Welcome to the painter marketing mastermind podcast. The show created to help painting company owners build a thriving painting business that does well over 1 million in annual revenue. I'm your host, Brandon Pierpont, founder of painter, marketing pros and creator of the popular PC A 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 Relationships are Key Candelario Valenzuela of VS Pro painting will be sharing how he has grown his painting company to $2 million in annual revenue with a 100% year over year growth rate.

And the advice he asked for ambitious painting company owners who are looking to follow in his footsteps. In episode one, Candelario discussed the importance of effective systems to scale. In episode two. This episode, Ken Deloria will outline how knowing your numbers is critical and which numbers he most focuses on. In episode three, Candelario will discuss the importance of reinvesting into your business and the decisions he has made as his company has grown. And in the final episode, episode four, Candelaria will deep dive into the importance of networking and some actionable insights he has on how to most effectively network for your painting company.

If you want to ask Candelario questions related to anything in this podcast series, you can do so on our exclusive painter marketing mastermind podcast forum on Facebook. Just search for painter marketing mastermind podcast form on Facebook and request to join the group or type in the URL facebook. com/groups/painter marketing mastermind. Again that URL is facebook. com/groups/painter marketing mastermind. There, you can ask Candelario questions directly by tagging him with your question. So you can see how anything discussed here applies to a particular painting company.

What's up, man, Mr Brandon? Excited to have you back, brother. No, man. Thank, thank you for having me again. The first episode I think was absolutely key. Felt like uh felt like I received a master class in in business administration there. So I'm looking forward to, to diving into numbers. Yeah. No, I mean definitely it was, it was a great topic. Uh uh the last one and definitely this one is, it's things that are so important in business that sometimes we um oversee and uh they're just so critical for growing a painting company.

But yeah, man, I'm so excited about, you know, talking about numbers today. Yeah, it it is uh numbers are the language of business, right? It's kind of what it's all about at the end of the day. And yet so many business owners are not really on top of their PNO. Um, I mean, we, we speak with a lot of painting contractors obviously through, through strategy sessions or whatnot and we tend to speak with more advanced ones, right? Like the, you, you have to be a certain level of advancement really to be focused on marketing and investing into your company.

And still so many people that we speak with don't actually know their gross profit margin, their net profit margin, they have little to no idea really what's happening financially in their business. Right? Um, I mean, I, I was, I was there when I started the business. Uh, you know, I, I don't have a degree in accounting. Uh So I, you know, it was, I was, you know, I was a, I was a painter and it was, that was, that was all I know I knew how to do uh back then and it was, it was kind of like I was going with my guts.

So every time I sold a job, I produce a job, I just felt it was good. So I felt like I was doing good. Right. It was on the table. There's, there's at least a little bit of money in the business bank account. So things are working. Yeah. Yeah. Yeah. Just, yes. But at the end you start seeing. Ok, cool. Like, you know why my, why the money is not growing, why, uh, you know, I'm selling a lot of jobs and I'm not being profitable what's happening.

Like, I, I feel like I'm working more and I'm making less of what's going on. It's like, it's like, basically running a car without, you know, having the gate is in there. Like having the gas, how work, you know, what, how much gas the car has, uh, the oil, like, where's the oil pressure at? It's, you know, it's, it's basically going with your guts. A lot of us as contractors, as business owners, we're just going with our feelings with our guts, what we feel. And it's kind of like we're not, we're, we're going in there blind until you start realizing that by knowing your numbers, you, you get to know.

Ok, cool. Like I am being profitable or I am, I'm, you know, I'm beating the jobs too low or, or something's going on. You are able to find a leak in your business whenever you know your numbers, if there's one. Yeah, I think this idea of like you're working more and you seem to be making less or maybe you don't seem to be making anymore is so common. You know, this idea of, of mista activity for achievement. John Wooden said that, uh, don't mistake activity for achievement.

And, uh, I think it's really common, you know, we're, we're busy, we're doing all these jobs, we're laying the jobs and man, we're growing, things are good revenue is up. But yet the business bank account looks the same. Yeah. Sometimes, sometimes we have that tendency that the more busy we are, the more money we're making. And that's basically, sometimes might be a mistake. It's not always that, yeah, it's not a super illogical thought process, but oftentimes things are falling through the cracks and it's not really playing out that way in reality. Yeah.

So I, I, for me, for me, I had, I knew at a point I had, I had to find a way for me to know my number. So I, I had an idea because I was, before I started uh the business I was looking in, you know, I was going to the, to the universal uh training courses in, in youtube and Google and all that stuff. And I remember I was looking at, hey, like, what, what things I need to look up up, you know, or out for uh you know, having a AAA business.

