Guest Interview: Benji Carlson of Breakthrough Academy “Industry Partners” Series Episode 3

 

We have Benji Carlson of Breakthrough Academy. Benji is the head of content at B. T. A. Benji, thanks for joining us today man, Hey thanks for having me Brandon. It's an honor. Absolutely man. So I've heard a lot about B. T. A. You know you guys, we travel in the same circles, I've heard very, very positive things. So I'm super excited. We're finally making this connection. I don't I don't think you and I actually met in person at expo last year. Well we'll fix that this year.

 

But yeah, I'm excited. We're shooting this man. Yeah, me too. So tell me as we get started, tell me I guess a little bit about you your background and kind of how you got involved at B. T. A. So I started um in the painting industry, I was in College Pro painters franchise. It was really successful with that for about five years through university um after I dropped out of school for the third time and didn't go back, I was like looking for other stuff, I was wanting to get out of painting.

 

Uh actually it wasn't so much that I was wanting to get out of painting. I just had heard of this Breakthrough Academy thing being started at the time, this would have been back in 2015 by um a friend of a couple friends of mine and I was like, that's a really good idea, you know, this market is huge and it's totally underserved um when it comes to like business systems and coaching and the infrastructure needed to scale and that's kind of you know what we do, which we'll talk about in a second.

 

But yeah, I came from came from the College Pro World Uh started with breakthrough academy in 2017 um and we've been just growing like crazy ever since. Um so that's kind of, that's kind of how I come to this world. Yeah, so you said that you dropped out of school three times. Yeah, going back huh. I kept going back. I just kept thinking, I think I kept expecting there to be more than there was. And then I finally was sitting in like a supply chain management of course with someone who clearly had failed in business and I was like, I don't know what, like I just I'm just gonna go sell the paint job because I think I'd make more and learn more there than I am in this classroom and I never went back, Don't tell anyone.

 

Yeah, yeah, that's great man. So the, let's get into breakthrough academy, what is it? Okay, we system eyes contracting businesses for growth, that's the tagline now, how do we, how so let me unpack that, you know, we are, I guess you could say we're coaching business but we hate the word coaching because many coaches are jokers and clowns and they'll take your hard earned money and give you crappy advice and then six months later you call us and you say anyway, I'm very jaded with respect to the word, I've got some pTSd around the word coaching, but I use that because at least give someone a bit of a comparison now really, what, this is a better way to describe.

 

It is like a franchise system without all the lousy aspects of a franchise and there are many, if you want to get into them, we offer the coaching, the content and the community, I would say at a higher level than a franchisor would give you, but you retain control over your company, you're not giving us crazy royalties in perpetuity, you keep your brand, it's your business, you pay us a fee and we provide you with the support the content. Um, all the systems needed to basically go from a, let's say about a million dollar a year business to $5 million a year to $10 million a year and beyond if that's what you desire.

 

But we focused on the operational side of the of the business. Like we help implement the behind the scenes. Not so sexy systems that you're not really thinking about when you start your business, but then you hit a certain point and you're like holy crap, I really need better financial controls. I really need to implement employment agreements and job descriptions for everyone so they know what they're doing. I need to build S. O. P. S. I need to create an on boarding system blah blah blah blah blah.

 

The list goes on. There's all these things that um when it's just you and a helper you're like man, they're not really on your radar, but when you're let's say approaching a million dollars a year million 0.5 a year, it becomes abundantly clear that that's indeed what you need. And so we help entrepreneurs in painting. But a few other industries as well inject their business with the infrastructure, it needs to scale to the goal that they have in their mind's eye. So that a good description. Did I miss it?

 

I think. No, I think it was great man, I want to make sure I'm crystal clear here. So you, for you guys, you really start working with companies when they're at around a million in revenue, is that right? Yeah. Our lower threshold would be like um let's say as low as about $750,000 a year in size. And that's not because this is some elitist or snobby group. It's literally just because At the at that when you get to that size is when what we teach makes sense and it becomes more affordable.

 

So we have a lot of free content that we deliver to smaller businesses. We would happily connect with them and kind of like build a bit of relationships so that when they grow into us where they're waiting and ready but by and large you know the 153% of our businesses are between one and $15 million a year in revenue. Okay. 112 15. So if you got one you want to get to 15. You guys are the guys. Yeah if you want to get to five where the guys we want to get to seven the number is totally arbitrary and that's up to you but we'll just kind of help you put the systems in place to do it.

 

I love it. So I know you said it's an underserved market so it's kind of dive into that a little bit. What was the main motivator behind B. T. A. What was kind of the aha moment that led to that. Well we want to transform honest hardworking contractors into truly thriving entrepreneurs. Okay like I believe at trades and construction and home services are essential. There's no like no part of sort of the western world north american society that we all enjoy really functions without them. I don't think they get a ton of credit for doing you know, dirty work behind the scenes and that's fine.

 

It's not all about the credit, but I do think that this little niche and it's not, it's a huge part of the global economy huge is um hasn't until very recently, hasn't been equipped with the systems and tools needed to run the businesses they want and as a result it's been kind of fragmented and um stuck a decade behind. But that's all changing very, very quickly which I know you want to dive into later talking about the future of of this space, That's all changing very quickly.

