Welcome to the Painter Marketing Mastermind Podcast. The show created to help painting company owners build a thriving painting business that does well over one million and annual revenue. I’m your host, Brandon Pierpont, founder of Painter Marketing Pros and creator of the popular PCA educational series, Learn, Do, Grow Marketing for Painters. In each episode, I’ll be sharing proven tips, strategies and processes from leading experts in the industry on how they found success in their painting business. We will be interviewing owners of the most successful painting companies in North America and learning from their experiences.
In this series titled Systems Beat Fear John Macfarland of Macfarland painting will be discussing how to overcome what can be scary chasms in your company’s growth journey through the implementation of effective systems. It is a five-part series in this episode.
Episode one, John will be discussing team pay philosophy and how it sets the stage for accountability in his company. In episode two, John will cover growth sticking points he has experienced while scaling Macfarland painting company. In episode three, John will deep dive into his systems for his office and sales. In episode four, John will lay out the systems he uses to ensure success in his operations management and out in the field. And in episode five, the final episode, John will discuss his unique approach to meetings and how they have become the most productive part of his team’s week.
If you want to ask John questions related to anything in this podcast series, you can do so on our exclusive painter marketing mastermind podcast form on Facebook. Just search for painter marketing mastermind podcast form on Facebook and request to join the group or type in the URL facebook dot com forward slash groups forward slash painter. Marketing mastermind. Again that URL is facebook dot com forward slash groups forward slash pain, marketing mastermind. There, you can ask John questions directly by tagging him with your question. So you can see how anything discussed here applies to your particular painting company.
John, thank you for joining us. Thanks for having me. Brandon. Pumped to have you back, man. You were a uh a veteran of this podcast. You’re, you’re one of the few who came on twice um last year. So super pumped to do this series with you, man. Appreciate it. I got a new new building. We’re in the old building when we did the last two. So, wow, congratulations. It’s behind me. You see the artwork behind me? That’s mine. I do, man. I love it. Um So yeah, you so I I get feedback, right?
Kind of as people listen to podcasts, I’ll get feedback far beyond when we film or when we release podcasts, sometimes I’ll get feedback six months or a year later because people just come, come across episodes and there are certain episodes and guests that I’ve gotten a lot of feedback from and yours is one of them and I know that, that people listen to but all of them, you know, like pretty equally. Uh So when I get feedback from a couple over and over again, it means that they really resonated.
And for you, the, the thing that really seemed to resonate a lot with people was your pay structure, your approach to accountability in your company, you really organized it a bit differently. And I know when you and I were discussing this series, you said that everything, everything that you’ve built is really contingent on that buy in. So I, I, I’d love to kind of explore that with you right now. Yeah, absolutely. I think, you know, when I was, when I was coming up and paid people, traditionally, you know, we had a ton of overtime hours, we had guys that worked really hard and, and were paid good money.
My philosophy early on was pay people uh better than our competitors. But at what point, you know, and then what happens when jobs go slow. Um So I, what I try to tell folks is the way that I pay my staff is generally how owners in the business get paid. If you increase efficiencies, things go well, it’s set up the right way. The owner makes more money when stuff goes sideways or goes slow. Or there’s a problem on a job, you make less and, I mean, sometimes you make zero or lose money as an owner.
Um, our pay system kind of balances this out between the ownership and the field staff so that when they’re doing well, they’re being paid well. And, and so is the ownership or our sales team or office staff as well? And I just think it conceptually has us all rowing in the same direction, making decisions that impact us all um to benefit us at a very similar rate. So just so I’m super clear if McFarlane painting takes a step back, takes a hit, your employees start paying you just to, just to make it up.
Well, they, they, if they got, I just, I just, I just check with you well, you know, but I’ll tell you what Brandon. That’s not that ironic because if we, if we have damage to a house, right? So a couple of weeks ago, we had a ring light uh security camera that, that got damaged. And the first thing the guys in the job so said is, well, this is coming out of the job. It’s coming right out of our pay. There was no question about like, you know, what do we do or is this a big deal now, we don’t enforce things like that.
But culturally, they’re paid so well that, that was, that Rube’s expectation. I was like, hey, this is coming out of the pay on the job, right? Um, it was a new or higher accident, not the end of the world, not a huge expense. So we didn’t do that. Um, but generally, no, our, our men and women feel so strongly about how they’re compensated that it’s extreme ownership for them and I love it some Jaco extreme ownership here. And I think the, um, the, obviously they have the potential to make more money and they probably make more money than their counterparts in other companies and therefore can accept or tolerate, you know, or be ok with something like that, that the traditional employee model would make someone obviously very disgruntled.
Yeah, we have, um, gosh, I don’t know what percentage of our field staff did over six figures last year, but it’s a reasonable percentage did over six figures. It’s incredible. Yeah. So let’s, that’s not working seven days a week. We’re pretty, we, we’re pretty spoiled. We work five days a week and some weekends is optional or somebody before a vacation. So that’s a pretty manageable 45 hour week, you know, in the summer months up here in Michigan. So it’s, uh, it’s not from just working a million hours to get to that point. Man.
That’s great making six figures 45 hours a week as a team member. That’s, that’s the dream right there. So let’s get super into specifics, you know, and I think I have a really good understanding of what you’re saying, but I want to make sure we flush all this out fully. So when you said you used to employ a more traditional pay model, what did that look like? Yeah, we had uh back then really, I mean, before we transition to what we call this lump sum system is probably the most relevant because that’s gonna be the point that everyone that is listening is at, we had, you know, six or 78 people and we paid them conventionally, right?
So time and a half over 40 hours and they were all year round employees. Um they’re all W-2 staff, we still don’t subcontract anybody. So these are our people with our benefits. Um Then back in the day, we didn’t have the health insurance, we didn’t have 20003k, we didn’t have short term disability like we do now. Um So back then it was like most guys in the painting business, you pay people pretty well. They paint homes and they get paid pretty well. The problem I dealt with was the that pinch of overtime and you know, you gotta in Michigan, we have like a four or five month sometimes season to paint outside.
Um So you have to be balance. How much overtime do we pay without burnout of field guys and girls and then, you know, but we can’t tell people we’re booked for the season too fast either. That’s bad for business. So, um I was looking for ways to increase efficiencies and increase their pay and increase their buy in. Um And honestly, it was one of my, one of my staff kind of came up with this idea. He said, listen, what if we just kind of paid a fixed rate on a job and you put everything on me to get it done efficiently the proper way, no callbacks, no touch ups.
Um The end result probably pays you about the same, but I think I’d be incentivized to like do this. And so we kind of worked through early on uh some beta testing of numbers and said, OK, what’s gonna work? So, um I pulled back several years, maybe four years of payroll data and, you know, paint material data to figure out what is that labor margin for my field staff? Um And at, at that time, originally, it was 34% is what we paid. Um, we’ve broken that down a little bit different now.
We have 2% goes to the project managers on top of their field time because they’re kind of working management between teams. So the, the effective rate for the actual straight painting crew is 31%. And uh we did this and, uh, you know, I had, uh I had a group of guys that have been with me for a little bit and they were very hesitant um they knew my personality and thought, you know what? This is just gonna be John saying harder, faster, more and and it’s gonna be a tough system to beat.
It took two paid periods of Aaron being in it before everyone said, ok, enough’s enough. Let us all get into it. It really was about a one month period that the, the masses found out about how it’s working and, and really clamor to get involved on. So you made it optional, at least in the beginning, in the beginning. I mean, the goal was we had to go one way or another. I didn’t want to be split. I had enough faith in it to know that it was gonna work.