Like what numbers am I supposed to be looking at and things like that. So I started getting self educated, but I, I knew that at a point I was going to have to delegate that to someone that really knew what they were doing, that they could teach me how to understand numbers better. I love it. So you were going this self education route on youtube trying to figure out your key metrics so you can start to dial those in. And then at what point did you decide?

I guess, how did that go? And then at what point did you decide to maybe engage with a professional? Yeah. So it was, it was the first three years in business. So, uh, we're currently, you know, year number seven, in August and it was about four years ago that, uh I remember I was before I had my CPO, before I hired my CPA. I was just doing it on a Excel Sheets, you know, I was going in there and just put in plugging in my numbers and I will show up to my uh tax lady with a whole bunch of paperwork and all that stuff.

I remember the last time the, this uh uh tax person that I used to use to do my taxes. She's like next time you come with all this paperwork, I'm not doing your taxes. It was just a scrumble man all over the place. I had so many receipts, so many uh forms because, you know, of course I didn't have money to invest, uh, back then when I started. So it was just kind of like, ok, you know, as I go, I'm gonna be invested in the business and all that cool stuff.

Um, but I, I it got to the point where it was just getting out of hands. I felt like I was working too much time doing my numbers and I, which, which I mean, in, in a way served me a lot because I got to, you know, to learn a couple of things the hard way. Um, but it was just too much, too much work and I knew I needed to focus on something else is that if I really wanted to grow in the business, like if I really wanted to scale, I need to focus uh my time in different aspects of the business to be able to grow.

Um And I remember that, you know, three years passed by and then II I started, and this, this is this basically the conversation started with one of my, he was my CPA was actually my, my customer. So we did a project for him. And one day I just asked him, hey, what do you do for a living? And he started telling me about, you know, he, he's, he does all the accounting and all that good stuff. And I was like, oh my God, I wanna, I wanna be able to do a 1 to 11 day, talk about this.

And um I remember the first time that I, I met with him, he gave me kind of like a, a rundown. He, he an overview of what he could do for me. And he showed me three packages, right? He showed me uh uh a small package, medium package in a, in a large package. And the large package of course, was covering basically every single information or aspects of numbers in the business. And the small one was just running my accounting bookkeeping, um, and all that, you know, just, just kind of like AAA smaller attention, uh, to, to our company, I guess.

But that's the only one that I could afford. And I was like, one day I'm gonna be able to afford, uh the biggest package that you have there. And that's when I, I pulled the trigger, I was like, you know what, um I'm gonna, I'm gonna make this happen. I'm gonna start little by little. And now we're like, you know, we're, we're, I guess that at that big package where he's running all the pnls where we meet, um, every month and go over our numbers. Uh, you know, it is, it's just, we, we have a live, like I was talking to you yesterday.

We have a, uh a live da dashboard that we're able to see our numbers basically week by week, day by day on what's going on in our, in our numbers, uh from each project and, and overall what the business is doing. So, was that idea that he had several tiers and that you could move upward? Was that part of what attracted you to him? Yeah. So he was really transparent, right? And for me, I think, and this is something that, you know, for everyone out there that is, is looking at this, this podcast or, or listening to this, um, it's really important that the person that you're gonna bring on, especially with, with, you know, whenever it's, it's gonna start messing with money and all that stuff, it's important to make sure you have trust.

Like there's, there's trust in between you and that person. So, um, for me, the way that he broke it down on my end and, and show me what the, what value he will bring to the table was really important. And plus he was, he was my past customer. I dealt with him before I knew we were, we were, you know, we were meant for each other. So, uh definitely someone that, that's able to create, you know, uh that trust with you is it has to be really important, especially um on, on the accounting side of things.

So you came across this person because he was your customer and you were just talking with him and figured it out pretty spontaneous. What would you recommend to somebody listening who would like to find someone like this? And, and kind of wants to take a more proactive approach. Do you have thoughts there? Yeah. So before I, before I, I brought him in, of course, I did my homework, right? I, I went online and I started looking for other uh CPA s and, and I started kind of like you know, having conversations with multiple of them.

So definitely you have to do your homework, right? Uh Go out there and look, you know, talk to different people, uh have that sense. But I, I always, because I, I spoke with people that were, uh, you know, only on the phone, but I say the best way for me and this is just the, the way that I see things is like, uh 1 to 1 in person. So I, I had to go in person, I had to meet the, you know, whoever was gonna do uh run my account.

Um definitely, you know, getting multiple, getting to know multiple people in, in the accounting side of things or looking for different CPA S that could, that can do the work for you at the end of the day, just having that feel and that trust is just gonna, you know, it's gonna, most of the time is you're gonna hit, you're gonna hit the nail. Um And that's what happened with, with my accountant. His name is his, his name is taught by the way. Um He's, he's an amazing person.

