In this episode of the Profitable Painter Podcast, host SPEAKER A introduces the show’s mission to guide painting business owners through financial and tax matters, emphasizing that the content is general information, not personalized advice. Guest Daniel, founder of Bookkeeping for Painters, outlines strategies to "winterize" cash flow. He begins with customer reactivation, explaining how to leverage existing client databases via SMS campaigns, noting typical 1‑3% response rates and illustrating potential revenue gains from a 1,000‑contact list. He advises on extracting contact lists from QuickBooks Online or CRMs and recommends SMS over email for higher engagement. Next, Daniel suggests adding winter‑specific service lines—interior work, cabinet painting, wallpaper removal, garage floor coatings, basement waterproofing, and even Christmas‑light installation—to generate revenue when exterior projects slow. He then covers cash‑flow management tactics: increasing deposit percentages (e.g., 50% deposits), setting up vendor credit lines with suppliers like Sherwin‑Williams, delaying vendor payments to the full term, and using business credit cards to extend payment windows. Finally, he reviews financing options: vendor credit, bank loans or lines of credit (secured before need arises), SBA loans (noting tighter recent requirements), business credit cards (often interest‑free for the first 30 days), and invoice financing/factoring for businesses with sizable receivables. The episode concludes with a call to join the private "Grow Your Painting Business" Facebook group for further discussion.
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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 today's podcast we're going to talk about winterizing your cash flow. So I'm going to run through some topics. We're going to talk about database reactivation, start doing winter-specific service lines, adding those onto your painting business, cash flow management, and financing wisely. So these are just some ideas that I've absorbed over the years working with some of the best paint businesses in the country. So we'll jump into it with customer reactivation. Now, what is customer reactivation? Basically, customer reactivation is a form of marketing that engages customers to purchase again. So a lot of painting businesses that I've worked with, they have a huge list of customers, folks that they've worked with in the past, but they might not realize that reaching out to them on a periodic basis to see if they need services could be an excellent form of marketing. And so they might have hundreds or maybe even thousands of folks that— names and numbers and names and phone numbers and email addresses of folks that they've worked with, but don't actually realize, oh yeah, I could reach out to them and say, hey, you know, would you like a 10% off on your next interior painting job that you'd like to do, or whatever. So reaching out to those folks can be very profitable because it's usually a lot cheaper than trying to get a new customer, like on with Facebook ads or direct mail, because you already have a relationship with them and you already have their information, and it can be a very profitable way to increase your revenue. So how much can it actually increase your revenue? So from what I've seen other folks do, and I've, I've helped some folks do this as well, is, is, uh, a typical reactivation typically sees about a 1 to 3% response rate, meaning that if you have like 1,000 contacts in your database, you know, former customers or maybe even customers and, uh, former prospects. So say you have 1,000 contacts. 1% of those should turn into estimates if you do like a mass text SMS text campaign to those contacts. That's typically what we would see. It obviously depends on the quality of the list and, you know, how old the list is and those sort of things as well. But generally about a 1% response rate. So You have 1,000 contacts, send out an offer to them via text message, you get about 10 estimates. And so if you're doing a, if you do about a 40% close rate, you can book 4 of those jobs. And usually the close rate is higher on these types of estimates because these are folks that you've worked with in the past. And presumably if you do good work, that they probably like you. So for, let's say, 4 book jobs with an average job size of $5,000, that's $20,000. And that's kind of a lower job, average job size. You know, nowadays it's pushing $10,000. Some folks even have $15,000 average job size. So, you know, it could be anywhere from $20,000 to an additional, you know, $40,000 or more in additional revenue. And so a lot of folks might be like, okay, that sounds awesome, but how do I actually get this list together? A common way to do this would be to go to your QuickBooks Online. If you use QuickBooks Online and you've invoiced folks out of there, you might have a customer list right in there with names and phone numbers. And if you go to QuickBooks Online under the customer section, you should be able to download a CSV of them. Or if you go into your CRM like Estimate Rocket or PaintScout or DripJobs has, you know, lists of names and numbers of folks that you've worked