Um, and to be honest, I kind of slow played, letting the other guys into there. So they really coveted this. Um, we do that with new hires even today. We have a 60 day period where they’re paid conventionally. Um, I don’t want to add the stress of this system and not knowing exactly what your hourly pay is. Um, we want to have people come in, get acclimated, get their feet wet and then they transition into the system. So we still use hourly pay for new hires and that’s smart.
Yeah, you’re gonna run into all kinds of issues. Burn people out, gonna kind of panic a little bit maybe in the beginning. Um So you, you did, you reviewed four years of historical data and then, and then you came up with the conclusion that you were paying 34% to labor. So you just stuck with that exact percentage as what you started with. Yeah, I did. Um We really kind of hit the nail on the head and now our office staff and sales staff, you know, the, that, that number of straight payroll is wildly higher than 34% because there’s a good percentage of our folks here that are not field staff, but for field staff, that number has still held very true.
Ok. And, and the intention, I guess was to become more efficient. It sounds like if it’s 34% and that’s what you are historically paying, then you weren’t planning to increase your profit margins per job because you’re at the, you decided to stay at the same profit margin when you did that. But potentially you could increase the volume of the volume goes up. Yeah, uh exponentially the volume’s gone up. Um And you know, inflation and price increase is notwithstanding the efficiencies that the pay system causes us to require from each other from either me as the owner, our operations manager, our sales staff.
Um It really is this level of accountability. So think about a project, let’s say it’s, you know, $3000. Um Right now, we would expect a crew of three people. If they’re pretty high functioning, they could probably do that in a day, you know? And I mean, $3000 total materials labor the whole shebang. Um, and they can do that because the materials are stocked in our warehouse. Right. Tape, paper cock. All those stock things are here all the time and they’re inventoried. Um, they can do that because our office staff is contacting clients and getting paint colors two weeks before a project starts.
So they’re not spending time doing that. They’re not going to the store to pick up paint. You know, I think I, I gave you the example uh before, but if, if our crews pull into, she and Williams Home Depot P P G Lows, it doesn’t matter. Um I really use the illustration. Take $133 out of your pocket 10.5 and leave it in the parking lot. That’s what you’re doing. And so if they’re going to the store too often, there’s a break in our system because it should be set up that their pain is delivered a week ahead of time.
It gets loaded in their vans and they go to the job. These are generally folks that love their trade and they’re very good at that, but they might not be great at material takeoff. They might not be great at, you know, color and design and placement. And so we back in the day I did those things right myself to get them kind of set up for, to go to work that day. And then now we have these systems where there’s other people whose job is to get this put on a platter so our crews can go out there and just really hammer out nice work. Yeah.
What a vivid metaphor that pains me to think about that. Yeah. And like, you know, even from a sales standpoint, right? So we dealt with this struggle over the past few years of trying to get our salesmen to take adequate pictures and put notes in the client file. Well, if someone can do $1000 a day with really good material, that same buddy’s skill set. If the system isn’t as good, maybe you can only do 700 because they’re getting hung up about colors and placement, there’s wood replacement that they didn’t know about.
They didn’t have photos, so they forgot a little giant ladder that they needed. Um And it took a minute to have the sales staff understand that that’s a 30 40% increase in their pay because the output of the field staff is growing up. So if those guys and girls do a better job of getting things together for the field, people to take over, they’re paid with the same amount of bodies is capable of going up exponentially because they have it set up. Um because they can roll out more projects, they can roll projects, they don’t have to, you know, ask the customer, we have notes on, you know, if there’s uh, kids in the house and nap time and pictures and moving stuff and, and our sales staff takes really good photos like that so that our crews know the exact game plan when they walk into a house.
They don’t have to do a walk around and have a discussion for very long. They know they’re going in even down to the order of the quote, right? So if we’re painting an interior two story home, most guys in our field like to paint top down inside out. So you’re not moving ladders up stairways, you just finish painting it, right? Or estimators just write the quote in that order. And so we don’t have to have a discussion with the other estimators and, and the homeowner, they know the order of that quote is the order that we’re gonna follow.
Maybe we can see because Johnny’s got to take a nap at too. And so we skip that room and do walls and that later or something. But you know, those little implanted systems make the field staff more efficient. Um, and, and pay them more money to do so they don’t need to, you know, have a 15 minute conversation with a customer about, ok, let’s walk through this. What order do you want? This painted and things like that? It’s just, it’s done. Yeah, that’s huge, man. That stuff adds up those little things add up over time just to get a clear picture of your company and the magnitude.
How many painters do you have right now? Field staff were at 42. Ok. And what was your revenue approximately in 2022? 2022 was 0003. Ok. So over seven million, it’s a sizable company. And then do you know your, your support staff, office personnel, how many people you have there? Uh five sales staff and four office staff, really kind of two office staff and then a, a marketing director, a designer uh and a business manager that are not, you know, general customer service office people. We have two that are kind of general customer service office folks. Sure.
Ok, great. Thanks for sharing that. So with the, with this transition, when did you make this transition? What year? 2000 14? Ok. 2015. Yeah, I think it was the summer of 14. And did you have any team members who did not want to make it or who ended up leaving? Um I had team members that didn’t want to make it, but did it? Um I certainly have had some guys that have left but not because of the pay system. Um We have done a really good job learning over the past 8, 10 years with this, that part of that culture and hiring.
When you explain this, if people’s eyes light up and they lean forward, they get it and they want in on it and if they seem confused, they’re probably never gonna be a great fit for us. You know, it’s, they have a, maybe they, they’re great people but they have more of a 9 to 5, super predictable mentality, you know, we want forward thinkers that, you know, really like, ok, I’m gonna get paid $400 to paint this, uh, man, if I don’t go to the store, I don’t take excessive breaks.
My van set up, it’s $133 in eight hours or I can make it $400 in 12 hours. If I want to go to Sherwin Williams twice and you know, take an extended lunch and, and do things out of sync from a process standpoint in the house. Those are costly, you know. Yeah. Yeah, this is great, man. You’re essentially accomplishing what you hope to accomplish with, with like uh an esop or something, you know, get an employee stock ownership um program, but you’re doing it. It’s almost a, a form of profit sharing in a way for sure.
Yeah, I like it, man. Ok, so you are, have you tracked and I’m sure you have it kind of just basically asking for the information after you started doing it. What happened at your company, right? So you went from, from 34% and I know there’s now split a cut that’s going to the project manager. So 31% is going to the actual field staff. What has happened since, have you measured the, the volume increase? The, have you measured uh what the typical painter was making and how that changed after that?
Yeah. So volume increase, you’re talking because I, I started off as a residential builder um with a focus on painting. And in 2013, um the company was ready to have this growth and I got rid of a lot of remodeling projects. So I cut my gross revenue down by half. Um So we transitioned this. You’re talking, we went down to 900,000 or so. Um Yeah, it was, but it was, I had to do it because that was so labor intensive for me and, and in order to grow, I had to shrink and I had to, you know, tighten up our offerings and, you know, when I was in the field, we never said no to anything.
We did everything for people and, you know, so a lot of people start, man. Yeah, you don’t wanna say no to revenue. It wasn’t that long ago. I mean, I was doing roughs. We do siding. It’s, I mean, we, we would do anything for anybody but in order to grow and replicate this, we had to make it down where it was just much more of the same predictable thing that allow people to succeed. Um You know, not to the tune of mcdonald’s, but you know, it’s kind of a model of that, you know, uh just stamping this out where it’s much more uh less stress for people.
