The Blueprint for a Profitable Painting Business: Key Hires & Outsourcing

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 this is Richard, tax director of Bookkeeping for Painters.

How's it going today, Richard?

It is going well. Uh, the sun is shiny. It's a little cool out, but you know, when there's no clouds, it makes everything feel warmer. So I know we're heading into winter. I'm going to enjoy what time I can spend outdoors until it becomes, uh, less tolerable.

It's getting— the reverse is happening for me in Nicaragua. It's like starting to become more beautiful than it already is. Uh, so that's pretty cool. Because December is when it's going into the dry season. So it's like a lot more sunny and it's really beautiful. And there's going to be a lot more folks going up and down the street trying to sell things. This is where the thing in Nicaragua where to sell things, they'll go through the neighborhood with like this megaphone and just yell out what they're selling. And it's really loud and kind of disruptive. So if you hear that in the background, that's what that is. Just somebody trying to sell some, some fruit or something.

Nice, nice. That feels very medieval. Like, yeah, they need to ring a bell or something. But, or they could hire someone to do sales and marketing for them.

Yeah. Yeah, today we're going to talk about what are the hires that you should make, kind of like in sequence, and how much you should pay them in your painting business. So if you're looking to grow your company, you know, grow your painting business, this is the general sequence that I typically see, uh, successful painting businesses do in their, their business. and, and then typically what they pay those folks. So hopefully this will give you some ideas if you're feeling really overloaded with tasks in your business and you just want to get it off your plate. Uh, hopefully this will help you kind of think this through. So we, we have 7 key hires and we're gonna go through them in order of as you grow your business. So These are obviously hard and fast. You might hire someone else, someone in a different order, but this is a typical hiring sequence. So the first one is painters. Now you might start your business, you're probably the sole owner and operator, and you're the only one in the business when you start it on the first day. Start doing, uh, painting work on the job site yourself. And at a certain point, you might want to hire some painters to, to produce the work while you focus on doing the sales, marketing, and production management and everything else that needs to be done. So painters is kind of like the first hire in the business.

I mean, that makes sense, right? Like, if you're going to go out and grow the business through marketing and sales and whatnot, you need to make sure that you have the labor in place to to handle all this new work, and you're not going to be able to do it yourself. So getting someone to help you, um, you know, actually do the work, um, that, that makes sense. That would be your first hire.

Yeah. And typically what you want to shoot for is if you hire an employee, you want to pay them about 20 to 30% of whatever they produce. So if it's a a $10,000 project, you would want to pay your employee or employees about $2,500 to $3,000 for that work that they, that they produced. Now, subcontractors, if you use the subcontractor model, they're going to be a little bit more expensive because they are required to have their own business set up. Have their own insurance and, you know, workers' comp and all that stuff. So they're going to be a little bit more expensive. So you might end up spending— you might have to pay them closer to 40% of the, of the work, of the sales price that you charge the customer. Um, so that's just something to keep in mind. And if, if, if I'm giving these percentages out and you're like, oh, I definitely can't do that with what I'm charging customers, you're probably not charging them enough. So in prior podcasts we've talked about pricing, but, uh, so definitely refer to those if you feel like that percentage is just crazy. Uh, we kind of go through it in other podcasts, but that's just a rough rule of thumb. When you're hiring your painters, you should be paying them about 25 to 30% if they're employees, as a percentage of the sales price of whatever you sold it for, and then subs around 40%. So that's—

oh, I was just gonna say subs are more expensive, but sometimes it's worth it just to be able to free up your time so that you're not having to, you know, do HR stuff and deal with the payroll and deal with, you know, so-and-so called in sick or needs a vacation day. And you have less risk with subs because you're setting the prices in the beginning. You don't have to worry about, you know, labor costs, overruns. If there's a problem or a slowdown, that's on the sub, it's not on you. But so yeah, so it's each business is going to be, you know, have its own unique circumstances, but either employees or subs, depending on what works for you, either model can work well.

Yep, absolutely. Yeah, we work with a lot of successful painting businesses. A million dollars plus in revenue that have both models successfully deployed.

