Hey, it’s Brandon Lewis here and I’m out in the middle of the woods, high upon Hawk Mountain in North Georgia. You cannot tell it, but behind me there is a beautiful view of the North Georgia Mountains, panoramic almost, about 180 degrees of three beautiful mountains, but they are all obscured currently because it has rained since about 8:00 last night.
It’s a beautiful view. I mean, frankly, it could be the world’s worst view, but you can’t tell because the fog has rolled in. Many owners of painting business, in particular those who became technicians to owners who never really took any business training, never really got serious about the business end of their business can’t see what’s going on in their business.
So they just work, they move from project to project, they hope they make some money, they hope they’re making some money … And they’re really flying their business blind. So, what I’d like to talk to you about is how you can see what the view actually is in your painting business. Okay?
And there are three tools. Number one, you can really simplify what’s going on in your painting business by getting rid of all the ancillary stuff that really doesn’t matter and if you’re doing a ton of financial reporting often simplifying it is better than further complicating it. So let’s get back to basics. There are three tools that I teach members of APPC to use.
Number one is you have to be tracking your job expenses daily. And for some of you, you’re like, “Wow, this is very elementary.” But most people do not do it. After doing almost 900 hour-long diagnostics, I promise you, if I asked people, “Show me your job report for the last seven jobs,” they don’t have it. They don’t know what’s currently going on. They’ve got a feeling that they may be making some money, but that’s it.
So a job expense report, whatever you want to call it, is simply where you put in the amount of money the job is sold for, what the labor is budgeted for, what the materials are budgeted for … And you just count down the labor hours in that job and you multiply them times your average labor rate, which is your average amount that you pay a painter per hour, plus the labor burden, and then you also look at the hours that are multiplied by the charge rate, and then every single day, you simply count down. It takes probably 15 seconds worth of keystrokes, you’re finished. Okay?
That lets you know if each individual project is coming in on budget. You report that weekly with your men and they begin to talk about labor hours. And they begin to conversate about budgets. And they’re using that same vernacular that translates to your personal income.
Second tool I want you to put together is what I call a cash flow projection sheet for the month. And this is very simple. You take the number of men you have, 10, let’s say that your average pay rate with burden or whatever is $30. And let’s say that you charge $60 an hour, okay? This means that you clear $30 per hour per painter. So if you’ve got 10 painters in the field and if they’re working 40 hours, right, that means that you clear $1200 per painter, or $12,000 a week, okay?
So that’s really where your money comes from. You may make a little bit of money on materials, but that’s $12,000, then you begin taking out all of the operations expenses, okay? If you’ve got anybody in the office, if you’ve got overhead, marketing expenses, all that kind stuff.
And then you get an amount, that if you have a certain amount of painters coming in on budget working a certain number of labor hours, that tells you exactly what you’re gonna make without any guesswork.
And then finally, to check to make sure that that’s correct, have your accountant put together a cash flow report. Now, a projection tells you what you should make if everything works out the way that you think it should, or it does in your business. The cashflow statement or report just lets you check to see if your projections match your reality.
If you use these three things, and nothing else; now there are other reports, you could put together for operations managers, estimators, marketing coordinators, admin … There’s other reports you could put together. But if you will just do this, you will know exactly how much money you’re making every month, how much you should make. You’ll be able to make decisions on should I cut overhead, should I add painters? And then finally, you’ll be able to see if reality matches your projections.
So you don’t have to be blind, like I am right here. I mean, I could, if I hiked much further away from our campsite, I don’t know if I could find my way back until this fog clears.
So I’m Brandon Lewis with Painters Weekly and Painters Academy saying if you don’t know what’s going on in your painting business, three very simple, rudimentary, elementary cash-related reports will tell you.
And if you ever need help, if you’re confused about running your painting business, if you feel overwhelmed, lost, or if you feel like making 15% net profit isn’t where you need to be, or 10% and you really want to be around 30 and you run a big company, just reach out: 423-800-0520, or email me firstname.lastname@example.org. I’d be happy to help you anytime.
Take care guys.