So, um and our staff, at that time, our average painters and they’re probably making 30 40 a top end guy might be $0003,000 back then. Um You know, and now, like I said, I think we have probably seven or eight field staff that were over six figures. Um Our average painter right now is in the sixties 60 K a year or, you know, average experience, we’re talking four years type. Um You know, so it’s, I know that that’s there. Um The volume of work increased at such a rapid rate that um you know, the work that 11 had does now compared to even when we started, this is probably double.
Um and certainly the caliber of people and some hiring stuff has helped with that. But I think a lot of it is these little tiny built-in efficiencies like the order of operations on a quote. Uh and some things like that that we’ve done uh that in order to do what we say we’re gonna do this holds us accountable too. I have to have good systems and measures in place. So that um what we’re selling folks when they come on board with us happens and it happens for them fast because it is scary, you know, so generally the right people after one pay period.
They’re kind of looking around saying, oh my gosh, we did, our team did 25 $20,000 last week. They start running math. And then those are the people we know that we got the right fit because they want, they’re begging us to get out of this hourly cap system quick and some system. So, yeah, I love the fact that it holds you accountable as well if you have them coming in and you say you’re gonna have the warehouse stocked and they’re not going to have to go to the store and, and they’re gonna be positioned to succeed.
If you drop the ball on that, you are gonna have uh an employee retention problem. Oh Yeah. Yeah. Yeah. Awesome. So I know when we talked last year, one of the uh I guess more complicated things, not that complicated, but kind of the minutia of this system was how the 31% is split among the crew. Yep. Let’s dive into that. Yeah. So, um I’m trying to, we’re a little different now, so I’ll try to make sure we’re starting at the beginning. I don’t wanna confuse folks and jump ahead.
Um Back then I was dictating kind of the breakdown, right. So we knew we had a crew lead, we had a crew guy and we had a helper apprentice type with a team of three maybe. Um And we generally tried to come up with fixed percentages that were paid to the team. So, you know, maybe it’s 40% to the crew lead and then 30 and 103 to the other two folks. Um, and just as a baseline so that it wasn’t reinventing the wheel every week, we operated that way for quite a bit on a team.
If it’s a two person team and one skill is really good and the other one’s a little green, maybe it’s 60 40 or whatever percentage makes sense. And so back then our teams knew what their cut of the cut was every morning. Um Then we started to figure out like, ok, it’s a little hard. We might move a team member around, they might start a job and not finish it. So then we started to have whoever was the direct project manager kind of dictate that pay breakdown and on our curbside reports which are really unchanged from the time we started this, there’s a little box at the bottom where they log their total hours uh and divide that, you know, by the growth of the job and they’re figuring out what that average hourly production is and then how we did it back then is that they would walk up to everybody and say, hey, Brandon, awesome job today you’re at 32.
Hey, Tim, you did a good job. You’re at 24. Um And, and, and it was done in real time and I think there was some value to that. Um because again, the system was, I don’t wanna say unproven, but it wasn’t quite as polished as it is now. And so I think that real time feedback was important or that predictability matters when it’s new. Uh, now it’s a little bit more obscure because our teams are kind of dividing these percentages up. And so the, the makeup within the teams is a little bit more complex than that.
The actual project manager is dictating the pay for their 10 or 12 people. Um And generally we’re paying them so well that no one’s concerned with. Is this good enough or not or did I get shorted a little bit here? Should I gotten more? Um Because the crews are going through and figuring out their average dollar per hour. And so there’s some historical data that says, hey, our labor rate on this, I’ll give you an example. Uh last week, the, the paid labor rate for our entire company was over 40 bucks an hour.
So if you’re really good and you got a summer helper that’s only getting $20 an hour. Boom, you’re 60 immediately. Um You know, if we just take that off there, so that’s been effective having them know the numbers because they know if it’s a good, bad or great job generally where their pay will fall and it’s also good that no one is hypercritical or upset. We still have the data accessible. They know exactly what their average pay was for an entire pay period. Um, with all the jobs that accumulated to it.
But we don’t have very many instances where people are disappointed by, man. I thought that was gonna be better than that. Um, it’s like, yep. And I’ve been running my own numbers and I know where I’m at and I’m great. We’re good. That’s phenomenal, man. I would absolutely think that, that it would become this political debacle, you know, and, and that project managers would be favoring some people or others and, and even though people are being paid better than they were at another company, they would get envious or upset that, you know, John’s making more than them or Frank, you know, um that, that you’re saying that just basically doesn’t happen.
No, it doesn’t happen. And when we have those people that are, they got a little bit of ego in Bravada, which we love, right? We want them to be motivated. We’ll start to put them on jobs by themselves and see what their average hourly is. Uh 0003% of the time. They’re losing money. At best case scenario, they’re making the same that they did with the person that was taking too much from them at the top end because they’re not really clear on how much that crew lead on the job site is doing and setting them up for success.
So they’re like, I sprayed this whole house, you know, I, I should be getting paid top end. Well, ok, you did that because all these other things were handled for you, right? You know, we knew the color was right. We knew the material was ordered. We know the sprayers working order. The customer knew what time we’re arriving when you were rolling out the paint spray and hopping up under the roof. Um They had done a walk around, it, discovered a couple extra pieces of wood and done a sign change order.
So they set this up for you to be really good at what you’re good at. Um And those, that’s when we start to train people. Ok, you’re really good. You’re not ready yet. So let’s back this off. Let’s learn from working with your crew lead on the job site and figure out what do we got to fill in for some gaps that you’re making what you think you’re worth? Um Because if we, if we put up somebody on an island for a job or two, we will see their pay at best case scenario, be the same that it was before or possibly go down a buck or two an hour because they’re just not ready for it quite yet.
Uh But we give people the chance to prove it, you know, and if they do it and it works well then fantastic. We train them up as a lead and we start staffing underneath them as soon as they’re available and we don’t look back. So you, you will actually send someone out to do a project by him or herself in this. And how do you, I, I mean, my fear would be that that project is not going to go as well as maybe I would want it to go, you know, maybe it’s gonna take longer.
Maybe they’re gonna make mistakes. How do you, I guess balance the potential ramifications from customers while giving your employees the ability to prove themselves. We pick the jobs the right way, right. So we may look for an empty house, a vacant house that we can check on the quality of work without the customer being near us and, and saying, oh, this guy’s kind of green, he’s a good painter, but he’s kind of green running a project. Why is he in my place? Um So we’ll pick something like that or we’ll pick something that technically they’re quite good at and maybe it’s time management or client management that they’re a little soft around.
If they’re a little softer on client management, we might send them with a p client that knows, hey, we’re, we’re a growing company. We have newer people and they’re very, very patient with us. Um But very few of those balls get dropped. I mean, honestly, I think they’ve gone through some meetings with me and our team and they know the expectations. So, uh there’s not gonna be real problems. They’re just gonna be a little slower at it, you know. Yeah, I love it. It’s, it’s calculated risk, you know.
And uh, yeah, kind of bouncing. So when you, um, when someone comes on, I’m understanding the kind of the value split and how this all works and people do have the ability to prove themselves. But do you have general timelines like, ok, usually after a year, after two years, usually a percentage moves up X amount. Do you have anything like that? We do? So we have kind of a sliding scale based on ability. So if someone is, you know, brand new, when can they effectively mask and cover and move furniture and wall ceilings or roll walls or pull sand walls, some of these more entry level tasks.