 

I'd like to think that we're kind of at the forefront of it with lots of other players in this space. But yeah, that's that's kind of why we do what we do, we want to make contracting cool again and we want to put more dollars and more more free time into the hardworking entrepreneurs behind these businesses. Yeah, I love your focus on taking hardworking contractors really turning them into entrepreneurs. So I think that that's a serious one and I think you know many people in the industry don't really recognize maybe even the difference between those things sometimes.

 

Yeah, so yeah, I do want to get into the painting industry. So one of the things I love about talking with people like you you know from from some of the best industry partners that we have is you guys have insights. So you have insights. Working with all these different painting companies. Are you guys just in are you guys just in North America? Are you guys elsewhere as well? It's just North America Canada, the U. S. But last I didn't believe we have members in every state and province with the exception of maybe a couple.

 

But it's yeah, we were we have clients all over North America. Okay, so yeah you guys are working with these with these painting companies all across north America which means that you have access to data and the knowledge that very few people have had a lot of highly successful painting company owners come on the show but they can only really present their their their experience right? Or the people that they know you have a unique scenario. So I want to start with the mistakes first because because you know you see these mistakes, you repeat these mistakes and I think one of the best things about learning from mentors or education like this is avoid mistakes other other people make.

 

So what are some of the most common mistakes that you see painting company owners make, ruth? Um Well I mean there's there's lots of mistakes that people make and I also just preface this by saying like mistakes are a good thing, mistakes for how you learn. Uh making mistakes is not bad, It's very healthy. So I'm not, I don't wanna, you know, publicly shame mistake making, but I can maybe speak to some common patterns. Um I'll tell you one that is not going to surprise you is is like a total lack of focus on financial controls.

 

People sell jobs and produce jobs and basically cross their fingers and on, basically go on a hope and a prayer that everything will even out in the wash and sometimes it does, but lots of times it doesn't and if you don't have an ability to see what's going on um within your business that's driving or or or hurting profitability. That's a big problem to click in on that even more. Just be like super specific for painters. Like when I say financial controls, especially when you're starting out, like just get really good and rhythmical about job costing.

 

You estimated project for with a certain uh certain, you know, baked in gross profit that you're trying to achieve. If you're not reality checking how the project actually did six weeks later, two months later, whatever the cycle you decide it should be um is you're not, you're not reality checking how you did against that estimates are way off, you can be working for free for many, many years. So it's a dialing in on job costing is sort of a good cornerstone or a good starting point to building out strong financial controls.

 

Um I know the really common when I think about is like holding onto sales too long. Um Nobody can sell the way I sell, nobody can sell this business, you know this job, it's like no like lots of people can um you're good at it, but like you're not world class and sales people are not these, you know, impossible unicorns that you think they are. You just need to, you just need to like standardize the process, build a consultative selling process. Um Get a good crm in place, build some good sales and marketing collateral and set someone else to do it because I was saying this to some of the other day and like, like you have a more important job which is to be the ceo of your company and not like the part time sales guy, part time job site manager, part time administrator.

 

Um And so if you want to, you know, run a big boy business or a big girl business, you need to treat it as such and and getting, getting out of sales I think is is if you can do it early, you're you're better off a lot of people hold on to it way too long. Um Yeah, other simple stuff like people overspend on painting sundries, but they under spend on labor meaning like people kind of be like cheapskates about hourly wage when it's like in my experience you do get what you pay for and if you find someone really good and they want a few bucks more like those are dollars well spent wasting money on an extra pale because you were too lazy to do the estimating and figure out how much it was going to take.

 

That really, really hurts. And if you look at your numbers at the end of the, if you've ever spent too much on paint, like I have, you're like, wow, I cannot believe how much I just put in the landfill and basically I could have kept those dollars. Um yeah, I don't know, that was probably the big ones, you know, another one like trying to, trying to grow without investing in a good brand package. Like don't run ads to a really crappy website because you're just amplifying noise.

 

There's so many things, man, but I think that those would be like some, some big, some big obvious ones that we see. Yeah, that's really helpful. I'm curious as to you really focus on sales. You know, people hold on to sales too long. Is that, is that because that's just what you see, like that's just the position that people tend to not want to give up or is there something specific about that sales position that, that they should try to give that up sooner rather than later.

 

Yeah, I mean like that like, so that is what we see like from talking like from the 550 businesses that are, we're actively working with and then the thousands more that are kind of an alumni status, like that is just a, a broad aggregate uh perspective that I or we have, you know what, why is that? Well, I think that people are terrified to take off the proverbial sales hat because it's a very leveraged role, so giving it away if someone is genuinely estimating and selling on your behalf and making promises that your production team has to go fulfill, it isn't important, but I don't want to diminish it and say like, oh you don't need, like this isn't a big deal, it is a big deal, I'm just saying it, don't don't let that fear be so um so paramount to you, that you, you stop yourself from from filling that seat on your organizational chart.