with in the past where you can download their names and their phone numbers. If you're— and I do recommend usually doing an SMS campaign. It just it is a little bit more effective than an email campaign from what I've seen. Not to say you shouldn't do email, but if you're going to choose one, text message is definitely the way to go, especially with the new rules that the phone carriers have put in place where they've actually limited a lot of the spam SMS messaging. So it's kind of cleared out the competition there. And as long as you're doing it you know, per the regulations and you're not breaking any rules, SMS can be really good. And so once you get your list, then you craft an offer that says, uh, keep it simple, something like, hey Sally, this is Daniel from XYZ Painting. Today we're giving out a few complimentary painting quotes with a 15% off voucher towards any painting project needed over $2,000. Would you like one? So offering some sort of voucher with a discount, something like that. Just keep it simple and straightforward and easy to understand and offer them a voucher or a free estimate, something like that. And so you can send out a customer reactivation campaign through many different apps out there like KMarket, ClickSend, SimpleTexting, TextMagic, many different ways you can send out mass text messages. All right, so the next thing that you can do to winterize your cash flow is start a winter service line. This isn't for everybody, and it, it definitely takes a lot of extra work. So, you know, definitely proceed with caution with adding a service line because it does add a layer of complexity. But it is something that folks have done successfully. So not to, you know, don't want to necessarily ignore it. And then some of it is not really even starting necessarily a new service line, but like, here's some ideas that you can run through. So for winter, obviously focusing on interior, I think most folks know that, right? Because obviously interior, you can do things that you can't do on the exterior because of the weather. But, you know, you could focus in on cabinets. A lot of folks shy away from wallpaper, but maybe during this time of the year you don't. Maybe you do take a by-the-hour wallpaper jobs to help folks get rid of that old wallpaper and get some fresh paint on there. Garage floor coatings is another winter service line that might work. Basement waterproofing. And some folks have even done things like starting a Christmas lights service line and hang Christmas lights since they have the ladders, you know, in many cases they have the equipment that you need to do Christmas lights, and they just start that as an additional service. So, you know, whether it's starting another service line or just emphasizing the services that are available for, for during the winter, those are some ideas to help keep the cash flow going. Now, the other thing is cash flow management. So there's 2 ways to improve your cash flow besides improving profitability. Obviously, if your profitability goes up, then it's going to improve your cash flow, generally speaking. But let's say your profitability stays the same, there's two main ways to improve your cash flow. One is to get paid faster from customers. So ways you can get paid faster is to, one, take a deposit. So, uh, a lot of folks I work with are taking a 50% deposit, and, and many— and that's usually, that's what I generally recommend unless you're in somewhere like California, you're limited on how much you can take as deposits, uh, so you'll have to Abide by your local law, laws and regulations, of course. But most folks can get away with taking a 50% deposit. And the folks that I've recommended this to and they've implemented it, they've never had an issue with pushback from customers. Maybe one customer has an issue, but it's usually the folks that are doing really small jobs. So it's— you'd be surprised when you implement something like this. And I think it's also a testament to whether the customers trust you. If they trust to sign up with you, they probably trust you to give you money, generally speaking. So, you know, that is one easy way you can really improve your cash flow is by taking a deposit or a larger deposit. So maybe you only take 20% throughout the year, but maybe this is something you can look at increasing your deposit during the winter to increase your cash flow. Right? Maybe you take 20% throughout the year, but maybe in the winter you increase it to 40%. Something that you need to do something if you struggle with cash flow during the winter, definitely consider taking a larger deposit or taking a deposit. The other way you can impact the, your cash flow is to slow or delay payments to vendors. So this is, you know, Even before we get into slowing or delaying payments to vendors, just setting up credit lines with vendors. First of all, like Sherwin-Williams, Dunn Edwards, your local Benjamin Moore store, you know, just setting up a credit line with them, and that's going to allow you to hold on to your cash because you'll need to keep your cash for things like payroll, right? You can't put payroll on a credit card, unfortunately. So You gotta have cash for that. You want to