Um We have kind of a metric that says, ok, our competitors would pay that person 18 to $20 an hour today. Um Our expectation for them in lump sum is they’re making 22 to 1893 day to day and we have about five or six categories where there’s, you know, some skill sets and it’s defined. Um And, and I would recommend if you, if you can come up with a percentage, what we tell folks is, is your goal to be baseline worth coming to work that day is 1883% above your expected hourly or what, you know, neighboring company may be paying you.
Um It’s my job to shave off the waste and make that 1873% feel very easy to get, you know, uh, some type of projects like commercial buildings for us in our market pay our guys wildly high. Um, some of the commercial only contractors pricing I think is way out of whack. We provide a better customer service and we had five that got done last week. The average hourly pay to the crew on that was over 1863 bucks an hour. You know, it’s easy. It’s not a high end homeowner with, it’s like love.
We show up on time. We know what side of the building we’re doing when we already have a parking lot planned of not parking. Um, things are ready to go, the lifts been delivered. I mean, those things are done so they’re showing up and just doing what they do best, which is bringing out siding or block. What is your guys split between residential and commercial? We’re probably 1853% commercial at best. I think it’s probably more like 1843 to 1833%. Um, it’s an area we want to grow. Um, but the, the turnover and velocity of customers is so much faster and residential.
It’s hard to have that. The vibe kind of. I, I love 1823 1813 honestly. But, um, you know, we can paint three or four residential jobs and have three or four happy customers that grows to 1803 happy customers much faster. Um, I think the residential people are more loyal to referring contractors, commercial it’s a little transactional, you know, they don’t tell their buddy who owns another building or something like that is fast. So it’s harder for us to get where we want to on that. Right. We’re really residential repaint guys.
We don’t do any new construction. Got it. Ok. So I want to go back to this idea of the, you know, breaking the ring uh that happened recently, you guys just paid for that, somebody pretty new, not that expensive. One of the, you created a, a really robust outline for this podcast series, which I very much appreciate. It makes my job way easier and helps ensure the quality of the series. But one of the things you had talked about and, and we have other episodes that will get really in depth on this with the, the operations management and, and the systems and everything.
Um But one of the things you had mentioned was just being careful of, of um items in China cabinets, for example, and if you’re not clear with the customer, then then they’ll either keep it in the cabinet or they might move it to the table. And ultimately, you have this liability of potentially breaking a plate. So let’s say a really expensive plate is broken or a window is broken or really anything that, that is potentially quite expensive. How do you handle it? Yeah. Well, we have, we obviously have liability insurance, right?
So if it’s a big deal item, we’ll make a claim, but I, I really don’t do that. Um, I think it’s about three or four years since I had a claim. Um, even with the bond that we do, uh, I think it’s better for us and the client and everybody, if we just address those out of pocket quickly rather than we on insurance and things like that, they’d appreciate things. It’s a, it’s a bad look. So, um, if there, if there was damage, you know, like that, um, the, the folks on site generally call their direct supervisor, project manager.
Hey, um, this, this got knocked off, it broke. Um, assuming we can replace the item, right? It’s not grandmother’s import in China that there’s no replacement on, um, that’s gonna get bought and, and dropped off like that ring light immediately, you know, before the job’s done, it’s handled, it’s replaced. Um, the cruise, like I said, the cruise assessment is ok. Well, this is just gonna come out of the labor, um, depending on the situation or if it’s somebody that had a problem maybe 21401, 215000 months ago, um, maybe we’ll take some of it out of labor, but generally if they elicit the correct behavior, no, the company’s gonna eat that.
You don’t have to worry about it. And, um, you know, we’re kind of calling their bluff a little bit, right. So they, they said, hey, I owned it. It happened, we didn’t have this prepped, right. We didn’t have a good walk through with the customer. Um, our contract says they need to remove small breakable things and I didn’t enforce it with Suzie and my bad. Um, we’re gonna say, ok, let’s just not do this again and we don’t have repeat offenders because it’s enough that, um, I like the phrase, you know, don’t gamble minutes for hours, right.
Don’t cut a little corner that’s gonna save you a couple of minutes to have a call back or um you know, spend a second to move a TV or a base out of a room, even if the customer is not available to do it because it’s just minutes, it’s not gonna be a big deal. And uh and so for us, yeah, we, we would replace something like that real quick and, and handle it. Yeah. Ok. I love that. So let’s get into and I don’t want to get too into the systems right now, but I wanna focus, continue to focus on the pay.
Let’s get into how you are incentivizing other staff. So you had mentioned the project manager, you know, the talk about the estimators, if there’s any sort of um quote unquote profit sharing plan that you have with office staff. What does this look like for everyone else? Yeah. So our, our estimators are paid, you know, a small base salary and then a a commission, traditional sales staff salary, right? Um They actually have a metric of uh like errors and omissions or problems on quotes that that can be if it’s out of control, leverage back to them and say, hey, we’re, we’re knocking you out a quarterly bonus because you had a few jobs that went sideways.
Um Again, generally, we don’t have very many of those issues. So the, the estimators are incentivized kind of indirectly by having this set up really well so that the crew can just do it more efficiently. And if I’m, if I’m stuck with 219000 painters in the field, um if I can get 2110% more out of everybody, it’s like I have 211500 right? So I can do, I can do more with less bodies. Um So their pay is more traditional sales with where their bonuses come up on closing percentage and some things like that, they have a, a quarterly metric that tips over and doubles their commission when they exceed, you know, expectations.
But most of those things are not standard but kind of standard in that realm. Um Our office staff is incredibly well paid straight hourly. Um Their, their benefits to being rock stars is, you know, I have my, my business manager doesn’t work Fridays never has. Um they have kind of nontraditional schedules. I have one uh office manager that is off Tuesdays and Thursdays at three o’clock 2118 2120. She hits her 21000 hours then and, you know, she has Children and a family and that works. Um So theirs is more flexibility because we have some things in place that we know their jobs are getting done at a high level.
Um And they kind of self police. So their pay again is kind of more traditional our project managers with that percentage. Um That’s their incentive to getting the best out of their people by having a good game plan on a job or say, hey, make sure you look at this photo, I’m not sure if we need a 2118 ft ladder for this or if it’s a 21000 bring both estimator wasn’t clear if it was a one by six or a one by eight. It’s two stories up. Bring both.
Um You know, so some things like that um Those efficiencies where they’re carving out their raises and their additional compensation. Are you um with the the estimators, are you willing to provide a little bit of detail regarding that commission structure? And you said there’s a tip over point where they start doubling their bonuses, things like that? Yeah, yeah. So we have a base salary of 22,000 which is is nominal. Um And I should clear with everything. We provide vehicles and all the tools for all of our staff.
So that’s a little different. Some guys here, the percentages start to think, ok, is that people driving their own stuff or vans and things like that? We provide everything. Um And then the estimators commission, standard commission. Um, they kind of have a multi tier. It’s like everything we do. It seems way too complex but it does work once you implement it, um, 3% for a straight sale, another 3% for self directed leads and then another 3% when they hit their target and right now their target for all but one of them who’s kind of a, an older gentleman that’s been with me a long time.
He’s kind of working two thirds time, but everyone else, um, their target is, uh, 1.1 million and that’s divided up in quarters. So it’s scale. We’re seasonal. So the quarter two and three, when we work outside their quarterly target is not an even, you know, percentage of that. It’s 15003 I think actually this quarter, this quarter two gets pretty high for us. And so it’s 3% over, over that threshold, an additional 3%. Yeah. So I have a guy right now. Um, he actually had 100 and 60,000 in sales in the last two weeks.