 

Um and then I think as well there's just like some ego stuff like people kind of like the dopamine hit from closing a deal and like when you, when you give that. Yeah, yeah, exactly, and like I think totally, and if you found success for three years or five years selling yourself, it's just a habitual thing that's hard to change. Yeah, that makes sense, man, and I think a lot of uh you know, there's a, there's a big, almost identity crisis that can occur, you know, people, people with their business, there's no, there's no disconnect, it's the same thing.

 

Yeah, I love it, man. So you so one of the, one of the really, really awesome things about breakthrough academy, which is something that I find really interesting is you guys don't work just with painting companies, but you work with all kinds of contractors. And the reason I find that really interesting is because I think, I think I love the painting industry because I think the opportunity is just incredible here, right? I think it's in some ways beyond or or less competitive, more ripe for disruption and let's say plumbing or roofing because oftentimes they're a little bit farther ahead in terms of the marketing, in terms of sometimes how professional they are.

 

So I'm curious how do you think that the painting industry compares to these other home service industries right now? Um I guess from our, I guess from our like very broad perspective, like we are business system misers. So from our vantage point, the differences are not as much as you think, like we look at them as little business entities that have certain inputs that create certain outputs and there's certain KPI s that you track, which tell you, you know, what needs to be fixed and what's broken and etcetera.

 

So like from our perspective, we we definitely look at these little business organisms from a bit more of a scientific and a bit more like calculated lens sounds like it said that what's that, it's like a lab we've got mathematical equations and. Yeah. Yeah. Yeah it's a bit more like colder of an analysis or like a bit you know these bit the business is the business. And now having said that we can kind of zoom in and talk a little bit of a bit more about the pros and cons of each.

 

Because I do think that there are uh while I I say what I just said, I do think there are a few you know advantages and disadvantages that they all have. Like so with painting in particular I think one of the big challenges is if you're in um Canada or northern parts of the U. S. The seasonality of exterior work is really challenging and you'll hear this a lot with with businesses that are just starting out, they've got big cash flow issues from the november two, March, maybe later they lose part of their staff sometimes because they can't keep them employed.

 

Um You know people in Miami in texas and and uh southern California have it easy on on this front. But definitely the seasonality of exterior work depending on your geography can be really hard. The other thing that I would say to about painting is um I think due in large part to a fairly low barrier to entry. And then I also think in large part due to these big like student painting franchises like the one I came from college pro but their student works, there's university first class.

 

I mean there's there's hundreds of them at this point. I think that that has funneled a lot of entrepreneurs into the painting space and so everybody will say their space is competitive and they are but painting in particular is a very busy market. Um Having said that you know, I don't know if painters realize this compared to other industries. Like you guys have the healthiest, the best gross profit percentage compared to roofing compared to construction way better than renovations. Um Way better than landscaping. So there's your ability to price and create a healthy growth profit margin is something that is uniquely good for painting.

 

Not everyone enjoys that. Um And the other thing that I think that I I really likable painting is it is relatively simple. Like you know like when you think about the complexity that's like a G. C. Like a general contractor has to deal with where they're there's a very extensive design process, they may need to work with engineers and to pull permits, they're working with highly paid project managers and interior designers. They got to deal with the city. Like there's all sorts of stuff. The scope of the projects are hundreds of thousands of dollars.

 

Sometimes millions dollars is like really big sophisticated challenging projects that require way more system ization on the side of the business. And I think that painting doesn't have to deal with that as much. So it is they're just they're simpler they're kind of, I'm not saying that they're simple. They're simpler than some of the other ones. And as a result I think it's easier to get your head around it. Yeah. Yeah relatively speaking simpler. So I want to kind of get into this margins idea then with you because again this is your business.

 

You know you make painting companies healthy, you help them scale, you tell them what they need to do and how to do it. You said that they have the healthiest, Highest gross profit percentage of of all these contracting businesses. What do you think a painting company should have in terms of gross profit? And what do you think they should have in terms of net profit? And then maybe we can just obviously it's gonna vary based on the structure of the company but maybe just a brief look into, let's say a one or two or three or even a $5 million dollar company.

 

What would the overhead likely look like? I know that's somewhat somewhat of a loaded question there but I'm curious. Okay so let's start with let's just do residential. Um We can talk about commercial if you want and and you know by the way people are gonna like people are gonna gasp and be appalled and they'll be like we can't do that. That's not possible. I'm like okay I'm just telling you what we see with our members. So when it comes to gross profit margin, okay anything below a 40% G. P. We would consider needs work like that.

 

That's that's not it's you know it's not great. Anything from like 42 to 47% gross profit. We would say that's that's solid and anything north of 503. So 47 50 55 we have guys are north of 55% Gp that we we call Like exceptional or world class. So if you're if you're grossed out right now is 32%. Um you know that should be an alarm bell. Something to do with your estimating process, something to do with your production process, something to do with the way you order into something in that system that that um can be dramatically improved and then your your net profit like what does that trickle down to?

