kind of like if you've never had to build processes before, when people say process and be like, okay, what the heck does that mean? I think you nailed it with You know, it's a checklist. It's a written how-to, recorded how-to that someone else can take and then just follow it and accomplish what, what you wanted to them to accomplish. And so having that job description, the scorecard that measures quality and efficiency, and then having a set of processes for them to take and get started with in their job. Uh, is there anything else that we should be thinking about before making that, that first hire for production manager?

Um, oh, I know, I got one. Yeah, I got one. Um, in the mindset of being a profitable painter, um, you need to make sure gross margins are good enough to be able to handle a production manager. So you should have a minimum 45%, hopefully 50 or 55% gross margin. On all of your projects. And if you don't have that level of gross margin, you really shouldn't be thinking about scaling. You should be worrying about fixing the current ship before you look at expanding the ship.

Yeah, I see your point because making that first hire can be expensive, especially if you don't have the margins to support it. So you got to make sure that that's carved out. So do you typically have a recommended, like, gross margin that you tell your folks on?

I like between 45 and 55%, like minimum 45%. And then do the math. Like if you're, I'm just gonna pull some, do some quick numbers. So if you're producing like $50,000 a month and you have a 45% gross margin, that's $22,500 net margin per month, then you have your overhead. Say you have, say you have like $6,000 of overhead, you know, so that brings it down to $16,500 per month. And now you gotta think about what are you paying your production manager? Okay, if I'm paying my production manager $6,500 a month, you know, now that brings my net down to $10,000, right? So, $10,000 a month net, like that's, that's pretty good, right? But you just have to look at, at your numbers, what your net margin is. Do you have the ability to afford a production manager? And you also have to have those kind of initial projections in your mind too. Like bringing on a production manager, you're assuming you're not gonna be stagnant. You assume you're gonna grow because your time is gonna be freed up now to do sales and marketing activities, work on expanding, work on hiring, work on recruiting. So you need to have those goals in mind as well. Like, and, and, and the discipline that when your time does get freed up with this production manager, that you don't go sit on your cell phone in your truck, right? That you actually use that time effectively to do valuable activities. Like, okay, you're doing 10 estimates a week now with a production manager, you should be doing 25, right? You're doing 3 hours of recruiting a week right now. Okay. With a production manager, you should be doing 8. Like fill your time with the most valuable activities and don't just use your free time now to go work out for 3 hours a day.

Yeah, it's, it's funny, but you know, I, I've definitely been at fault for this. You know, you, you finally get the key hire in a certain role and then now you kind of don't know what you do with yourself because you've been doing all the stuff that they're now doing. And so you're like, okay. What do I do now? Because half my day is freed up. Yeah, so that's definitely an issue.

Like that's one of the things that we actually, I struggle with. So I have a coach, right? I have a coach I meet with every single week and I learn so much, not even learn, but get accountability, get structure, get support, get clarity, get guidance. And so we actually built a one-on-one coaching program at Painter Growth where for those people who are at that $500K, $700K a year, And they, they just like, they don't know what to do with their time. They need that clarity. They need that accountability and guidance. We have a one-on-one program that helps with that. So that's been pretty cool. That's been my kind of main focus this year was, was building out that program, creating the structures, creating accountabilities, bringing on the coaching team. And, and so people just, you know, if you've never had a coach before, you should definitely try it. It's, it's pretty magical what can happen. Yeah.

Definitely. Uh, I definitely agree with that sentiment. Um, I know coaches have helped me significantly. You know, you have certain blind spots that you don't know that you have that, uh, the coach can, can help, you know, reveal for you. And, uh, even if you think you're doing amazing, or if you think in your own head, you know, that you're doing good, it doesn't hurt to, to get a second opinion from a coach and, and point out those blind spots, help you get to the next level. Because all of us can grow and improve. So totally, totally.

So yeah, definitely get, make sure your margin is good. Make sure you have systems, you know, those checklists in place for the tasks that you want to outsource. Figure out what your budget is. How much do you want to spend on this role? How much can this person make if you hit various revenue targets? And then make sure that you have structure in your life still for once you are able to offload these responsibilities. You know, you spent, you know, 3 months or so training this person. Hopefully you, they free up more time than they take eventually. And now, now you need to be disciplined with yourself and structured so that you can continue driving your business forward. And having weekly goals is really helpful. How many leads do I need this week? How many estimates do I need this week? How many jobs do I need to produce this week? Where am I going to get these leads from? How many painters do I need this month? How many painters do I need next month? Like these are the things that you're thinking about now, a little bit bigger picture. You gotta think a little bit more ahead instead of like today and tomorrow. You gotta start thinking this month, next month, next quarter. But it's cool problems to be able to solve. Yeah.