If we’re completed, that’s a record for us. Um, he’s awesome at exteriors and he stacked up a ton of exteriors and there were some high profit commercial ones. Um, so he’s already in that quarterly bonus system and we’re only two thirds through it, you know. So he’s stacking this up at 6% and then adds some self directed with another 3%. Um, you know, the average commission, if I look at gross sales commission and base, we probably pay 8.5 to 10%. You know, I break it down in other metrics. But, um, the other thing that we have is a quarterly, uh, commission bonus based on closing percentage.
All right. So, uh, those are at benchmarks starting at 40003% and they go up to 70%. My average bonus for sales is probably around three or $4000 a quarter. And that’s if they’re closing at 50 55%. Ok. So they, so you have people who have a close rate of 70%. Uh, if for a time sixties, sixties happen, low sixties happens here and there. Um, my expectation is 50 and above the guys generally operate 50 to 57 to 60 depending on the person. We have uh some different geographies that people quote and sometimes their average job is less for the closing percentage is high and things like that.
But yeah, my expectation is 4013 and what is your gross profit margin on your projects? The, the gross profit margin? Our paint and stuff runs about 16%. So 16 33. And you know, we’re, we’re over 50% in that man. That’s great. Over 50% gross profits. You’re at like, I guess 51 or so. And then you have a over about a 57% close rate. Those are impressive numbers Yeah. Um Wow. OK. This is great, man. I appreciate all this, this candor. You’re really laying it out. It’s quite the system. How long did it take you to refine all this?
I gotta assume there’s some trial and error here. There’s been a little bit of trial and error, but the general framework has kind of remained untouched. I heard our first estimator in 2014 that wasn’t family. My brother worked for me for a long time. Um So first outside person that was straight sales was then um that pay structure has been pretty similar. Um That person didn’t understand the value of closing percentage. I think that’s, that’s an efficiency thing. Like you can’t create quotes out of thin air very quickly as a sales person.
But you know, whatever you do in the home, that closing percentage is gonna be re uh reflective of that. And so he’s when I started the closing percentage bonus to try to get him to understand the math, right? Um That, hey, if we can just increase our percentage by 5% we’re talking a few $50003,000 at the end of the year. Um for the same amount of work, you’re going to the same amount of homes, you’re spending a half an hour with everybody. Like if we just dial that in a little bit and and increase that we’re talking real money.
So I started that early on. Um it was honestly higher with him because I had to motivate him and then the other people that we’ve hired in, um, we kind of throttle it back down to more reality. Um, but if someone closes at, you know, 50 55% they’re getting four grand a quarter. Um, and that happens frequently enough that it’s not like this crazy out of the real possibility too. Um, so we increased that the last couple of years to where it is currently. Um Because we wanted to, I didn’t want to deal with messing with base salary and cost of living and stuff like that.
I I’m as you can tell much more of a let’s pay performers type of person. So we made those numbers kind of wildly high, you know, so that it was the last couple weeks of the quarter. Um Our estimators really do try to close deals and make sales. Um We are one of the softest in home sales companies you’ll ever find we would be the, the bane of every, you know, sales coach’s existence. We don’t try closing in the home, we email the quote 24 hours. We do what we do.
We want you to get another quote because that they show up on time. They generally our competitors are our best sales people. Um And we like that softer approach. So the only time that we get traditional sales is, you know, near month or quarter end for a little bit uh, you know, chase them at, you know, you guys aren’t backing him into a corner. No, I can’t stand that personally. I mean, a lot. Almost everything we do has my fingerprint on it now. And, and that was one thing that I just, you know, we’re a, we’re a luxury service.
We’re a want generally. Right. We’re not like your sewer backed up and they don’t have a choice. So I think it’s so best to make it fun, you know, work all the kinks out for them, tell them what to expect and, um, they’ll call you. Yeah. No. Yeah, definitely. I like that approach of a want and a need understanding where you are and what you’re selling. The, um, competitors are best sales people. Super like that. That, that is really, really good. The, uh, have you ever had issues with estimators either overpromising or trying to cut the cost a little bit or doing things that could, other things that could potentially be detrimental to the company in order to improve their close rate?
Oh, yeah. Small, small doses. And again, in our culture it gets handled real quick, right? So they, the, er, original missions, let’s say somebody shaved off AAA metric, right? They did an integer that was last or they, you know, tried messing with square footage in a room. We might have a person that makes a legitimate mistake every now and then, but we don’t put up with you know, because our team, you have to remember this, this is open book accounting. So in their quotes, it says this living room is 700 square feet to be painted.
Um Our crew guys will take out a measure tape. If it feels off, they will measure rooms. Um So we usually have somebody that maybe that wasn’t trying to really pass one through, but they were sloppy, you know. Um, those crew guys will let them know they send an email immediately to our operations and, and sales manager and say, hey, Suzie Smith, er, on a mission, you know, square footage was off by 400 square feet. Wood count was off, you know, this and this. Um, in, in generally they’re, they’re pretty pleasant to the sales staff, right?
They’re, they’re, they’re coworkers so they’re not just trying to dragged through the mud. Um, but when we get those, it’s black and white and like, oh yeah, it’s, it’s an error, you know, uh it’s an error. Part of the, the monster that this creates is and we had this happen years ago is some of the crew people can get a little bit too hyper analytical, get analysis paralysis because they’re trying to hunt and peck and look for errors or this just seems wrong. Um, we’ve really done a lot of work to have people control what they can control if we’re off by square footage.
I’m not going back to the customer and adding in 100 and 20 bucks or something. So, you know, quiet your mouth, get the job done. Be pleasant. Don’t, don’t make your crew go sideways. The crew painting should have no idea anything’s even going on. I don’t care if you gotta step out, it’s come back in, it’s sunshine and rainbows and hey, we’re gonna smash this. The number comes back a little askew. Um It will get brought up in the sales meeting like, hey, we gotta make sure, you know, if there’s a, a closet bump in or something that didn’t get a accounted for, right?
Like, it’s just a, we gotta do this, but our field staff will catch those for sure. And the, the errors and omissions bill will come out of what the estimator is making. Yeah. And we generally take half the commission on one of those. So it’s not, it’s not totally removing a sale but it’s cut in half. Oh, it, it doesn’t the severity if it’s like 200 square feet, 90003 100 there’s not a sliding scale of how much they lose, they just lose half their commission. Yeah, because we generally don’t even bring them up if it’s something of, you know, less than $500 total value or something.
It, it, that’s just like, that’s no big deal. You know, we’re looking for the ones that are, you know, actually significant. Got it. Ok. We had one, a commercial building that had a bunch of trim that was put up and it was put up at the quote, the pictures show it, but the cocking patching and rhyming them, all of these casings was not included. The price that was put in was just basically for door slabs. So it’s about half or a third of what it should have been.
Um, that’s an error and that was about a $2000 cost, you know, for that. So taking some money off the sales guys, it, it, it kind of just disperses the burn a little bit. I mean, obviously the, as the owner, I’m eating a lot of that, um because I’ll pay the labor difference to the team from that job if it’s $2000 and it would have paid them an extra 700 bucks. Um We’re adding $700 onto the labor. So the little bit of money that we take from the estimator still doesn’t cover it, but at least gets us all kind of feeling like, ok, we gotta do this together, right?
Are you making those calls or is someone else monitoring all that? I did? I haven’t in a couple of years. Uh My sales manager and operations manager are, are really dynamite folks. Um They’re also kind of polar opposite personalities and I told them I’ll be the tiebreaker if I need to. But our field staff does such a nice job of clearly outlying. Hey, here’s the air here’s a picture. This is, I know how they did it. You know, they didn’t account for the ceilings. I’ll be 10 ft here.