 

Anything below 15% net we would consider needs work 15-20, we would stay solid. And then anything, anything above 20 is like exceptional. You're really making good money. Um Commercial side, it's really really similar to the net is a little bit lower. So I just like take all those same numbers for G. P. And then your net would be a bit a bit lower because um generally speaking you are you have a little bit more overhead to run those uh to run those projects, they're a little bit more price sensitive because their businesses there's a few factors in that, but they're very very similar between the two.

 

Um what was the second part of the question? What the overhead looks like, Yep. Yeah, basically after after you talk about net profit percentage, you know we're we're going from, let's say it's 103% um down to 15%. Where's that? 30%? Where should that be attributed to? Yeah, I mean, so I'll talk in broad strokes because um you get too technical and when people start disagreeing about what is actually considered overhead versus what is not. So let me just make this really simple, okay, where should those where should that 30% in overhead go?

 

Um As far as people, I would say like a really really strong office manager is money well spent, you can hire a good office manager earlier than you think because lots of them will do part time. Uh and then you can scale them up to full time as your business grows. So really really good office manager and like admin support um I would say a really good crm in tech stack is another good, like those are dollars well spent. Uh So whether that strip jobs or job or work glue or you know, there's be a handful in in paint scout whatever, although I think that's more for estimating um a good salesperson.

 

Uh And somebody might debate well depending on how the paint that's actually packed into variable costs or whatever, I would just say your team should have a good salesperson early on, especially around like 7 50 to a million dollars a year, getting a good salesperson in place. Um And much later on once once those sort of like facilities, once those people are max you can talk about production managers or operations managers or GMS beyond that, I'm like spend some good money on your branding and your marketing and uh I think that that's like a good healthy mix of overhead spends early on when you get to bigger businesses, it gets a lot more complicated but I think those are probably pretty safe bets for your audience.

 

Yeah, that's a great breakdown man, I appreciate that. So when someone's listening and let's say they are at that 32% when you said okay, if you're a 32% you hear this, that should be kind of an alarm bell for you because your gross profit should not be that low. What in your experience would again there are a lot of factors, but is it typically that they're not charging enough or is it usually okay, they're charging enough but their their production costs are just way out of control. Um It's usually been to both uh by the way, now is a great time to raise your prices.

 

Spotify is doing it. Netflix is doing it, you know, your bank is doing it every like might as well, everybody's doing it a great time to do that if you haven't already. Um and then yeah, I think I think most operational efficiency is difficult um getting like motivated and tenacious painters who are just kind of like you know, funneling around the job site is difficult. Getting people to follow S. O PS so that the production process is methodical, um you know, getting people to be thorough, so you're not spending an extra day and a half doing quality control because the client pointed out a bunch of stuff, I mean, you know, I mean if you're listening, you know the things that kill your business when it comes to like productivity go fix those the solutions are not as complicated as you think, I know you're busy and I know it takes time but like that if you want to play the entrepreneurial game, working on your business rather than in your business is obviously something you want to do.

 

And so I'd say it's usually a mix of both, but it would come down to like how your pricing via your estimates and then like very zoomed in on like job site efficiency, like what's going on on that site between the crew lead and the painters and the customer communication to get projects, you know on and off the schedule as quickly as possible. Yeah and I love your focus, if you're listening to this, you probably already know something right. People tend to procrastinate, they think like it's it's a great step to listen to the podcast, great step to get educated, but you also need to take action.

 

Don't have paralysis by analysis, one step, one step in the right direction. So I, I want to um I love the fact that you guys give away stuff for free. There's a a a podcaster, I follow Alex or mosey, you're probably familiar with him, I love him, but he gives away a lot of, a lot of free stuff and you guys give the stuff away for free, you help the businesses sort of get to a point where it might make sense and and then maybe they may or may not want to want to work with you, right?

 

Because they've already benefit, They see that, you know what you're doing. Um so it's kind of along that same vein, I'd like to focus on the Pareto principle. You know, the 80 20 rule for people who are listening, painting, painting company owners who are listening who haven't yet had partnered with B. T. A. Maybe they're not even at the point where financially it would make sense for them to partner with you guys. What would it be likely that that they should take away and take a hard look at right now you've talked about a few things, but what are the things like, hey, 13 20 if you're at 500,000 or so you probably need to go ahead and look at this right now and make sure it's okay.

 

Um I think the first problem that you want to create for yourself and I realized that sentence sounds weird but Hang in there. The first problem you want to create for yourself is a demand glut meaning you can sell, you can market and sell more work than you're able to produce, which is a problem and it's a big one but it's a really good problem to have because you kind of looked after the thing which cripples 70% of contractors when they start out, which is just getting the phone to ring.

 

So figure out your lead sources that work, figure out a sales process process that works, get your closing ratio to be 40% or higher um like just get that part of your business and I realize there's a lot there but like get that figured out first so that you have more work coming at you than you can handle then you would connect with breakthrough academy and we will help you know really deck out your operational systems and your production capacity so you can get, get through that work and more with ease or not ease but but relative ease compared to where you might have been before.

 

The other stuff that I think is really fundamental to success. Brandon is um and I know everyone's heard this before and this is like kind of a tired message but just like take care of your diet, sleep and exercise. Like being in business is, is a grind and it is a demand on your internal motor, your physical body, your emotional body, your spiritual body. Like these are things that need, like it needs to be maintained. So I'm a big fan of like having your rhythms and rituals dialed in for yourself right?