So either one, sometimes at the same time.

Exactly. Yep.

All right.

So the second hire that we typically see that you might want to think about is giving your phone, getting somebody to answer your phone for you. Because if you're on the job site a lot, you're doing estimates, you're, you know, talking to customers, doing production management, you are probably not available at any, you know, random point in time that someone decides that they want to have their house painted and they call your business. So you're probably not picking up your phone every time that rings. And when you don't pick up your phone, that costs you money because that person, if they're looking to have their— get a quote for their house to be painted, they're not going to, you know, call you back and like, well, I'd really want to get a hold of this particular painting business, so I'm going to give them another shot. They're going to just go down the list of who they have to reach out to on Google, on the Map Pack or whatever it is, and call the next business. And if they answer, they're going to schedule with them and you're going to lose that lead. So this is kind of a simple one. Because there's a lot of phone answering services out there that you could get set up with for like $200, $300 a month. And, and that can easily, you know, if they just pick up the phone one extra time that you wouldn't have, that pays for itself if they can schedule it. And it's pretty easy to set up some simple instructions, especially you have a a scheduler like, um, Calendly or You Can Book Me or Acuity. They have those forms that you can embed to ask questions like what their address is, what their name is, what their email, phone number, maybe some qualifying questions of, you know, is it— what's your budget? You know, so you can qualify— so the person that answers the phone, the call answering service, can qualify them a little bit by answering, asking those questions and filling in the form, and then scheduling them for an estimate, uh, right then and there for you instead of you missing the call, trying to call back, they don't answer, and then you've lost that lead. So, uh, a phone answering service can easily pay for itself, uh, and it only costs a couple hundred bucks a month, and they'll answer the phone at any point, at any hour of the day. Most of them will It will anyway. So that's kind of a simple one to get rid of your phone.

I'd say if someone calls for a painting quote at 1:00 AM and they actually get someone on the other end of the line, they need to hire that painter because that is some seriously good service right there.

Yeah. Yeah. I don't know if there's anything are there painting emergencies? Like wake up at 2 in the morning, I need my house painted right now. I'm sure it's happened.

I had a dream of the perfect color for my rumpus room and I need a consult. No, but just all joking aside. Yeah, the power of having a human being answer anytime they call, that is so powerful and that will win you customers for sure.

Yeah. All right. So number 1 was hiring your painters. Number 2, getting a call answering service to answer the phone. Number 3, accounting. So this might be when you're starting out, at least getting somebody to do the tax preparation for you because you're probably, uh, you shouldn't be spending your time trying to figure out tax forms, um, and doing that for you, especially with the risk of doing it incorrectly and just creating a mess. So getting someone to take care of your tax preparation and then maybe at a certain point also your bookkeeping so you know your numbers and what they mean. And typically what we see is folks, if you look at the averages, like if you pull the benchmark averages across the US for how much painting businesses pay for accounting is about 1%. Of their revenue goes to bookkeeping and taxes. However, that's the average, and I can tell you from working with a lot of painters that the average painter doesn't know their numbers, and they're— they haven't filed their tax return in a couple years, or if they have, they've done it in a way where they are just paying a lot of extra tax. So, uh, you know, the folks that are more squared away are paying closer to 3% for bookkeeping and tax prep. So that's, that's it. So the percentage that you're paying of revenue kind of depends on what you're having your, your accounting team do, whether it's bookkeeping, tax prep, tax planning, you know, accounts receivable, accounts payable. So the more the stuff that they do for you, obviously the more you'll have to pay. But generally, as a rule of thumb, 1 to 3% is what you look to pay an accounting team to help you out with those things.

Yeah, they're paying more for more services, but if they've got good tax planners and good bookkeepers, they are getting more back in missed tax savings, missed opportunities, avoiding having to pay silly penalties because you didn't get such and such filed on time. So I don't know, maybe this one should be closer to the top even, because this is one that kind of pays for itself if you get the right team behind you.

Yeah, I know your tax planning clients often get 5 to 10x whatever they pay. Is that right?