They did them at eight. Um, they don’t have squabbling over that. It’s, it’s super simple and it’s a mass email to, you know, the, the project manager that was involved and then all of the sales teams. So the other sales team knows what’s going on and don’t make the same mistake. And it’s just, hey, there’s no mission on the Suzie Smith project. This and this was done. Here’s a picture, you know, just pay attention when you’re measuring that you, you got a closet bump in or a hallway leg that you didn’t account for or something like that.
And that’s, uh, they take it. Well, honestly, it’s not even combative. They’re kind of like, I really feel bad about it. Um, sometimes the sales guy will still run out to the job and, and, you know, talk to the team and just say, hey, I’m really sorry, my bad on this because it throws off our schedule too. If it’s a big one, you know, we schedule based on you kind of asked us earlier. Um, we schedule based on time on that quote volume. So if a job is $3000 but it’s short three or 500 bucks, that’s 103% that we didn’t really account for.
So now the field staff days went from nine hour days to 10 hour days or 10.5 hour days. And that doesn’t work very long term either. You know. So again, those kind of just work themselves out because we’re scheduling based on what we think we’re doing. Right. Let’s discuss briefly, the project manager compensation system here and how they can win. Yeah. So our project managers, all of our teams, uh, cabinet division included are anywhere from 7 to 12 people currently. Um, we have 66 of them, right? Um, five of them really?
With cabinets. So there’s five of these people. Um, they’re getting paid 2% straight project management. Now, what does that mean? We, we generally say that that’s scheduling when the job is approved. So they’re gonna call somebody and say, hey, we’re booking July 10th. I’d like to get you down there. They’re gonna do that. They’re gonna go through a little bit of process stuff. Um They’re gonna tell them they’re gonna get a call the week before. Um, they’re gonna assign their staff, they’re gonna do their takeoff, they’re gonna order their materials and that pays them 2% of the job which covers if, if they’re doing it properly, they should be making 50 bucks an hour to do that, uh, for most jobs.
So we kind of go back and look because we have guys at times we had this last winter when we were a little slower. We had guys taking way too much time to do those functions because they had the time and we weren’t that busy, but we said you guys gotta tighten this up. It’s gonna be spring and you’re gonna be, you can’t spend hours and hours to do this, you gotta shrink it. Um, and then they’re working project managers. So they’re doing maybe some more technical stuff on a job site and just checking in via phone to the other crews.
Um, and they’re logging in time and they’re paid out of that lump sum pool all the same. They may take a new hire and do training. They may take a small job that just doesn’t make sense to send two people in a van. They may go on a big job and actually do some heavy lifting. They may do some technical stuff, they dictate where they’re needed most, uh, maybe have the crew that’s struggling and can’t figure out why are they low performing? So they’re just gonna go there and be a fly on the wall and roll walls or do very generic work with them just to try to see what’s going on and not be the savior.
Um, and they’re paid out of that same labor. I think when we had talked before, there was a big focus on saving on material costs and, and is, is there still a big focus on that? Uh, not for me, but yes, for the guy. So, um, the year 15003 to 3 when we started lump sum, our materials jumped up like 4%. And at those numbers it was like $40,000 more in a year than what it should have been right now. It would be 400,000. Right. But it was, it was a lot of money.
And I said, ok, well, we’re missing something here. We’re throwing out stuff instead of washing it. We’re losing stuff. We’re not organized. Are we leaving stuff on job sites? Are we leaving a ton of leftover stock paint, like ceiling paint and trim paint instead? Just a little bit of touch up. Something’s up here. Um, and it was all of those things that were going on, right. We were buying and, and just not taking care of things. So that was a problem. So I came up with kind of a fixed metric and I pay our project managers a quarterly bonus.
Um, that’s based on 18% for paint material, sundries and supplies. And then, um, also all their bigger tools, but tool rental goes into that too. And the reason tool rental goes into it, which might seem kind of odd is we just have guys that painted a $25,000 Bell Tower at a college. Um, that was only a two day project. It was two grand, but the lift was $183. So if that lift doesn’t come out of their P and L is a cost to them, their labor to them would have been $200 an hour, take home.
And so it’s like, ok, we have to leverage that a little bit. Right. We, we need that lift cost. Can’t really just come out of my end. Um And then we pay labor at this exorbitant rate. So we started that project manager bonus system with the P and L. Um, when we started it, it was divided up by all the teams. So I didn’t separate uh in our accounting system, I, we didn’t separate every team, right? Because there were two and three person, four person teams that were small.
So they got grouped up and then we just divided it between them. Now we divide it up. It’s everything’s very specific based on project manager. So uh if someone’s really wrapped on sprayers or equipment, we just had a power washer, take a tumble out of the back of a van when a guy was trying to get out by himself, that’s got a $200 repair to it. That’s going on that person’s P N L immediately. And, and now those P N L bonuses, um the reason we’re kind of stringent with it is right now, especially we’re leveraging for the best deals we can on paint material.
We just got $4 off, you know, a standard product that we use. A lot of, I mean, a lot, tens of thousands of gallons a year. That’s great. But in my pay system, I don’t see any of that. It just pays the crew $4 a gallon difference, right. Or the project manager, the $4 an hour difference with their P N L. So in order to make sure that this is tempered, we had to have those repairs and the not, I don’t wanna say abused but the wear and tear and go to project managers.
Um, so that they’re responsible for all of their things and their operating costs. So if someone takes better care of stuff, they get paid more to do. So if someone, I was kind of rough on tools back in the day, admittedly, I would make less than my brother did because he took better care of pain sprayers, you know, and, and that was just, that’s a way to kind of hedge that and really just establish ownership because there’s a financially immediate every three month benefit for them to do those right things, Jaco would be proud, man.
Jaco would be very proud, right? And for me, uh they find it fun and, and the solution is not to beat up your paint wraps for 10 cents off a roll of tape, right? That’s not what we’re doing really. They’ve discovered that more time on the job sites working efficiently will make up for, you know, if you’re spending a dollar more on a roll of tape or whatever else, that stuff becomes kind of insignificant. And so when we talk with people and we train, we train on the biggest things first, right?
And we have a good attitude. Are we well prepared? Do we know what we’re doing? Do we have good photos? Do we have the right materials and tools? Because I don’t care if the estimator missed a wall and I don’t care if tape cost me a dollar or more, that’s not gonna change my day. You know, I’m gonna go through do this project, the chips will fall where they fall and those little kinks in the system will get worked out in the back end. You know, my job is to show up and do a really nice job for this woman to paint her home.
Not to be concerned because your hallway was missing the wall and, and squabble about the money. Right. Sure. Yeah, I think that’s a really cool, um, thing. Obviously, they have the ability to make more money. They have the ability to lose some of that money. Um, but also it, it sounds like your team members are just better understanding the business. You know, I can kind of see the forest through the trees and I would imagine that that makes it a more engaging place to work because it’s interesting.
There’s ownership. You’re not just, hey, show up and do your job, hey, show up and do your work. There’s like they’re actually thinking there’s, there’s strategy, there’s intelligence that there’s kind of business thinking that goes into this, but there’s a ton of it. Like if we’re, we do a takeoff on a job and, you know, it’s a small, it’s a couple rooms but we’re doing one color and we’re not sure if this is a, a three gallon or a two gallon, you know, job. What is the coverage?
They don’t know they’re going off photos. Right. And it’s a little iffy. How big is every window and they’re trying to do a take up, they buy an extra gallon. The worst case we have the extra gallon, the trip to the store is gonna cost them more than the extra gallon. So we don’t care, you know, we’re just gonna buy it. Um and they make those decisions that were the same ones that I used to make when I owned it and it was like I’m on a job site and I was paying myself reverse lump sum you as a business to say, ok, what’s worth it?