save cash for that. You don't want to miss payroll for your team. So, but you can put materials on payroll. And so definitely do that, especially during the slower parts of the year. So you can hold on to that cash to pay your team. And the whole game with cash flow is to speed up cash yourself and delay cash going out to others. Other folks. So set up your vendor lines with Sherwin-Williams, Centiverse, those things. And then, you know, don't pay early on them. Wait the full, you know, cycle, 30 days, however much time they give you for the payment terms. Delay to pay until the due date. And then another hack you could do is actually get a business credit card and use that business credit card to pay down the vendor credit line. So use your business credit card to pay down your Sherwin-Williams balance, and that buys you another 30 days, uh, to hold on to your cash to make it easier to make, you know, payroll. So again, the whole game is get paid faster, and then number 2, slow down payments to vendors. Now the last thing we'll talk about for winterizing your cash flow is Financing options. So we talked about vendor credit, which is the first one here. You want to have credit set up with your vendors like Sherwin-Williams, Dunn Edwards, Home Depot, Lowe's, those, those types of places so you can leverage that to keep your cash. The next thing, if you've already done that and you've set all the things up you need with those different vendors, then take a look at a bank loan or a line of credit with your financial institution, that could be a way, you know, get access to that, to that cash. Maybe you don't actually need it right now, and, and that's when you want to get it, by the way. Don't wait till you need it, these things. Get it before you actually need it. Get access to it. You don't actually need to— in a lot of cases, you can take a, a line of credit, you know, get access to it, but don't actually take the money out, and keep it, you know, on, on the ready, but not actually take it, and, uh, and just, and just have that just in case as a backup. The other thing is SBA loans. SBA loans have been a little bit more stringent recently, in recent months, for the requirements and the documentation needed. So it's a little bit harder to get access to SBA loans. Not saying it's impossible, it's just a little bit harder. So you'll need to start early if you— if that's something that you feel like you'll need to tap into. And again, I would look at the first two options, vendor credit and bank loans, before going to SBA. But definitely know it is an option. It's just a little bit more paperwork to do. And then the, the next option is credit cards. Another— if you should probably have a business credit card available before you do the three before you start going to an SBA loan, especially since the first 30 days of a credit card are usually interest-free anyway. It just extends your cash for an extra 30 days. So, but that is another option that we can't overlook, obviously. And the last one is invoice financing. So not a lot of folks know about this, but basically there are companies out there that will buy your, your accounts receivable. So, you know, your accounts receivable is money that's owed to you from your customers. Now, if you're a residential painting business owner, you shouldn't really have much of an accounts receivable. It should be very minimal because you should be collecting as soon as the job's over. You might have a little bit of accounts receivable, but for if you're doing residential repaint, you should have very minimal accounts receivable. Now, if you're doing commercial, that's another story. You probably have a substantial accounts receivable where folks owe you, you know, 60, 90 days, you know, waiting to get paid from those folks, especially if you're working under a general contractor. But if you do have an accounts receivable, And you can go to some of these companies. Bluevine is one of them. No, no affiliation. But if you just look up invoice factoring or invoice financing, you can find some of these companies. This is the most— probably the most expensive way to finance, to get money for your business. But it isn't often. It's a last resort. If you need it, it is there available. And what they'll do is they'll basically buy your accounts receivable and give you cash now. Tap, give you cash today, basically buying your receivables. And so when the money comes in for, for the receivable, it goes to the company that bought the receivables from you. So that's called invoice factoring or invoice financing. So those are some options for winterizing your cash flow. We talked about doing a customer reactivation to get cash flow in, maybe looking at winter-specific service lines, give you some tips on managing your, your cash flow, and also, uh, doing some financing, you know, whether that be getting a line of credit or SBA loan or what the case may be. And with that, that concludes our podcast. Look forward to hearing your thoughts on winterizing your cash flow and your painting business. Go to Facebook, and type in Grow Your Painting Business and join the private Facebook group. Love to hear your thoughts, and I'll see you next week.