So I think we did a decent job at, you know, tackling the problem of hiring that first production manager. If you're between $500,000 and $1 million, that usually seems to be where that first hire usually happens. What do you think the next, or a common, either the next problem set or a common problem set to getting maybe past a million, you know, to maybe $2 million? What's another problem set that you often run into that you're helping folks with?

Sales rep. Next is the sales rep. Yeah, you need an admin, you need a sales rep, and you need a production manager. And if you can have that team, you can easily do $2 million. right? Because $2,166,000, $166,000 a month, something like that. So it's not actually that much if you think about it. But to do, you, you need a sales rep, you need a production manager, and then you need like a dozen painters or something like that. So sales rep is an incredible position to hire because now you're not just hiring someone who's running ladders and talking to painters and customers. Now you're hiring someone who's driving a ton of revenue to the business. And if you've never had anyone book work for you before, it's an incredible feeling, right? Like you're working on something at home and you get a text message, hey, I just booked a $14,000 job. Wow. And I had to do nothing for that.

Yeah. Yeah.

It's a great feeling. Absolutely. So, but there's the luck goes into it, right? The two distinct skills go into hiring an estimator or a salesperson. I prefer to call them a salesperson than estimator. Number one is estimating and number two is sales. So you gotta learn how to get the numbers right and it, you can create systems and processes for that, or you can use something like DripJobs, which has a, the new estimating feature. That's pretty cool. Or, uh, sorry. And then you need to teach them sales. How do you actually close the job? Because you're not just giving them a number, you're actually gonna go close a job and those require their own set of systems.

Yeah, and so it kind of goes back to what we were talking about with the production manager. First thing, job description. What are they doing? Scorecard. I mean, this one's probably a little bit more straightforward. I would like your input, but I mean, with their scorecard, are you still trying to incorporate the— obviously, you want them to close as much work as possible. That one's an obvious one. Is there anything else that maybe you would track or you recommend tracking for a salesperson besides close as much as you can?

So a salesperson— I'll just back that up a little bit. So a salesperson, how should you pay a salesperson, right? So this is a question that I often get, and there's no right way or wrong way to do it. I mean, there's definitely wrong ways to do it. Um, the wrong way would just be to pay them a straight salary and not no commission. Yeah. So the ways that I've seen, if you have a part-time someone you usually say, um, a retired painting contractor who just wants some part-time work. Great. That's a great person to bring on as a salesperson because they want to work 15 hours a week and they can make some good money. So I would pay someone like that like a flat fee per estimate, say $20 an estimate, $30 an estimate, plus somewhere between 5 and 10% of bookwork, right? So they get the base no matter what, but the upside is definitely in actually closing the job. You can also pay on gross margin. So if you produce that job and you get a 45% gross margin, you can now pay them a commission on it after the job has been produced. And I know that's how, that's how they do it at like Paris Painting where they're doing like $10 million of residential a year. So they, they, they bonus their salespeople on gross margins. So that incentivizes, going back to incentivize for the actions that you want, incentivizes selling profitable jobs and not just selling any jobs. So when people are just getting started, I typically tell them to, to bonus on the front end so that the sales reps can get paid that much sooner. The other way to do it is like, you know, a base salary and a certain commission when they close a deal and then a higher commission if it's a self-sourced deal. So if they go and get their own estimate or they go find their own leads, then they'll get paid more because they get the marketing portion of that job as well, that 5 to 7% marketing. Yeah, and an average sales rep should be, should aim to be doing anywhere from 15 to 20 estimates a week.

15 to 20 estimates a week. And so from what I've seen, it's like a salesperson, a good one can bring 1 to 1.5 in revenue. Is that what you've kind of seen?

Yeah. Yeah. Around that. I mean, as much as 2, if they're really good and you have good average job size. But you know, if you do the math, you say they're working for 48 weeks a year and they do 15 estimates a week and they close 33% of them, that's 237 jobs. And now your average job size is the, is the big thing. So if your average job size is $5,000, that's $1.18 million. If your average job size is $3,500, that's $831,000. If your average job size is $8,500, that's $2 million. So, you know, at 5% of that, that's $100,000 plus say a base of $25,000, that's $125,000 for them to book $2 million for you. That's a good income for them and it's a great, you know, profit center for you.