 

Like for me. And by the way, this isn't like you don't need to get up at 3 30 in the morning and meditate for four hours in journal for two like and then take like six ice baths and then be like, get a grip. Like I'm not one of those people, but how they routine to your day have forms of exercise that work for you. Um, you know, make sure that you have a good healthy sleep hygiene, try to eat food that's good for you because usually what takes people out of business is just like complete and total burnout and exhaustion and the best defense to that is like healthy rhythms and rituals.

 

Um, the other thing when you say like what's like 80 20 like get really good at priority management. The one thing that everyone has in common, the great equalizer is time, right? We all have 03 and 68 hours in the week. It's the one resource you can't get more of. So what you'll notice with high performers is they're quite religious. They're, they're pedantic about the way that they manage their schedule and their small picture meaning what they do in like days and weeks is highly, highly connected with their big picture meaning where they want to be in years or decades.

 

There's a logical link between those things. So there's lots of business owners who have the big picture figured out what we call dreamers or entrepreneurs, like people who talk the talk and then you look at their actual activity and they're spending it on stuff that has zero correlation isn't driving them towards that at all. They might be working hard, they might be busy, they might be stressed out, but they're working on the wrong things because they don't understand priority management. So I think like learning to say no to the small stuff and and kind of the, the noise while focusing on what leads you to that greener pasture that you have in your mind's eye is, is really fundamental as well.

 

And we teach, we teach a ton on that and break through. Academy is free webinars that we do and blogs and all sorts of content you can consume on that specific skill. But I think diet, sleep and exercise and get good at priority management because time is the great equalizer. Yeah, I love it man, have that, have that vision but then work toward it in a strategic manner and don't get burned out and bury yourself in the process because then you don't get there. Mhm. Okay so I want to shift gears a little bit, you know, we're I'm all about the marketing, the growth, I love that stuff.

 

So what are some of the most effective marketing strategies you've seen in the painting industry? Obviously getting from one million to 15 million, you're probably doing some some form of marketing. So in your experience, what has worked the best? Well, it's different for different, I mean is there like what the best for who best for a small business, A big business like what however you want to answer? So if there are different tranches, let's say, okay, if you're if you're at a million we find that this works really well.

 

Maybe it varies by location. Right? Northeast we find this works really well. Kind of however you want to segment that. Okay, let's let's just make it really simple, let's say like like smaller businesses and bigger businesses and we'll just give two categories for smaller businesses. You have really limited marketing budget. Um It's gonna be uh it's gonna be simple stuff, right? It's it's it's gonna be like job site marketing. So a really good like sign and flyer program around the projects that you're doing residential. E um some good door knocking.

 

Like I know people are gonna poo poo that but like door to door still works, especially for painting. I would hold tension to reviews. So like your job site manager or you, whoever is doing it ideally not, you is trains to make sure that on the exit and close out of a job when a when a when a check is cut, that review is being posted to google because that's free, as long as you take a good job and it's really, really good for your seO your search ability.

 

And then I would say optimizing your google business page, that's like a S EO layup. It's a very, very cheap. You would know more about this than I would, but that's a very cheap and inexpensive and doesn't take long to just help you with your ranking when we get into bigger businesses. You know, it really gets a lot more complicated. Like your usually, we're working on some level of brand building. You're creating a, you know, beautiful logo, beautiful website, you're working on brand voice and how copy is written and you're creating content that is disseminated out there on the interwebs for people to find you're probably running paid ads to it.

 

Um and you get into managing campaigns and and it all gets a little bit more sophisticated and expensive. Um but that I would say like, I was like, that's that's kind but you'd also be paying a lot on spending a lot on sc oh, because you're gonna want to be on the first page of google. Um so like, but I I, you know, I think for your listeners, like I'd stick with that low hanging fruit and if you're not doing that start there. Um, and, and the ball will begin to roll and you'll start to have fun with it.

 

And then these newer, maybe more more sophisticated marketing tactics will become available to you in time. But one thing I would not recommend is going and spending a pile of money on stuff that you don't fully understand and your business isn't ready for. Um, if your website sucks, don't go run paid ads to it. You know what I mean? Don't go amplify it with a whole bunch of ads. Like I just like do the fundamental. Yeah. Yeah. Marketers, marketers are not talking about you, but you know what I'm talking about?

 

Marketers are slippery group and they'll be happy to take your money and spend it. Um, and give you not a whole bunch in in return and contractors kind of get duped by that all the time. So yeah, the marketing industry is a shady world. I can tell you that I've been screwed a number of times myself and I'm in the industry. So that's how, that's how dicey it is. Um, okay, cool. So you know, you, you work, I think you said you work with companies in just about every state and province in Canada.

 

What, what have you found or have you found anything to help combat winter slow season to, to kind of, you know, I know you mentioned that the smaller ones will take a huge dive. What do you recommend to take less of a huge dive. Um, you know, the simple, the simplest one would be to market sell and schedule all your interior work to happen during the winter. So you're trying to manage the schedule. Uh, if somebody wants an interior job done in september, can you diplomatically sell them into the idea of doing it in december when you're going to be slow.