Yeah. Yeah. Some, some even more, especially in the beginning, which is kind of counterintuitive. You know, we think like, oh, I'm not going to hit the big numbers until If you haven't done any tax planning at all before, just, just the first year, you will see a huge return on investment because we'll go after like the low-hanging fruit, right? We want to go after the thing that moves the needle the most, that gets you the most bang for your buck. You will still continue to get savings in future years. But, you know, the first year is usually the best because we have the most the most opportunities.

Yep. So that's the third one, getting an accounting team to, to help you out with those things. Number 4 is an admin person. So this is someone helping you fulfill the work that you're, you're doing, more doing the, the back, the background admin stuff. So you, you, you already have the painters probably by this time that they're actually doing the work on the job site. An admin person is, is helping pave the way to make sure projects are scheduled, customers get their colors into, to the business, maybe taking over phone answering at this point. If that makes sense, you know, maybe, maybe you keep the phone answering service, maybe you don't. And so this admin person is just doing a lot of the, the office work that you know, that you can give to them so you can focus on marketing and sales in most cases, because marketing and sales is more, it has a higher return on investment for your time than, you know, scheduling a project or going back and forth with a customer about colors.

Yeah, you want to kind of save yourself for the high-dollar work. And try to farm out the lower dollar an hour work as much as you possibly can. You know, if you have to pay someone $15 to $20 an hour to answer the phones or schedule projects so that then you can go and do the $1,000 or the $10,000 an hour work by building the business, deploying capital, that sort of thing. That's how your business is going to grow.

Right. That's a good point. The other thing you should keep in mind is as you hire folks to help you with these things, you should spend your time on those higher ROI activities, those higher return on investment activities. You shouldn't just, you know, hang out and kind of like, oh, this, I have a lot of extra free time now. Now I'm just going to kind of cruise. I mean, if you do that, I mean, you could do that, but you're just not going to, your income's going to suffer for that. You gotta take that extra time and actually, you know, focus on the, the higher reward activities to get to the next level.

Yeah. These are hires for a purpose. We, we know you're a hard worker. We know you could handle it, but you're hiring to free yourself up to do the big money work.

Yep. So admin person, and, and you can get creative with the, the admin person. I mean, the, depending on what you want them to do, you know, you could go and hire somebody in a different country to do these tasks. There's— we work with some, uh, talking to a painting business a couple weeks ago that was— has their admin person in Mexico. So this is something you don't necessarily have to get a US-based person. The benefit obviously of getting someone to work as an admin person in a different country is that it's probably going to be cheaper because the strength of the US dollar. So you, you could, that is something that you could look into doing as well. All right, so the next one is marketing. So, you know, at this point, if you're going in sequence here, we, you have painters on the job site, you have an accounting team, you have your phone taken care of and someone answering your phone. You have an admin person scheduling projects, doing customer onboarding. At this point, you're probably, you know, over $500K in revenue. So this is about where you might want to consider between $500K and $1 million. You might want to consider getting a marketing agency. And a marketing agency can help you run social media ads, help you with SEO, help you rank on the Google Map Pack. It can do a lot of things to really grow, help you grow your business to the next level. So, and it can get pretty nuanced with the marketing, all these Things change very frequently. It's hard to keep up with it. So you're likely not going to be able to keep up with all the changes happening with the marketing side of things. So getting an expert to help you with that can really, can really help you. And what you'd want to pay a marketer is, is typically 5 to 10% of the work acquired. So if they help you sell an additional $100,000 of work, you should be paying them around $5,000 to $10,000 for that. So that's something you want to track in your bookkeeping, making sure you're getting, you know, a 10x return at least. Yeah. Or, or say it another way, 10% of whatever that they help you acquire.