He and I always, I always think, think our like achievement uh to him, you know, it, he has a lot, a lot to do in what we do. So it's kind of like in our growth, it's, it's a big, big one for me. So definitely all the time is, is, is always looking out for um keeping an eye open on, you know, who can, who can be the right fit for your company. And that has that, you know, same culture that you have and all that good stuff.

So taught me, met all the requirements. I love it. I will drop a, a small plug here. Uh Someone I'm friends with if you guys are listening and you don't have someone I recommend you do reach out to Daniel Honan. Bookkeeping for painters. He runs a really good company, accounting for uh bookkeeping for painting companies worth, at least talking with him. Um ok, cool. So I, I wanna get into all the numbers, but before we do that, I wanna actually figure out what changes in your business occurred as a result of you becoming more familiar with your numbers, you becoming more on top of them.

Did you make any strategic shifts? Were there any pricing changes? Were there any customers you no longer served? What happened? Yes. So the first thing that happened when I started getting to know my numbers I had to do. Uh I found, I found a leak in my business and, and I think that was one of the scary. He worked so hard, he worked so hard. Then there's a leak. Yes. And it's, and it's, again, it's whenever you don't know your numbers, you're basically running blind, you don't know what's like you, you think, you know what's going on but you don't really know what's going on.

Um, so I, I remember whenever I first hired my CPA and we started, you know, on boarding, putting all the numbers together and all that good stuff. Um, you know, he, he started grabbing all the numbers from, in, in my end and all that. And I remember back then we started seeing that some of the shots were not being profitable and it was just kind of like, uh really like what's going on. We had multiple crews and one crew was just the one that was like the, our numbers were coming negative.

So we started digging in the right and I started showing up at the, at the job site talking to, to the people that you, of course, to the crew lead and to the people that were working in that, in that, you know, in that crew. And I started finding out man that the reason why we were not being profitable. Um And that we were having a league basically on profits was because our team uh lead was letting our guys leave early. They, they were not finishing the jobs on time.

So they were basically, um they were, they were, they had a, we had a bad crew lead. Um And I remember that it was, it was, you know, I spoke to the crew leader and I was like, hey, um we're noticing that we're, we're slacking on certain things like numbers are, we're not hitting our, our targets on the production side of things like what's going on, we try to fix, you know, the problem and, and, you know, we, but we started seeing the numbers didn't change. So at the end of the day, I had to make that executive call and let the, the crew lead go and after I let him go and I put a new crew lead in place, our numbers spiked up.

So, so that's, that's, that's that I can say that's one of the greatest exa examples there to why you should know your numbers because if not, you know, you could have a leak and not, and, and be able to detect it, where is the leak at? And it was just, you know, it, it was just amazing because I was like, oh my God, like if, if knowing your numbers can, you know, can show you what, you know, what's going on in your business. Definitely. I want to keep on doing this and from there, it's just, there's, there's a whole bunch of other aspects of why knowing your numbers are critical.

Have you, did you ever quantify, did you ever look at that crew and figure out the change in profitability from before the, the crew lead left to after and figure out how much money that crew lead was costing you? Yeah. So we percentage wise. So basically on our gross profits on those jobs, we were like at under 20 per, like it, it was, it was about what, 3027 gross profit that we were making on those jobs. And then whenever we brought the new uh crew lead, it went despite above 603 50% gross profit.

So we were losing about 25 you know, in gross profits. So essentially each of those jobs was half as valuable to you because you are the wrong crew lead. Yes. So we were, we were losing. So we were, you know, if it was $10,000 job, we were losing, you know, $2500 or $5000. Yikes. Yeah, so it was, it was, it was really, really bad man. But uh again, knowing your numbers is really crucial and you're able to get to d because this, this was going on for a couple of, you know, months already.

So it's, it's, we were, we were losing some money with that basically with that specific group. Sure thing, man. Um OK, so that's a really good example of, of uh a shift that you made. Were there any other that's probably the most flagrant but any other shifts that you made, that kind of were aha moments after you started diving into your numbers. Yeah. So um af after you know, with, with that being said, so it's, it's gonna be an unknowing like for example, what was my uh production rate?

Right? Uh Where, where were my numbers are? If if I was charging what I, what I was supposed to be charging and, you know, we came up with my production rate rate, uh, back in that, in, in, I guess, three years ago we were like, at $65 per hour. Right. And it's, it's, it's like every, every year is increasing and the only, the only way that we're able to kind of like, keep moving our numbers up is because we see the results that if we're able to sell at 65 and then bump it to 75 and you know, we're still have a, a high margin on, on closing rate, then we're able to keep on bumping the price up every year or, or as, as it, as it asks for it.