 

So that would be like the simple thing would be to try to push your interior schedule to happen in the winter months for more senior businesses, it's generally adding another service and you know like christmas lights for instance is a really popular one for painters because you already have the infrastructure, you have the ladders of the boom lifts or whatever you need to do it. And so you're basically just, you're basically just ship, you're kind of retooling your production crews to do christmas lights rather than painting in the winter.

 

So it's, it's a lot of our lot of our sort of Canadian and businesses that operated in quality climate will have that short that sort of shoulder season and offseason side hustle that they do with their skeleton crew and then they scale back up for, for the busy season. How do you feel about the idea of offering discounts to people who want an interior in the summer and you push it out? Yeah, I think it's okay I don't it depends on how much and it depends on why and it you know can you in all honesty Brandon can you like pad you're estimating a little bit so you're not taking the 10% straight off that healthy G. P. That you should be getting.

 

Is there a way to maybe do some clever estimating with whatever add ons and Cells so that by the time you actually get the discount you're not making 10% less. I think that that's your job to maneuver your way through that as a business owner. I don't think it's the worst idea. Any any incentive that you can provide to push someone to be scheduled when you want them schedule and suits your business better. I think it's worth investigating. Yeah. Yeah. The I know there's a big debate there you know whether whether give a discount or not or okay if you do if you give a discount.

 

Well should you pad it or is that unethical? But I think I think at the end of the day what you just explained you have to have to really fundamentally understand your sales marketing process really well and your numbers. Otherwise you don't even you don't even really understand what discount you're giving because you don't even know what your margins totally. Yeah totally. I'm not necessarily against it just depends on the business and what works for your market. Yeah. Do you find and again I know I kind of keep hammering this, but again you work with all these different companies and, and you know they're pretty wide range of revenue, Do you find that there are some sort of certain tranches like Okay I know you guys you really start well at a million, but but sometimes you'll, you'll be fine at 750,000, so I assume that's kind of your, your first trench and and probably below that another, how about how about above that?

 

Yeah, we totally see that the whole concept of tranches rings true for me. Yeah, like it's there's kind of smaller businesses, there's medium businesses and then there's bigger businesses and the challenges and the things that they're working on at those different stages um are really similar um And so yeah that's just kind of like the progression of the, you know, think about like thinking about like Pokemon, you know, I mean like where the businesses are evolving from one stage to the next, you go to like char mander to char million to char is er like that, you know business is kind of evolved the same way and um the stuff that the owner is thinking about um you know to put this a different way, the stuff of business owned a painting business owner at $4 million a year is actually more similar to what a roofing business is thinking about at that stage than another painting business would be when they're much smaller.

 

That makes sense. It does. Yeah. What what would you, I guess so under 750 we'll call it trench one right by a couple different phases there. What would, where would you say, trench two begins? Um Yeah, it's very different. It's like industry to industry, it's very different. I would say like trench one for painting would be like getting to the million dollar a year mark. And then I would, and I would sort of say 1 to 1003 is another like zone or another tranche in the north of 2.5 would be like the bigger business category. Okay.

 

I love it. And where does the, I guess where does the overhead, right? When when you start to kind of build out more of this team, would that be then in trench two? That 1 to 2.5 million. That's where you need to be building that out. That would be when you're starting to spend a little bit, you're not, it's not gonna, you're over, you're still gonna have overhead below a million dollars a year but it just becomes a lot more substantial when you're hiring a full time office manager, you want to get an estimator, you're spending, you know some money on someone to do some marketing stuff for you part time.

 

Um You're spending money on a tech stack. I mean, Yeah, like the expenses do add up and so it's pretty common for people to make, you know, they'll get, they've been working for years to get to a million dollars a year and they hit that threshold and they get past it and then they're making less than they were before and like, oh my God, this sucks, what have I done? But that's just all, that's just all part of the evolution, You kind of have this guy on the podcast the other day dan platter, remember dan plata Blue sky home service, you'll cross paths and he's a great guy.

 

Anyway, we were talking about business purgatory and like this idea that at different stages you get stuck in purgatory where your businesses is bigger than it was before, but you're making less money and so like top line goes up and bottom line goes down and you're like, what the hell am I doing? Like I've worked. So his point was like, that's just a natural part because your expenses swell because that's a part of the strategic plan and so you're spending more before you get to the part where you make more again and it's just something that does even now and if you know that they're coming in advanced, um it helps, it helps to be not caught off guard.

 

Yeah, anyway, a bit of attention there, but yeah, what was super helpful thing? No, I mean that was super, super helpful man, I think, you know, one of the, one of the things that I mean for entrepreneurship in general that can be scary, but but for painting specifically especially is you don't fully understand what's going to happen, you know, you think you're running this 220,215 business? Well that's what it would look like at 250,210,21 and oh I'm making 20,203 our 220,220 hours, I'll be making you know a million then, but you don't actually know how things are gonna change and yeah, I can imagine that's pretty concerning if when you start to hit these levels that you've been sort of dreaming about or aspiring to and then your financial well being seems to be getting worse.