Yeah. And I think one of the friction points and you kind of hit it on this a little bit with hiring a salesperson. Obviously, probably the first friction point is actually doing it because I think a lot of people have, they might be hesitant to do a production manager, hire a production manager, but even more hesitant to be, to actually hire a salesperson because they're getting out of that role and they've been the face of the company and they feel, they oftentimes might feel that they're really good at it, which they probably are. So giving away the sales, role is a friction point. But once you actually get the salesperson in that role, especially depending on the type of person you've hired, if they're more of a salesperson and less of a technician, they're probably gonna really need to rely on your estimating process to generate that price. So then there might be friction between your production manager and your salesperson because your salesperson is focused on closing work, And your production manager is focused on doing it efficiently, maybe within gross profit margin targets to hit their bonus. And I know you mentioned, you know, Jason Paris and his company, he ties the salesperson's pay to the gross profit margins to kind of, I guess, correct for that. Are there any other things that you've seen that have helped with that problem, helping the salesperson, you know, not just close the work that, you know, either doing painting incorrect, paint proposals incorrectly or generating a lower price to close work that's not profitable or something, some sort of process or incentive to keep them in line?

So you're asking basically, what's the best way to do incentive structure to prevent a sales rep from underbidding just to close the job?

Right. Either performance pay or either that or maybe a process that they need to follow or something.

I mean, the thing about if you have a process, you have a sales rep that's consistently underbidding it, even if you have a process, they could just like not include a bedroom or like not include the trim or put less square footage or something like that. So If they really want to underbid, they'll find a way to do it. But I think the real important thing is like, like we've already said 2 or 3 times, you want to incentivize for the behaviors that you want, incentivize for the outcome that you want. And if you are finding that you like, I would prefer to pay them on sales because then I could pay them right away. And if it all works out and we have good margin jobs, then we can keep doing that. But if it just doesn't work like that because not every business is the exact same, not every person is the exact same. We need to switch that, like I said before, to bonusing on a percentage of gross margin. And so an idea for something like this would be to have a sliding scale based on the percentage of gross margin that you have to how— what percentage the sales rep earns. So say it's less than a 40% gross margin, you'll only make 3% commission. If it's a 40 to 50% you know, you'll make 6%. And then if it's a 50 to 60%, you'll make 9%, right? So it doesn't really cost you anything more as the business owner because they should be selling it at that rate anyway. But they're incentivized to sell a profitable job. Now, sometimes there will be production mistakes and that will mess up the job and you just got to— it's just part of life and part of business. That's going to happen sometimes. But macro view, over 50 jobs, over 100 jobs, you should be able to see those trends.

Yeah, yeah, that's, that's a good idea.

Okay, um, so, but sorry, the downside of that is that the sales rep now has to wait a few months to get paid for that job.

Yeah, right, that, that can definitely be a downside. The impactfulness of the bonus, uh, being timely is definitely a factor to consider.

Yeah, yeah, but if you track it and keep it front and center and they can see everything in a spreadsheet, they can see what's coming this week versus what they earned this week that's coming in couple of months, like you can make it motivating for them because they see like they've earned it and it's going to come eventually. So you just have to explain the why and why it's important for the business to do it that way.

Cool. Yeah. Well, awesome, Mike. I really appreciate your time today. I think we gave some awesome value and you had some really good nuggets today on hiring a production manager, hiring a salesperson, helping you get from $500K to $2 million or beyond. How can listeners stay connected with you and learn more about paintergrowth.com?

Cool. Yeah. So all of the resources that we talked about today, I'm giving you guys for free. Anyone listening here, paintergrowth.com/bfp, that's Bookkeeping for Painters, BFP, and you can download all those. I'm going to just go back through this video and make sure that I get all of the templates that we talked about, and I'm going to put all those in a toolkit for you to for you to download. Other than that, yeah, just paintergrowth.com. You know, we've coached hundreds of painting contractors, small and large. So if you're looking to scale, you know, we have a bunch of guarantees and it's actually more affordable than you might think. So we'd love to work with you. I would love to meet with you and keep improving this industry.

Awesome. Thanks for your time today, Mike.

Awesome. Thanks, Daniel.