Yeah, love it. All right. So let's get into some of the numbers. What are the, what are the key numbers you look at? So definitely gross profit and net margins. For me, it's kind of like really, really, really important, uh, whenever I'm looking at like a, a whole month uh for our business, right? So we're looking to be above 103% in that margin in, in the gross profits, I'm sorry. And net net margins. We have a, we have a, a big goal for this year. So we're trying to hit 33% net margins.

We're, we're currently, we're currently about 27% in net margin, which is, you know, pretty de decent. All right. So let's dive into this. So, gross profit. Do you, do you use uh W-2 painters or subcontractors? So, we're a subcontractor model? Ok. So when you just make sure I fully understand the revenue model, how do you pay your subcontractors? Like, is it a percentage of the, the job? It sounds like it's not if, when the crew lead was letting them go earlier, you were losing that much. So we, so we had, so whenever, whenever three years ago it was, it was we, we had a hybrid, right?

We had in house and we had subs, right? And, and the example you gave was in house in house, correct? Got it. Ok? So you pay your subs a percentage of the project, correct? So we, we pay basically what we do is we do a, we do a split so we will split material costs. We'll split uh you know, any, any additional cost that we have, we'll split that and then we'll go uh basically half and half on the profit. So we'll do 50 50%. Got it. Ok? And then, so you guys will go 5050 on the profit with your subcontractor.

So you're transparent with them then about the pricing and kind of what that project looks like. Yes. So, so basically what we, what we typically do whenever we, we get our, our subs on board, we'll go ahead and go over uh kind of like what we have for pricing. So we're really transparent on our end. Um And you know, we'll, we'll go over our numbers together and all that good stuff. So that way they can see what they're making on their end. Did you guys buy the materials?

So we purchase the materials, we purchase uh basically everything that, that we need to purchasing our and like, you know, any type of materials or good stuff like that, they, they just put their tools and all that good stuff and then we'll do all the materials. So let's say it's a $10,000 painting project. What is that? Probably gonna look like in terms of materials, in terms of what the subcontractors get paid and then in terms of what you guys walk away with. Yeah. So, so what we'll do and this is, this is something that we started implementing uh this, this year, what we typically do, um It's, we'll go ahead and take all the material out once, once we start doing job costing. Right.

So, like, let's say it's a $10,1003 job and we spent $2000 in material. So we have $8000 left, right. So then what we'll do is we'll do a split on those uh $8000. Ok. So you'll pay them 4000. Right. Right. But then wouldn't that be a 40% gross profit? So we would do that. But we have so, and, and uh, uh, thank you for telling me this. So we have, there's, there's so what we do is we'll have a 20%. So we'll remove 20% for, uh, basically, and that's, that's for, for our, our sales, our overhead, we'll remove those 20% and then split basically, uh, in half the profits.

Got it. Ok. So when we're talking about the gross profit that you wanna walk away with, so at a, at a $10,1003 project, you wanna walk away with $5000 R, right? So we, we're trying to make the 50% correct? And then that $5000 has that accounted for project management or any sales commissions? Yes. So that's where we are accounting those twe that 20%. That's what we're accounting basically. Uh the commissions are going now. Ok. Do you mind sharing your commission structure for your, for your estimator or sales person? And uh so we have, we have, so we have uh our production manager, production manager.

It's uh they, they're able to make 3% percent on, on uh on, on the, on the total revenue, right? So if they're, if they're, if we're selling $10,000 and they'll, they'll be make, may be able to make 3% out of that and then 1% it's gonna be for collecting uh the payment on time. Uh And then this is, this is just possibilities that they can make that money, right? If they collect the payment on time, they get a, uh, uh, they will get 0003% if they get AAA five star Google review and then they'll get the, uh, other, uh, 1%.

If the, if the job was hitting all the, it, it was on the green basically was all hitting all the margins. So they get up to 3% and then plus their, their salary. Right. Sure. How about the salesperson? Salesperson? We have a small uh small salary and then we have 5% for um for commission and this is based on the revenue of the job. Got it. Ok. So they get, they get paid on the full revenue of the, of the project. Ok. So the gross profit is pretty clear, you're removing the commissions from the, the production manager, you're removing the 5% that's paid to the sales person, but the, the bases you're not accounting for in those, the salesperson and the production manager base.

Those are an overhead, right? They're partner overhead and that's what we're, we do. The, the take off of the 20%. That's just kind of taking a shot at it um as well. So it removes some of that too, some of that weight too. Got it. So we, we'll remove, we'll remove that 20% because I, I uh and I remember I was talking to, to one of my mentors about this and we were, we were conversating on how to structure uh the payment based things. And uh and I was like, OK, so if I'm, I'm raising my prices, like, how like do I share that with the subs or how do, how, how, how does that work?

