Commercial Painting Calculating Guide

 

You keep your own company. Are you rich? No — why not? You have plenty of work, your reputation is visible, them love you. So, why aren’t you rich? For years subcontractors have asked themselves that same question. WHY AREN’T WE RICH? Honestly, you should at least be well off. So, if you’re not, why not?

Chapter 1 — Some Background

In 1985 I called on a large commercial painting contractor, soon there after seeing He Hopkins give a full day workshop on professional selling. Mr. Hopkins taught me to have unflinching confidence. And to respect my clients’ time. So before making my sales call, I completed all the paperwork in advance. It took about 20 minutes. I made my presentation and asked my closing question. harga pengecatan lapangan After my customer said yes, I told him that to save him time I had taken the liberty of filling out all the paperwork ahead of time. He was so impressed inside my preparation and confidence that she offered me a job, right then, earning a living for him as a Project Manager/Sales Representative. I didn’t take the job right away, but following a year of handling his account, and seeing what an extraordinary company he previously, I joined his company as a PM HOURS. I knew this became someone I desired to work for.

We worked for the best GC’s. Our prices were among the highest in town. But that didn’t matter. Our quality and service got people the work we could handle. With huge profit margins. We estimated our projects based on simple math. If we could get our desired profit border we took the job. If not, we walked away. We had production rates to paint every possible substrate, knew our direct costs, roundabout costs, material prices, and mitigating factors that might speed up or slow down production. It was downright scientific. And remarkably accurate. And I was good at implementing it all. By 1992 I earned $148, 000. 00 within a year. I learned enough and saved enough in those 8 years to start my own company in 1994.

Over the years, I’ve made it a place to get to know my competition. By and large, they’re really good at painting. Not so good at running a business. They can do a lot of volume but not make much profit. Here’s a perfect example. One night my wife and i met a semi-competitor at a dinner. He volunteered how much business he previously done the prior year. It was the same amount we had done. So i asked him how many painters worked for him. Twice up to worked for us! That’s right. We did the same amount of business but his labor costs were double our bait. So, who do you think made more money? As i got to know him better, over the years, he once shared with me that his accountant had called him in to inform him he previously “lost his a**”. He asked how that could be; they had been busy all year long, buried in work. The CPA replied that may be true but they had obviously had not charged enough. He told him he previously to increase his prices. That was it. “Raise your prices”. Unfortunately, he stubbornly repudiated. After all, if they raised their prices they wouldn’t get any work. These were already slightly above their main rival (but way below us, I have to add). They figured these were often they could go. So what happens they did? They changed accountants! They shot the messenger. It didn’t work.

A couple years went by with no improvement and they hired a high dollar consultant and yet another accountant. It took a while but they learned to see financial statements and started job costing their expenses. They also started getting monthly statements instead of annual ones. And they saw how much they made, but more often lost, each month. They’d make a killing for two months but then lose their t-shirts the next. Two million in sales but no profit. What the bejesus! Again, these were told to increase their prices. This time they listened and did better for a few months. But then when competition picked up they slid back to their old ways. These were stuck in their way of doing things. These were also stuck on using “square foot pricing”. And that is what eventually did them in. After 16 years they decided of business.

The truly sad thing is it all has been avoided if he previously allowed us to help him. Help him you ask? Yes. Better competition means more money for us. If he previously been happy to take our advice, here is what he would discovered.

Chapter 2 — Your company

Where are you at right now? I will take a guess that you graduated from high school but didn’t go to college. If you did go to college it probably had nothing regarding construction, made it happen? Out of HS you still have a job painting. You’re a difficult worker with a good work ethic, so in the long run you worked your way up and got to be pretty good, an important member of the company, probably a foreman. Every once in a while you still have a call to do some work quietly. Maybe family members buying a good deal? You did some nice work, you’re really cheap and you began getting more and more calls for side work. As time went by you accumulated plenty of equipment for your little side business, getting paid in cash as you went along. You didn’t really know how to price your work but you have also been making money basically wondering. Seemed really quick and easy didn’t it? When you got paid you took the money, paid back the paint store, gave your folks a little bit and whoa — dadgum — you made out pretty good. This is easy. More time passes by, you’re getting more and more calls for side work, the money is great. You recognise sq foot pricing, maybe find out what others are getting per sq foot. You figure that in order to get work you need to charge significantly less than the “real companies” but still you do OK. Then the day comes that you have so much side work that you up and quit your job. You may took a co-worker or 2 with you and now you’re in competition with your old boss.

The first year life is great. Every job seems to be a winner. You then have a couple buddies on your side. They have no complaints, doing their job and you’re making some cash. With all the cash arriving you get yourself a sweet new 4WD truck. Time passes by. Word is out that you do good work. What you don’t hear is that people say you’re cheap. You leave a ton of money on the table. Soon you have more work than you can handle. You need more equipment, the people are often curved that they’re working while you drive around in your fancy new truck. They just don’t realize that you have to leave to quote on work to keep them busy. Shouldn’t they be pleased? You’re working face to face site a lot of the day, businesses work in the afternoon and on the phone all night. You’re finding that you’re always striving to find cash. The insurance premiums are due, the note arrives on the new piece of equipment, the paint store wants their money, them aren’t paying on time, your employees want some benefits, they’re not showing up for work the morning after payday and they get angry when you move payday to Friday. Some of them contact sick for a passing fancy day to explain to which you lesson. This is crazy! Absolutely nut products. You didn’t sign up for this. What is happening?

So, at the end of the year your lady gets all the documents to the accountant. He calls. Bad news. You lost money.

Impossible you say. “How could I have lost money? inch Unconsciously you charged them less than what it cost you to do the work. BALONEY, you say. “I never execute a job for less than the cost of the materials and labor”. Well, you’re right! Due to took a job for less than your material and labor. But think about cost to do business? How much did you allow for your cost to do business? How much is your cost to do business? (Do you even know how to calculate your cost to do business? ) Your price is solely based on what the competitive events price is. Not what your costs are. Big mistake!

Time passes by. It has now been 5 years since you started your little company. You’re barely making ends meet. You can’t believe the BALONEY that goes with managing a company. The money is not what you’d thought it would be. In fact, there is nothing what you thought it would be. Luckily your work is more preferable than your competitive events. In fact, were it not for your superior quality and good reputation, you’d have gone under by now. You have set your price a little higher than others but you’re still not making any a real income. You want to raise prices. Inside you know you have to, but you’re afraid you won’t get any work, so you don’t. You have to do something, but what?

Actually, if you survived 5 years you should give yourself some credit. You survived longer than most. Most guys in your situation only last 3 or 4 years. At the same time they are so far in financial trouble they collapse. They bone their suppliers for tens of thousands of dollars. They’re going insolvent, leave town, or both. Nice guys maybe. Hard workers maybe. They’re good at painting and waterproofing, but they are terrible businessmen. Many of them actually went belly up during the thrive times, with a huge backlog of work. To this day they don’t know why. Many opened up again under a new name and went insolvent again. Still not so sure why. We have never cared what our competitors charge and never will. We have costs! Our cost to do business is different then theirs and consequently our prices can never be the same as theirs — period! Emerge a bright yellow highlighter, because you’re about to highlight this. From this moment on forget about what others are charging, and never, ever, use sq foot or unit pricing again! Let me repeat that. From this moment on forget about what others are charging, and never, ever, use sq foot or unit pricing again!