 

You start to wonder what you signed up for here. I think it's good to know, you know, going into it, what are you seeing? So obviously things last couple years have been weird, the you know, put it lightly, but let's let's focus I guess less on Covid and all that stuff, but just the painting industry in general, Have you seen it evolving over the last, let's say five years, Have you seen it change or not so much? Yeah, I have seen it change. I think we're seeing The early stages of a very very big change that will probably take the next 2100-20 years to kind of fully set in obviously like the onslaught of technologies and Softwares available to um business owners is remarkable, I was talking to um you know job big crm, I think it's mostly focused on roofing and exteriors but they've got a lot of painters as well.

 

It's a great platform. We had, we had the Ceo and founder of it on named Ben Hodson, really bright guy and he was telling me he's like, you know when we started out and I think the number he said was like 10 years ago or 12 years ago when they started not long, like in the in the 2010's, you know what I mean? Like they're not talking about 1980, like not that long ago he's like the most sophisticated tool that existed for contractors to store data was like Excel. Like so if you just think about like how you know now it's like you go to a trade show, there's going to be like 20 different people who want to tell you about their platform and their product, which is amazing.

 

And so I just think that like we're still on the early stages of that. Um and what you're gonna see is a pretty a pretty big gap arise between new school and old school contractors. I think, I think most people know what I mean when I say new school, just like tech savvy um excited to, you know excited to adopt technology and evolve and old school is the classic, you know, stuck in their ways boomer contractor who um you know, is is I sounds doom and gloom, but I think whose days are numbered Um over the long run.

 

So yeah, lots has changed but lots more well in the future, what do you think about I guess like the fragmentation of the painting market, obviously it's it's highly fragmented, I think there's somewhere number might be off, but I think there's somewhere in the vicinity of 203,000 painting companies in the US and from my understanding one or two or so percent of them are above a million. I mean it's it's wild how many small companies there are. That's a great, yeah, that's a really interesting conversation. I mean I I have a my own take on it and I, you know, somebody can make just as compelling an argument in the other direction.

 

But personally, I think that you're gonna see a lot of centralization over the next 20 years, I think that there are gonna be fewer businesses and those businesses are going to be much larger. Um technology has made that possible. Um, but I think more than that, you're gonna see larger businesses take up larger market share because generally what happens is money looks for new markets and this construction and trade spaces a relatively untapped one talking like investment capital. So when you start to see, you know, big money players start to enter this space, which they have, it just means that more and more will because they're looking for under optimized opportunities to make an investment and return on investment.

 

And I think that this will be a new frontier. So I think that, um, what you'll see is a few people kind of prove the concept, you know, not that long ago, somebody would have said, there's no way that you can run a, you know, a home service business that big and now, like our friend Tommy Mello is going to be north of 200 million this year and way more planned next year. And you'll see a few like real early adopters and real heavy hitters kind of prove the concept.

 

And then generally what happens is is a bunch more follow, So I think you're gonna see this fragmented thing Go away. I think it's going to be uh fewer larger businesses. And so our advice and what we're doing with our members, like be one of those larger businesses because they're going to be very well situated over the next 20 years. Homes, you know, homes and home services are not going anywhere. Um, but that lower third of that lower half of kind of like the really old school really under systemized business owner, there just, there will be far fewer of them in 15 years in my opinion.

 

Do you think that when, when these big companies, you know, come in or become big or whatever it is, you think this is gonna be kind of through internal growth of the company, you think they're going to employ more of a roll up strategy and just swoop up a bunch of painting companies, what do you think it looks like um At a certain, you know its internal growth up until a certain size, I don't know, $50 million bucks a year, maybe more. It's big. Like it's like like if you're just like just starting out like don't don't get excited about going.

 

Yeah like get really good at your own thing first, but eventually yeah, you get to a size and scale where like the only option for growth, well the most logical option for growth is just to roll them up. Yeah, so I think you'll start to see that there will be a Tommy mellow of the painting industry in the next five years and then people go, oh okay, I see what's possible now and um things will begin to go that way. Like I could not my personal take and if someone made a compelling argument against it and here and here it with open areas, but that's kind of what I see coming.

 

Yeah, so that's really interesting because you know, one of the things that historically um painting business have really struggled with is making their companies sellable right? This idea of transferring equity and there's probably a lot of reasons for that. But I guess number one, it's a two part question. Number one, why do you think painting businesses are usually um not the most sellable of businesses and I guess it would be very related to question number two. Some people who are listening this might not wanna become Tommy Mello of painting, but they might want to be bought by him.

 

How can they start to position their company now to potentially rolled up in the next five or 10 years? Oh, that's such a great question, man. I think that the first, the first part, like why why do so many people? Um Okay, so yeah, here's an interesting fact. We had a we had a mergers and acquisitions guy on not long ago and I wanted, I asked this exact same question because I just see it so often and I found out um it's rare, it's very rare, I think.