Is this close enough that we let it fly and then run to the store when we have to or do we say you know what? Screw it? I want to keep everyone working. I’m just gonna buy a little extra and it is what it is. And for me, my mentality was buy a little bit of extra, keep everyone working, working and then you can, at the end of it you can start to evaluate. Oh, ok. On that type of stucco, you know, I, I didn’t get 200 square feet a gallon.
I only got 100 and 50 and so we gotta, we gotta tighten up our, our process and fix that. So I’m not reinventing this every single job. Yeah. Yeah. People definitely, it, it gives them the ability to make decisions and to think critically on those decisions because they’re basically making them for themselves and those bonuses for those people on the materials and stuff. The, the last one that we paid was an average of $203 per project manager. So it’s not like a, a gift card out to dinner. I mean, it’s substantial, you know. Yeah.
No, it’s real money. Have you guys? So you’ve never employed subcontractor painters. Is that correct? Not, not as painters. No, we do a little bit of subcontracting with some, maybe really complicated siding replacement and things like that. But we’re pretty big to just refer that out to another company. Make the connection. They do their part. We do ours um, as painters. No, I love, I love having my people be my people. I think they’re paying mcfarlane painting to paint a house. I don’t think that they should pay me to subcontract it.
You know, I, that’s always been my view on it. I don’t begrudge people that do it that way. I know there’s certainly some tax and cost benefits that I, I look at all the time for. Oh man. Look how much we spend on this. But at least once a year for me, uh, you know, I’m not a, I’m not an advertising marketing firm or things like that, you know, and I think they should be my, my folks, John, have you been listened to some of my podcasts?
I have to listen to some of your podcast sales. A marketing company. Yeah. Yeah, it’s, I mean, it’s, uh, for me, I think it’s what we sell, you know, when, when, when I was doing quotes, that was one of my, we talk about the competitors as our biggest sales tool. I mean, I had a pretty solid script of, they’re, my people are gonna show up when we say we’re gonna do what we say it’s not subcontract and not, there’s problems with that. But, you know, there’s a reason generally that the subcontract industry is kind of transient and non permit.
And is that what you want or you wanna call me back when you need a job in two years? And, and Tony is still available and I can send Tony back to your house because I can’t, you know, guarantee that as well as subs. Um And, and to me that, that resonates with, with folks, they’re kind of hip to that, you know. So, yeah, so I, I, I wanna make a, a bigger point for the listeners. That’s one of the things I think is really powerful about this podcast.
Is there are a lot of themes that are consistent. I I’ve noticed very, very similar things but then there are some things that people view very differently. You viewing this, you know, feeling passionate about owning the process, the quality control, the consistency, you know, the fact that you are delivering a paint, you are a painting company, not a sales and marketing or people cover your painting company that’s different from a lot of the other guests that we’ve had on. But yet you’re wildly successful, you’re doing over seven million.
There are other guests that are wildly successful. There are a lot of times there are multiple ways to skin a cat, but there’s still recurring themes throughout the podcast. So I just wanted to, to point that out and I appreciate your, your different approach there. We do. I know we’re coming up on the hour. I, I wanna to touch base just quickly on your and I know we, we have systems coming up. So let’s not dive too deep because we’ll probably cover it. But the, your treatment of supplies, stocking in the warehouse, I just want to touch on it briefly since we have alluded to, uh, that being an important component of making the jobs operate efficiently. Yeah.
So when we were smaller, we set it up with our local, uh, our local paint store, right? Whoever you use, um, they did deliveries for us and it doesn’t take that much in spending to have them do that. Right. It’s more of a logistics thing. They’re gonna tell you they need it by a certain day and they need two days to place the order. But most of those big paint suppliers will deliver your stuff to your place and if your place is your garage, get it delivered to your garage, you know, and have it in stock.
So now we have the new warehouse. Um, we have individual cages per team, right? The chain link, um, and it just started twice a week because we’re summer, twice a week, we have one vendor that comes in and they actually inventory our tape paper cock everything. They mark where each team is at. They replace it with what they bring in a truck and then the next week they bring the difference. So they’re kind of scaling who’s going through what, at what rate we have minimums for all of them.
And so our guys and girls don’t have the inventory because no one here was very good at inventory. So that was our solution. The, the people that were paying a tonn of money to buy stuff from said, oh, I think I can help you with this. And we said absolutely fantastic when you come, um, same thing with our paint stock because we get colors two weeks in advance because it’s one of the biggest stressors for customers is that color decision. I don’t want it the day before your project you’re not bought in, then you’re, you’re doing it under the gun.
That’s not fun. So, I want it two weeks out. Um If we’re only booking a week out, then that’s fine. But generally we want two weeks out, we place those orders, we type and send those in online so that we know a number doesn’t get inverted. We’re getting exactly what we want that comes delivered. You know, now we’re blessed. We have a shop supervisor. He sorts that and labels it for everybody. But when we were smaller, that pile came and each project manager went through it kind of together and took their stuff.
Um Again, we just paid our people to paint instead of going to the store. And if you start to add up Iran metrics back when we started this, I used to figure out how many trips to the store we went per dollar, you know, revenue generated. And we had one team who was terrible. They were, they had a store trip every $1000. Home Depot P P G. It didn’t matter. The team that was performing better had one trip every 2500 pay for the group that was won every 2500 skill sets, identical quality people, quality painters.
If they did a race, it’d be a dead heat, right? But the one team was so much more efficient because they were cerebral with it. I said, OK, this is where we’re losing. It’s not, it’s processed stuff. It’s not like, hey, paint faster, you know, take a, a monster or Red Bull at lunchtime and hammer out your afternoon. It’s just think about this a little bit. And can we do stuff with a little bit of work we put in the, it took us five minutes to make the spreadsheet for our quantities and it hangs outside the cages right now.
It’s done. We’re not messing with it again. You know, we went to two times a week because our crews are just cannibalizing materials. Um, I hated the big sales where you got to buy $2401,25000 and stuff and then you have to warehouse it and you know, those things from the, the big paint guys too, they try to incentivize you with these deals. I think you can get the same deal if you just try to set up this relationship and then it’s nice and neat or it gets better on your accounting.
If it’s just kind of as you’re going, it’s not this boom or bust mentality, you know, back in March we used to buy pallets of ceiling paint and we tripped over it for three months before it was gone. And that was when we had less space. I don’t want to do that. Yeah. Real time. You guys are very, sounds like you’re very data driven. Do you use certain software to, to track all this stuff? Yeah. So we use Jar as AC R M. Right. I like them because they’re, they’re very actually deficient in terms of data and reporting.
Which sounds funny because we are data driven. We export a lot and then manipulate ourselves in Google sheets. Really. Um We use Jar for that because the pictures, the notes, I think it’s, it’s really top line for that. Um You know, we know where we’re going and what we’re doing and then the, the data, we use their reports for the hours and, you know, we have a one off jobs report that I know we’re gonna get into. It’s probably my favorite thing where every job that we did in the company for last week is listed by project manager with the exact crew and then what your average hourly production is.
So, you know, if you’re not performing Brendan, you’re saying John, your system is terrible. It doesn’t work, blah, blah, blah. We can look at that report and I can show you that. No, there, it’s probably a you problem or a process problem. It’s not a system problem because look at where all these other guys and girls are. They’re, they’re all over the place and really high. So let’s fix you right? Because you’re worth, you’re good. We know you’re good, but we’re missing something. We just had a crew that uh wasn’t looking in the right spot for the color placement for uh you know, locations in the house and they were just talking and complaining about, I just feel like an idiot talking to a customer.