And I remember he told me, well, selling is a different skill. Um If you, if you can have basically, and what we do is we'll talk with our subs and we're like, what numbers do you guys wanna do? You guys feel comfortable with? Like on making basically uh like a daily, let's say a daily rate, like what do you guys feel comfortable with? And then we're able to know, ok, cool. Like let's say a crew feels comfortable with making $750 a day, right? And the job is accounted for, you know, two days, we know that fif you know, 1500 bucks is gonna be what's gonna solidify them.

So we know that we have to sell a job that is over. Uh that, that is, that is basically that we're, we're making it happen in two days. We have to double that plus our 20% so that we're able to pay them that amount and we can hit our numbers at the end like our, our, our margins at the end of the project. So, so as we increase prices, we want to make sure our sub also are there ha happy with the numbers because that's for all you know, for us, we go and follow the three piece which is people processes and, and, and, and profit.

So people are really important thing for us. So we want to make sure that our subs are extremely, that they're super happy. Right? And most of the time you'll have, you'll, you'll see if the numbers that you're giving them are not right. Because you'll start seeing that they, they'll, they'll be complaining about numbers and all that stuff. But that's when, when we have to adjust and make sure that, ok, like if we're taking out that 1003% off the top, how can we, how can we basically compensate for that?

And it's by raising our prices, but that doesn't impact the way that we pay them. So it's just basically, it's gonna impact us in a positive way because then we're gonna be more profitable. Sure. So then let's get into the, the net margin. You quoted some really high net margins. You know, if, if you can hit 20% you're doing really well. You said 27% with a goal to get to 33%. Is that free or post uh uh owner contributions like owner payment. So, so I basically, I get my owner payment and that's after my owner payment, that's after.

So you've been paid, everyone's been paid all the materials that the whole thing has been paid and you have 240% left over in your bank account like the business bank account. Correct. Correct, dear. You are either paying yourself extremely cheaply or you were doing this. Right. I'm, I'm probably paying myself to cheat, man. I think, uh, I think you're doing pretty well because you'd have to be paying yourself dirt cheap to be hitting 260 to 210% at $2100 million. So, one thing, one thing that, so we don't have, we don't have to get an office space.

So I think that's what's helping us a lot too with this. I know that this is gonna probably change next year. Uh, but this year we're trying, we're, we're taking basically advantage of the situation that we don't have in office space. We're, we're in a hunt for it already and we're thinking that it's gonna be late this, this, uh, uh, this year or beginning of next year. But I know that that's gonna be, that's gonna be hitting our, our, our overhead too. So that, that saves us a lot of, a lot of money.

And then also that, uh, we don't have a lot of W twos. So we have the majority of them are subs, right? And we're able to manipulate the numbers, like, like what I was mentioning to you earlier, we know how much money they're comfortable with and we're able to, you know, boost up the prices or, or, or bring up the prices higher. So that way we can be more profitable per job. So every time, every time that we see that are like, we didn't hit margins on, um, um, on 2100 jobs, then we go in and dig in deeper in those jobs and see what happened in those jobs.

Why we didn't hit our numbers and then we start kind of like, you know, uh, uh, making changes what we need to do so that we can start hitting those numbers for those type of jobs. Yeah, I think, uh, one thing I, I wanna dive into is what the individual pnls look like because I know you basically are tracking by project, the profitability. So what does that, what does that look like? How frequently are you looking at that? Um, because that level of granularity is not really, most people don't have that, right.

So we're, we're looking at the PNLS, uh, every, every month and then for per job is every week. So we're, we're, so what happens is on the week, like for uh, the end of the week our production manager runs all the um, job costing. So he does all his job costing and then he sends it, he sends it out to, uh, to the accounting right, to the, to the uh uh CPA. And then he's, he's the one that's able to. Ok, cool. He oversees it. We have, uh, we have something that's called DEX.

I don't, I don't know if you're familiar with it, but that's where you input all the, the invoices that receipt. Well, I'm sorry, all the receipts and all that good stuff and then we're able to kind of like, uh reconciliate all those numbers put together so that we see. Ok, cool. The invoice ID is coming from this job here so we're able to match and, and make sure that our production manager, you know, did his, his, his work, correct? And that the numbers were right. Then after we do that, then I'm, I'm able to, you know, because it gets sent to me and then on a, on Monday, I already have it in my, in my, uh, in my dashboard and I'm able to go in there and look at that job and see.