Yeah, Daniel, you were mentioning, uh, social media ads. Excuse me. Uh, sometimes people will tell me like, hey, I really want to hire my kids in my business, but I don't know what they can do. If you have a teenage son or daughter, I guarantee that they are very familiar with social media, and they might want to take the opportunity to shoot film of your projects, shoot testimonials from your customers, edit these videos together and post them on Facebook Reels or TikTok videos. And you could pay them, you know, a fair and reasonable wage for doing that and help shift some income from your higher tax bracket over to their nonexistent tax bracket if it's done properly. But that's something that teenagers can, can usually get a little bit more excited about, get a you know, have a little, you know, part of the family business without having to say, like, pick up a paintbrush. So that can work out good too sometimes.

Yeah, that's a good point too. You know, as you grow, looking for opportunities for tax planning, hiring your kids is definitely one of those tax planning strategies. So maybe they, they could be an admin person or do some of the roles of what an admin person would do. Or take some of those marketing tasks and you can pay them for those things and that could save you on taxes. So yeah, that's a good idea. Yeah. So that's the marketing piece. The next hire a lot of folks look at around this time, over $500K, around a mi— or between $500K and a million is a production manager. Someone that's going to work with the crews to schedule them, make sure that the customers are onboarded, make sure that we're collecting the check at the end of the job, make sure there's— the customers are giving a Google review. So making sure that everything's ordered for the job. This does have some crossover with the admin person, so it might be your admin person grows into this, or, you know, maybe you'll need to have a production manager that knows more about the job site to be able to QC the job site. So around this time of around, you know, $500K to $1 million, this is where people look to, you know, see if they can get some help with production management. And typically, recommend paying that production manager somewhere between 5% and 7.5% of the work that they produce. So if you're doing $1 million in revenue, that's, you know, $50,000 to $75,000 per year that this production manager would be able to make with that guideline. Often folks are paying them salary. Sometimes it's a salary plus a bonus based off of the gross profit and the customer satisfaction. So gross profit, you know, on the job site, if they maintain gross profit of over a certain percentage, like 50%, let's say, and then plus the— they have, you know, a certain amount of Google reviews that they get, or they do some sort of rating from— they get a rating from customers that they need to maintain a certain rating from customers, some sort of customer satisfaction so that, you know, that they're producing the jobs efficiently, but also making sure their customers are happy. So you could tie bonuses to those two things. So you do like maybe 75% of their earnings are through just a base salary, and then the other 25% they can earn through bonuses by hitting those different metrics like gross profit and customer satisfaction.

And could you measure customer satisfaction through maybe like, you know, a follow-up phone call or a customer satisfaction survey? What might be some good ways of actually like quantifying, you know, are your customers happy?

Yeah, the one that I like is the Net Promoter Score, which is, it's been studied to Some smarter folks than me basically figured out, hey, you ask this one question to customers and the question goes something like, how likely are you to refer us to friends and family? And then you have a scale of 1 to 10 that the, the customer would select, 1 being highly unlikely to recommend or, and 10 being highly likely to recommend. And then they select along that scale. You know, 1 through 10. And there's a, there's a little formula to calculate the NPS score, the net promoter score. Basically, if someone gives you a 9 or 10, that, that means they're a high promoter. They're going to recommend you to friends and family. And if they give you a 7 or 8, they're kind of passive. They give you a 6 or lower, then that means they're a detractor, meaning that they're gonna talk badly about your company. So then there's a formula associated with how to calculate the NPS score once you're getting the feedback. And like a 70 NPS score is world-class service. And then they have, you know, so, you know, you could, you could have your production manager get, have a base salary of $50,000. And then if they have an NPS of over 70, let's say, over the course of the year, they get a bonus of 10% or $10,000 or whatever it is, you know. And then maybe gross profit, you know, if they maintain gross profit over X percentage, 50%, they get another $10,000 bonus or something like that. Or maybe you do it out quarterly instead of waiting to the end of the year. So yeah, those are just some, some thoughts on, on, uh, paying a production manager.

Yeah, very nice. And, and that gives him an opportunity to, you know, use his talents and skills and be rewarded for his work. It kind of gets, uh, skin in the game for your production manager and also, you know, drives more, more revenue for your company. So that is a really nice suggestion.