And I’m like, why are we talking about this? It’s here. Are your permissions right in it? The other permissions, right. Oh, man. No, we were looking in the wrong spot. Well, he was emailing his project manager every job getting that list and the project manager didn’t say whoa time out. He was copying and pasting a note and emailing it back to him. Like guys, this is ridiculous. You, you increase the time to get your paint colors by 29000. So let’s cut that by 210 21500 do your own deal. Here.
It is. I’m like, oh my God, I feel really dumb man. I’m like, if it feels hard, you’re probably doing something wrong. Let’s figure it out. I’ve spent enough time on these systems that they should be not feeling super hard. It is super cool too because it allows us to figure out where the problem is and even if they’re small problems and most of what we deal with my sales manager tells me all the time. He’s like, you need to stop and smell the roses. What we deal with these issues as a contracting company is nothing compared to everyone else.
So calm down. But you know that order of operations on a quote. Well, I may, I may not really irritate a customer but it’s super nice to come in and say, hey, Brandon, we did your quote. We already talked, you were doing the order of operations. Is this still good? And you say, ah, Johnny does take a nap at 218 when you think you do? Like? Nope, not a problem. I already remember we talked about that. You know, we’re gonna do those walls in that room starting at one PM and slide the crib into the hallway and you know what we use zero V O C. He could be right back in there at night.
It will be fine. Just don’t let him touch walls this evening. And you know, those things are kind of laid out that that’s what people remember. I don’t think that our guys paint a better straighter line than most of our other legitimate competitors. I, I just don’t, it, it’s either painted or it’s not, it’s cut straight or it’s not. Um, but I think the feelings of those mean a lot when someone on the phone says, hey, I noticed you have a large aquarium just came up, right?
And I don’t know how we can move that. Can you take water? Can you move that out of the way I can do this? I don’t wanna have to, can I even put a drop cloth on that? We had a guy asked, is that ok for your fish? I don’t want them to freak out if I cover them in the dark. And those people, like you’re the only one that ever has said anything about that. I’ve had this tank for 0003 years. We’ve had all sorts of stuff done and it’s always the first day.
Well, what do we do with your fish tank? You know? And that was, that was their hot button. They’re like, wow, these guys are on, you know? Yeah. Yeah, I felt care for, man. That’s great. All right. Final question for you John. So you’ve been doing this for a long time, this unique payment system that you have? Is there anything I haven’t asked or is there anything that, that, you know, is quite different that we haven’t covered that we should just cover right now before we wrap up this first episode in regards to the pay system.
Um I mean, we have a couple of things that we get asked by new hires that if someone’s gonna do this and they can chat with us later. But um the conversation of overtime comes up, you know, is this a way to skim out overtime? We never pay someone less than their base hourly times time and a half for overtime. It doesn’t happen. Um, if we have to make a difference because the crew is really, really struggling for a week. I’ve done that. It’s, it’s a rarity.
Um No, it’s not designed that way. We should be making money at such a rate that we’re not concerned with it. Um, you know, we know where we’re at day to day. So we’re not surprised that our paycheck is X or Y. Um, so that’s something that comes up, you know, with, with newer hires. How does that work? Um, you know, the idea of this W-2000 and, and you know, how do you do it on payroll? We run our people just as salary and that salary is just variable with whatever that number is.
It’s 218, 2000, uh, 13,000 bucks and a guy got a $13,000 paycheck today. Today’s payday. Um He’s the guy that helped me invent the system. So surprise, surprise. Um He’s the first dude I ever paid five grand to until today. He was the only guy I ever paid 10,000 to and his paycheck was 183 grand. Uh unreal mine was not 13 grand. So I with him, but you know, it takes me a while to get over that too. You’re gonna have times like holy crap. What are these guys making? The system is fixed that you will make it, you will make it back when they win, you win.
And so a lot of that getting over that ego. Um There’s been sometimes that I’ve paid guys and just been like, man, that just seems crazy for their ability. Um Yeah, if I was paid in the system back in the day, I would know my own company, I would still be working for the guy paying me that way. Uh I really feel like you’re gonna fire yourself and you go to work alongside them. It sounds fantastic. You know, all you gotta do is paint houses and you put it on a platter.
This is easy, you know. So some of those like legal implication type items, we get asked but, you know, people CPA can sort through that with them and we obviously dealt with ours quite a bit. Uh to confirm everything is easiest for everyone involved. Um We do have times in the summer where guys, they jump a tax bracket because their pay is so good, you know, and then they come in and like, well, well, what happened, man, the IRS took 1500 bucks. They don’t never take that much.
It’s like, yeah, you jumped, you know, welcome to, welcome to the big leagues, you know. Um So we talk with people about that, how that taxes get averaged out over the year and they’ll get it back. It’s not like it’s going, you know, into a pit that they never see again. So some of those coaching things we do, um some ways we kind of mitigate that in terms of pay. We have guys that are buying their own personal tools, some guys like certain stuff or, you know, drills and things like that.
The company doesn’t provide all the painting stuff we do. Um, we take that out of their payroll as a straight deduction and with the company buying it. So they’re kind of buying those tools tax free. So we got a couple of guys right now that are, are making a ton of income and they said, hey, I’m, I’m looking to get, uh, you know, some new equipment and this and that. I know it’s not stuff that you normally buy. But can we just kind of wash it through the company?
Absolutely. Absolutely. That’s a nice perk. Yeah. Yeah, it doesn’t hurt, it saves me some money in tax too, but it also, you know, saves them some significant income. You know, we do, we get our people in touch with our CPA because we want some more planning with this. They make enough income that they can’t do TurboTax anymore. Almost all our people, their stuff is high enough volume. They should get, it looked at by a professional and so there’s some planning with, ok, hey, you know, I want you to put another 4000 in your 401k, uh, with John.
Like now if you don’t, you’re gonna spend 5000 in taxes. So it’s a $9000 swing just do it. And so they’re not hearing it from me, they’re hearing it from the professionals. And so some of that coaching I think makes people better adults. You know, we’re dealing with people who are generally twenties, thirties, they’re younger adults and they haven’t really gone through this before. So we want them to be, you know, as successful as we can and, and budgeting stuff. Uh, we take, our pay can break it up into multiple accounts.
So our payroll service, they can do a percentage. Uh, they can have up to three accounts. And so 10% of your pay can go into this account or that account or you can do everything over $1500 goes into a secondary account. We had a guy who had no idea. He had so much money, he had 18 or $20,000 and that was a house down payment a couple of years ago, you know, he set his budget, he had plenty to live on, didn’t want for anything and, but he took those big summer wins and he never saw them that never hit the bank account.
He had a debit card too. It was his but he was like holy cop. I got 18,000 in here. We’re like, yeah, we told you go buy a house. Yeah, I’m safe. You’re good. There you go. So yeah, some things like that. I mean, I think our questions that we generally work out that are not maybe as reasoning for people. Do you want to go with the system or not? But those are things that will come up, you know, in the first little bit. Sure. I’m glad I asked, man.
That was a wealth of information. Yeah. All right, John. Well, that’s episode one of five. It’s good to have you back on the show, man. I appreciate you. Sharing all that. Nice to be here. All right, brother. Well, thank, thank you for this. There’s uh super appreciate you laying out your pay scale and, and approaches unlike any that I’ve actually heard in terms of how detailed it is and I’m very excited for the next four episodes. Diving into all these systems. See you. Thanks man.
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