Ok, cool. Like, you know, did we hit all our margins or where did we miss? It was uh, labor cost was too high or we spent too much money in labor or we spent too much money in material. And then I just, basically, every week, I'm looking all the jobs that we did the past week that we're turning by Friday. And so this monthly review that you're doing. Are you doing this with your accountant? So this is with the, with the CPA? Yeah. So we're, we're, we're basically, uh we'll do a Zoom meeting and then we'll go, um, I'll have the dashboard and then he will just do a presentation and then he will explain all the numbers to me on what's, what's basically, um, what the numbers are for each project for the month and then we'll see, we'll look at the actuals and the budget.

Yeah, there's just no way that you can get the net margins you're talking about if you're not on top of your numbers, es especially running a, a subcontractor model which, which can make it a, a little bit more arduous in some ways to hit the gross profit. No, definitely. It's, and, and again, it's, whenever, you know, talking about this in the beginning, it's, it's really crucial, it's really important. And uh whenever I started seeing how the numbers were changing, the way that I was doing business, I was like, I gotta, I gotta dig in deeper, right?

And uh I don't consider myself as a greedy guy. And it's not like, you know, that I'm like, oh my God, I want to make this crazy money. That's not like, you know, always in my head, I care a lot about people, but numbers help you kind of realize if you can make change. Because if, if we had, I, I remember one day and I met, I met with uh Jason Phillips. Uh I remember he came out to uh to Austin and, and then Jason was like, hey Kario, um how's your sales man?

How you doing? How's your production manager? And then I told him, oh my God, like we're, we're actually setting at a 2000% closing rate and he's like Kio, uh, you know, clo close closing, you know, closing rates are, are vanity and, and, and are, are, you know, uh, uh, profit is sanity. So he's like you need to bump up your, your prices. And I remember, man, I was like, ok, cool. I, I did a, you know, I did something that I had, I hadn't done right and I, I bumped up my price.

It was at, uh, uh, uh, you know, it was $2003 under than what I was. I was at per, uh, per hour and I bumped it and we were, I mean, we're, our, our closing rate came a little bit down but our margin started going higher. So, definitely, it's, it's something that you're able to work with your numbers once you really know them. Right. You're able to see. Ok, cool. Like this is where I'm at at this production rate so I can bump it up and then just make more money.

And that's a really important point too because if you weren't tracking your numbers, you weren't tracking your margins closely and you were afraid to raise your prices, then you raise them and you do start tracking your clothes. Right. Because you'll, you'll probably be inclined to do that if you are afraid to raise your prices because you thought you wouldn't close as much and then you see a dip, you'll probably be like, oh, I was right. I shouldn't have done it. I knew I shouldn't have done it.

I knew it was gonna hurt our close rate and then you'll lower your price again. Meanwhile, all you're doing is is making the hamster wheel go faster and you stay on it because you're not understanding that you're actually making more money working less after you raise the prices. Right. Right. Right. One of the thing, yeah, I'll go ahead. Ok. One of, one of the things your uh your mentor said that I really, really liked that I just want to point out was when you, when you talked about what should we do if we raise our prices relative to the, to how we pay the subcontractors and how those are different skill sets.

And I think the way that you're looking at it, hey, what do you guys wanna make? What do you feel good about? And then what do they deserve to make in terms of the quality efficiency? You know, how, how many times are there callbacks versus not? Right? Things like that. Um You separating those things, I think is really important because you selling you, you becoming, let's say you just become just the, the world's best sales organization for painting projects. That doesn't mean your subcontractors should necessarily be the world's highest paid subcontractors in the painting industry.

Probably not unless they happen to also be the most exceptional, which would be quite the coincidence. But I think there needs to be a, a divide between the skill sets and sort of responsibility and where the earnings are happening. Yes. And that, that, because I, I was, I was a subcontractor before. Right. And, and one of the things that whenever you jump into the, to the driver's seat and you start, you know, being the contractor sub, you know, selling work to other people, it's kind like I'm gonna take care of myself.

So, you know, they're gonna make a lot of money and all that stuff. But as you go, then you start realizing that there's different skill sets in different parts of the business and then in the sales part of things, it's, it's, it's a different, different because we're, we're always training, like we're, we're paying, we're paying for training, we'll go out there, uh, uh, to the boot camp and, you know, we'll, we'll, uh, you know, we'll, we'll invest in what we're, you know, in, in, in the sales skills and all that stuff.

So, it's a different, it's a different, uh, uh, skill set that definitely has to be compensated to the sales people. Yeah. Yeah, those are, those are skills that pay the bills. Right. Well, that's what I call those. Uh, well, 2200% you said your target or your net margin is 2000%. That is very, that's our target, right. That's, that's what we wanna, we wanna hit this year and then we're, we're at 200% currently. Why is it, why such a specific number? How did you come up with 33%? Uh So we, so we look, we look at our budget and then we look at our actuals and based based on what our actuals are saying, it just basically telling us that we might hit that goal.