 

Don't quote me on this, but I'm pretty, this is the number, I remember less than 1% Of businesses in our space will transact for more than $0. Okay. one in 100. Yeah. So why is that? Um most, Because most people don't think just, most people don't think of it. They make a lot of assumptions, They sort of like Assume that they're gonna work really hard. 20 for 20 years and they're gonna put a for sale sign on their business and it's gonna get snapped up to the highest bidder overnight and that's just not the case.

 

Um It's a buyer's market in this world. Um you know, it's not like there are more businesses available than there are people interested in businesses and so to successfully exit a business in contract and you need to be really really really strategic about it. Um And it's not something you decide on doing and then six months later you've done the deal. It's like it's like, you know, a five years long or a decade long process. Um You know, I can relay the information that I've been given on doing this successfully.

 

Number one is System Ization. And I'll happily plug breakthrough academy here like that is something that we do exceptionally well. A business broker or a potential buyer is looking for system Ization of some sort. It doesn't need to be 100% perfect. But if it's a chaotic mess, it's of no value. Another thing they look for is like the predictability of future cash flow, so recurring revenue or uh like secured long term contracts with clients. Um That's a big one, diversification of products and services. So if you have a few different things that you offer and you don't have all your eggs in one basket.

 

One basket. That's very appealing to a buyer documentation, stuff like S. O. Ps. And employment agreements and policies and manuals, all that stuff that we hate to build. Again, we do that really well. A breakthrough academy. Um A very consistent sales and marketing programs, like a strong brand. Uh And like you, you know, you don't have these large spikes and these large drop offs, like your sales and marketing is very methodical and consistent and the last one that I would say is like a good strong growth trajectory.

 

So when you is something that a lot of people will do, when they know they're going to sell in the next three years, they'll basically really hit the gas pedal down on marketing and sales. So the graph is showing growth and they'll also in very strategic ways cut back on their overhead. So they're posting really healthy and really appetizing net profit numbers. It's kind of the same ideas like when you're selling your house, you paint the exterior and you get an immaculately clean, there's a few things that you can do to really like boost its value.

 

Um but anyway, I'm getting kind of far down the rabbit hole, there's a lot of stuff that you can do to make your business more appealing to uh to a buyer. Um And if that's something that you plan on doing, you need to be thinking about it now because this sort of assumption that it's just gonna be worth a bunch one day because you've worked hard at it is, unfortunately, and in some cases very sadly just, it's just not the case. Yeah. Okay, so anyone who's listening who who thinks that, you know, breakthrough Academy might be a good fit for them, what would the next step for them be?

 

They would go to our website, which is www dot bt academy dot com. Um they would click on the button that says book a call or or talk to us a few different large orange, I think they're orange buttons on our site will just take you to a landing page where you can schedule a meeting with us. Um, we are really like, I should say this right now, like we are almost at capacity right now. So we will, you know, we'll get in touch, we may not have room right this second or very blessed to kind of be in the, have the luxury of being very like picky with, with who we take on and when we take them on.

 

So um, you know, we will get in touch with you, it might be a month or two before we have room to to onboard. Um, but our website would be a great place to start. The other thing I should mention, I should have said it earlier, is will also make available just this really cool training checklist kind of S. O. P. Thing. That's a fill in the blanks. Um, fill in the blank. We call them contractor quick tools. So that's just like a free thing will leave behind if people want to grab something for free and play around with it.

 

It's a really great way to start um organizing your job site, getting it a little bit more efficient, but website is a great place to start follow us on instagram at Bt Academy, check out the podcast just called contract revolution and it releases on all platforms every Wednesday. Um, it's pretty easy to follow us along and if people do want to reach out and talk to us directly, the form on the website is the best place to do that. I love it man, is there anything else that you want to add before we wrap up, any other advice you have for painting company?

 

There's really anything before we close down here? Mm hmm. Any final advice, um, work on your business, not in your business, believe that you can do it, be really, really focused on your numbers and your time and have faith that sooner or later things are gonna start to pay off and they will. Um I think that that's advice that I wish I had when I was kind of stuck in the trenches and suffering through the painful onslaught of, you know, grassroots entrepreneurship so that those would be my closing thoughts, Brandon.

 

Yeah, I love that man. It is, it is a grind, right? It's a grind. You're not alone. Um, Benji, thank you brother, this was awesome. Really glad that we made this happen and I'm excited to see, I think this will air a week before expo so I'm excited to see you next week man. Happy to see you there man, it'll be fun if you want to learn more about the topics we discussed in this podcast and how you can use them to grow your painting business, visit Painter marketing pros dot com forward slash podcast for free training as well as the ability to schedule a personalized strategy session for your painting company again that you are l is painter marketing pros dot com forward slash podcast.

 

Hey there painting company owners. If you enjoyed today's episode, make sure you go ahead and hit that subscribe button, give us your feedback, let us know how we did. And also if you're interested in taking your painting business to the next level, make sure you visit the Painter marketing Pros website at Painter Marketing Pros.com to learn more about our services. You can also reach out to me directly by emailing me at Brandon at painter marketing pros dot com and I can give you personalized advice on growing your painting business until next time. Keep growing.