Yeah. And then the last item is a salesperson. This is usually the last higher that folks go for, not the last one, but like the last, it's not the last one because you can always hire more folks depending on how big you scale, right? But this getting to, you know, $1.5 to $2 million, this is kind of the last big hire. So, and that is the salesperson. So hiring a salesperson to or maybe 2 salespeople, you know, because it's often recommended to hire 2 at a time because salespeople should be competitive. You want driven salespeople that want to make money and they're usually competitive. And a lot of folks are paying salespeople straight commission, like around 8% commission. Some folks do a small base salary or or just pay for paid training. But the general consensus here is you want to keep your salespeople hungry to close sales. So don't want to give them a lot of base salary. You want it to be mostly commission, if not all commission.

Can this be a difficult one to hire for? Because for so long you've been the salesperson, you are the face of the business, And it, this requires you giving up a larger measure of control than any of the other previous hires. You're trusting somebody else to, you know, represent this, this business that you have built from scratch. And is that sometimes why we hesitate to make those hires and maybe wait a little bit longer than we should?

Yeah, there's definitely, it kind of depends on your goals. I think a lot of folks are good with kind of having a business that is their profession, you know, and they want to be involved in the day-to-day. And so maybe they want to be the salesperson and do that and then just kind of have a, you know, you can run a $1.5 million painting business doing the sales and maybe you have a production manager helping you. And you're making 20%, 20-25% profit off of $1.5 million. And that's a pretty good amount of money. So you can comfortably live having that type of business and never worry about hiring a salesperson for sure. If you want to move past $1.5 million or around there, probably need to get a salesperson to help you out with that. So, you know, if your goal is to scale past that, then it's one of those things you'll have to kind of get over and create a good process and a good system for them to fall in on to follow and represent your company well.

Nice. Nice. So just to kind of recap, First hire is going to be help painting, help getting the work done. Second thing we want to look at is making sure that the phone is always answered and taking that off of our plate. Third is accounting. So that's going to be your bookkeeping and your tax prep and possibly tax planning. Fourth is an administrative person to schedule projects, do customer onboarding. And this doesn't necessarily have to be a US-based position. You could you know, use someone from a different country. Fifth, we're looking at marketing, which is going to be about 5 to 10% of the work they get for us. Good chance to maybe bring your kids in for social media if that's something they're interested in. Then we have a production manager to actually run the crews. Their pay should be about 5 to 7.5% of the work they produce. And you want to split that between salary and bonuses, maybe like a 75/25 split or whatever is appropriate. And then lastly, a salesperson. And that salesperson's going to be looking at about 8%, mostly commission to keep them well motivated. And is it at this point now where you're starting to transition into a, you know, 100% operations manager, CEO of the company.

Yeah, if you have all these roles hired, you're pretty much just making sure the system's running appropriately. Still, I'm sure very active in the business at this point because someone has to make sure all these things are happening. But yeah, for sure, you're not on the front lines anymore at this point. And I should also reiterate that The sequence is not like you have to follow the sequence exactly. You know, some folks might get their phone handled right away, get a phone answering service right off the bat. You know, I wouldn't argue with that. And then maybe you're not a good salesperson, so maybe you want to get a salesperson in first before a production manager because you like to make sure things are getting done right on the job site. You like that more than than selling. And so maybe you, maybe you're not that good at selling. So, you know, these, uh, this sequence would def— can definitely fluctuate. We do see that, you know, but this is just kind of a general, um, generally what we, we see other folks that are successful do.

So being self-aware and understanding, you know, that you have strengths and then you have things that you aren't so strong at. And focusing on the things that you're very good at and hiring for the roles that you're not so strong at, that seems very smart.

Yeah, absolutely. All right. Well, we'd love to hear your thoughts on maybe you have a different sequence of how you did things or how you're going to do things. I'd love to hear your thoughts on your hires in your business, what helps help you grow your painting business. If you go to Facebook and type in Grow Your Painting Business, you can find the private group. Just request access, we'll accept you and love to hear your thoughts.

Absolutely. Thank you for listening to us today, and we hope to see you on the next episode.