Ok. So you're seeing upside scenario, this is possible. Let's aim for it. Correct. Correct. So it's, I guess, I guess it, it might be AAA little stretchy but it's something that it could be done. So whenever we're able to see it on the radar, then we're like, ok, cool. Let's shoot for it. All right. But you know, it could be done it so we, we can, we can shoot for it. Yeah, if you hit 33% this year, we need to have another just on that. Yeah, and I'll, I'll, I'll, I'll, I'll have my dashboard here and put it out so that we can all take a look at it.

It'd be wonderful. So the, ok, we have gross profit, we have net margin, net, net margin. What other numbers maybe we can just talk about kind of what the dashboard includes. Obviously the, the profitability of each project, your gross project profits really important and then how much money you're keeping at the end of paying all your overhead marketing, uh, investment, everything else that you're paying, uh, is really critical. But w but there are other numbers in between. So what else are you focused on? So we're, we're another numbers that I'm, I'm really like into it is all the time.

It's an actual and budget like what, what I budgeted for uh for the month, for the week and for the year. So it's, it's kind of like uh we'll, we'll look at, ok, cool. Like we'll have like today later today we're having, I'm having a meeting uh with our team and we're just gonna go over what we had budgeted for the month and then what, where we currently are, right? And then from there we're able to see, ok, cool. Like we're off like let's say we projected this month uh that we were gonna hit $200,000 in sale and we're at 190 then we're able to see, ok, the actual specials, the budgeted and that worth $10,0003 off.

So, hey, let's start giving a shout to all those uh start following up with all the past customers that didn't close this month. Let's try to see if we can add, you know, uh uh some, some sort of promotion or something like that that can help us get, you know, to that 200,000. So actuals and budget and, and what you have, you know, budget, it's, it's a really important one too because that, that's what kind of like uh helps you get to the goals I could go on.

Uh there are like four different soapboxes I could stand on right now. Candelaria. I'm so I get heated sometimes I'm trying not to do that. Did you say that? The ones who, who didn't close last month? So yeah, so for, for the month, right, for the month of or any open estimates that we have? So we, we're able to see that on our, on our form like OK, how many open estimates that we have that we can post? OK. Yeah. So the one of the, the biggest mistakes that I see in the painting industry is people not following up on leads, right?

And a a super passive attitude. So people thinking that, well, they didn't close on the spot and most companies aren't even presenting on the spot, which you should be, but they didn't close on the spot or they didn't close that week or they didn't close the next week. So they, the, the answer was no. And what you're telling me is you're tracking your numbers, you have a goal and then you're gonna take responsibility to try to meet that goal if it doesn't seem like it's magically gonna happen on its own.

And then you're gonna actually pick up the phone and call people who didn't explicitly tell you no, but haven't closed yet. That's really intuitive. That makes sense. But it's so, so different from how so many painting company owners operate. And I think it's really important to just take note of this mindset if you're listening to this. A, a lack of an immediate yes, does not mean a no, especially in an election year right now, especially with high inflation. Those projects are still being done, but the buying cycle is a little bit longer.

People are taking a little bit longer to make a decision. And oftentimes the the contractor, the professional contractor chuck in a truck will oftentimes lose to the right buyer. But the professional painting contractor that doesn't throw in the towel that follows up a little bit more like Candelario is doing here. Oftentimes we'll close those projects there. I went on one soap box. I think I had one or two more. I'm gonna leave it big. That was one soap box I stood on. No man. It's, it's so for us, it like before we do anything else, if there's jobs that were not closed that we, they're still open, that's, that's our main target.

Like we, because we, we already visited those customers. We already had, you've invested a lot of time and money into that. Yeah, there's, there's a lot of money you bought the lead some way or another, right? Whether it's through your organic presence and, and or whether it's through paid ads or whether it's through referral somewhere, there was sweat equity money, something that got you that lead and then you sent someone out there, spent a lot of time driving their gas. You spent time on the pro I mean, you've invested a tremendous amount of that lead to just walk away, right?

So if you, if you have some open estimates out there that you haven't sold and you're trying to get to go, man, go, go, start getting, you know, get the phone and, and, and start start giving all these people a call. Try to make a sale. Yeah. Get the, no, I mean, people are afraid of. No, no is a wonderful word because no, a definitive no means you, you achieve the sale cycle. Not everything is gonna be a yes. You know, oh, like Jason Phillips told you 60%.

That means you're, you're, uh, your prices aren't high enough. So, you know, I know he likes to close around 40%. So you should lose 60%. So the, the no, it stings, it hurts, it makes it feel like we lost. We did something bad. You're supposed to get that sting six out of 10 times. So look for it. Find it. The thing that I think is the real loss is when you never know when you just kind of let a lead disappear. Right. Right. So, uh definitely it's, it's like you gotta do all it takes to be able to, you know, because this, we, we have, we have in, in our, uh, and, and a lot of people probably familiar with this but in our, uh, our pain estimated software, we have a proof or decline.

Our goal is to be able to either, you know, of course, get them all approved, but if not either approve or decline, but it doesn't, it, it, we cannot just have an estimate sitting there that it just says viewed and we haven't done nothing with it. Right. With, there's, there's a note button there too where we're able to notate every time that we follow up with the customer, every time that they didn't answer every time that we sent a text message and email, like we notate all those things.

So that way I'm able to also see. Ok, cool. We are following up. We tried our best to either, you know, prove or decline, but they're just not responding. Is that in paint scout? Yeah, there's in, in paint scout we use uh there's, there's a notes item in, in, in the uh um estimate, the estimate, uh uh a tap and you're able to like each go into each estimate and then notate what's going on, you know, with that project. So we're, we're basically all the time just notating there, the date uh and whoever, you know, reached out to that customer.

Yeah, I really, I really like observing whether they approved or declined it and then pushing for one or the other. Having a view that a view is uh no bueno view means more action is needed on your part. Yeah. No. And, and we were, we were doing a terrible job last year on that. And we actually, you know, whenever we started the year and started planning, that was one of our, our, our goals, right? Hey, we need to, we need to get our, all of the jobs are coming uh through.

They need to be either approved or declined, but we need to do something with that, with that, with that uh estimate. I love it, man. So we're, you're tracking revenue track gross profit net margin. You're looking into each project individually every week. You were looking at a holistic PNL every month with your CPA and then you have budget to actual. So you set targets for yourself for every month and then you compare and that would be the budget and then the actual is what's actually happening and then you, you take corrective steps when necessary to do your best to meet the budget, for example, reaching out to past leads and trying to drum up business if you're gonna fall short of revenue that month, right?

How do you come up with the, with the budgeted numbers with, with uh from the past year basically, and what we want to do this year and what's happening uh throughout my, you know, uh let's say last, last year on uh June, we hit 100 you know, $100,000 and you know, we have the goal to, you know, go grow at 100% that we know that we hit, we have to hit 200,000. Right. And then we're able to also see uh whenever we start the year like how the months are coming up like, ok, cool, like each month it is doubling from last year.

So we know that this month we can hit double two, love it. So you have an an overarching goal and then essentially you're going month by month factoring in seasonality. Right. Right. Because you gotta, you gotta see, you know, uh the, the actuals versus, you know, the, the budget like, like I was saying earlier and then we're able to track like we have because we have already in our, our database, we have multiple years in there. So we're, we able to track each year. What's the, what's the increasing rate on, on, on revenue per, per year?

Yeah. And this can be, this can be for those listening, this can be harder if you've only been in business for a year or so, sometimes the first year or two are gonna be a bit different. Uh but if you've been in business for really 23 or more years, this is absolutely applicable to you. I mean, it, it took me whenever I hired my CP, it took me like what we're on the third year with our CPA and it, it really has to take and I haven't finished learning everything.

Like it's always constantly learning something new, but as long as you know, the basics then it's, it's gonna, you know, that's gonna help you a lot with your business. So whoever is starting up like, you know, trying to, you know, get a CPA or trying to dig into their numbers, just start with the basics, you know, with job costing, you know, get, getting to know if you're being, being profitable. Her job that I, I'll say that that's one of the, the main ones there. Yeah, Canario, this is awesome, man.

Another another business lesson uh from you. Do you have anything else you want to add before we wrap up this episode? No. So the only, I, I think the only other important numbers there to, to look at it's gonna be uh the, the marketing side of things. I think that's, that's, that's an important one and we have like today we're having a meeting with Bianca from um uh in your marketing pros. So we're, we're going over, you know how the month looked uh on the on terms of leads, right?

What, what leads are, how many leads are coming from Facebook, how many leads are coming from Google? How many leads are coming from referrals? So that way you're able to track where um your sources are, where, where, where the money is coming from. Love it. Yeah, make sure if you're, you're working with a marketing company that you get transparency that you get reports that you understand your lead flow and by a source and what you're paying for that and all that. Um wonderful uh candy Lari. Appreciate you, man.

This is a, a magnificent episode. 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. com/podcast for free training, as well as the ability to schedule a personalized strategy session for your painting company. Again, that URL is painter marketing pros.com/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.

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