Maybe you’re like me and you love the idea of a good challenge, maybe you’ve always dreamed of being your own boss, or maybe you don’t want your income limited by anything other than how hard you are willing to work.
If these describe you, then starting your own painting business might be the challenge and opportunity you’ve been looking for.
In this post, I am going to get into serious depth about how to start a painting business. I’m not skimming the topic or regurgitating what you can already find online.
I am going to help you through every step of the process to successfully get your painting business up and running profitably. We’re going to cover forming your painting business, planning your services, pricing, equipment and much more.
I’m also going to help you avoid the mistakes I’ve made and assuming you are willing to work hard and smart, help you can jump right into success.
- My Background
- Why Start A Painting Business
- Forming Your Business
- Planning Your Business
- Advanced Resources
My Painting Business Background
Before you take any advice from me on this topic, you probably want to know why you should listen to me, right?
I originally went to college for computer science but somehow ended up working for a mid-sized production painting company in Minnesota around 2003. This is where I learned the basics of painting, how to move quickly and work hard.
I only stayed with this company for a year though. I wanted a bigger challenge, more potential rewards and risk had never bothered me.
I started my own painting company in 2004 and grossed $60,000 my first year while still learning the trade, learning how to run a business and get new customers. Things went as well as could be expected to begin with. In 2005 I grossed $120,000 and hired my first employee. In 2006 I grossed $240,000, grew to 5 employees and rented out a 1,000 square foot shop.
In 2007 I focused my business on commercial work and new construction and grossed $500,000 and in 2008 I cracked $1,000,000 in gross revenue.
I mainly grew this business through cold calling builders and businesses. In hindsight, this was a very laborious way to grow, but it worked.
In 2009 I moved my company to a 10,000 square foot shop and was running between 20-25 painters at any point. It was during this time that the housing market crashed and my business struggled. I had too many expenses and was running on razor thin margins. I also had many builder clients who went bankrupt as well as commercial projects that went bankrupt on us. I lost well over $100,000 that year just to clients filing bankruptcy on me.
In 2010, I closed my business. I was struggling to manage the number of painters I had, the profit margins were incredibly low and I was defeated.
One bright spot from my first try in business was that in 2008, I started investing in my online presence. I built a website and started blogging. Slowly, the leads started coming in. They didn’t come in fast enough for me to not close the doors, but they were coming.
After I closed my business, my online presence blew up. I was getting 50+ leads per month and I didn’t know what to do with them. I decided to try a new painting company, only to avoid the mistakes I originally made. I invested my time and effort in online marketing, decided to go after residential painting exclusively and I drastically raised my prices.
By 2012 I was generating over 100 leads per month, running a 2 man painting business and making more money than I had in my entire life. All while working roughly 80 hours a month. This was the business I had dreamed of.
I eventually sold this business for a great profit and moved into online marketing, an area that I truly love. Today, I still follow many of the same rules I learned from my painting business and consider it an incredibly valuable education.
Now, It is my desire to help others create businesses that they enjoy, are profitable and become assets for them. That’s what this post aims to accomplish.
Why Start A Painting Business
There are many reasons that someone would want to start their own painting business.
- You want to make your own hours and be your own boss.
- You don’t want limits on your earning potential. When you own your own painting business, the sky is the limit to the amount of money you can make.
- You aren’t afraid of risk and hard work. I would be lying if I didn’t say that there was risk involved and that it was easy.
- You love a challenge. Running a painting business has many moving parts. Marketing, customer service, employee management, bookkeeping and more.
- Painting Businesses have a low barrier to entry. Start-up costs are relatively low and at its core, basic painting is relatively easy (although many parts and services are very complicated).
These are just a few of the different reasons to start your own painting business. Personally, I think a painting business is a perfect opportunity for a young entrepreneur to get started and learn how to interact with both clients and employees.
What Experience Do You Have
If you want to start your own painting business, luckily, you don’t actually need any experience. A painting business is a great starter business (that can grow as big as you want).
Obviously, you will have much greater odds of success if you have experience painting, running a business or both, but neither are absolutely necessary.
If you have experience painting, then you will likely find the actual painting part of your job to be the easiest part of running your business.
If you have business experience, then what you really need to do is get out into the field and learn the painting side of the business, even if you plan on hiring employees to do the painting, you need to know every step of the painting process inside and out to be successful. If you don’t fully understand every step of every job your painters are doing in the feild, you cannot relate to them or improve your processes and efficiency.
The Potential Pitfalls and Dangers of a Painting Company
As with any other business, there are definitely some dangers associated with starting your own painting business. But that’s why you are reading here, to learn how to avoid mistakes and become successful.
First, you can lose money.
There is always a very real possibility that you could lose money. The bigger you try to grow, the more risk you will take on. More employees mean more overhead (risk) but also means more potential reward.
The best way to minimize your risk is to grow slowly. Make sure you are profitable as a one-man company, then move to two and make a profit, then three and so on.
You may also find yourself working long hours. While being your own boss means setting your own hours, every entrepreneur knows that in reality, it is often your client and deadlines that set your hours. At the end of the day, you are the one responsible to make sure a job gets done and you get a paycheck. On numerous occasions I found myself working late into the night to hit a deadline, usually because of poor planning on my part.
Finally, you may not like parts of the job. It’s ok to not like everything about running your own painting business. Personally, I really don’t like bookkeeping and dealing with difficult clients. I love to market, train and do good old-fashioned hard work. Find the stuff you love to do and are good at, and once you can afford it, hire out the parts that you don’t care for.
The Potential Rewards Of Starting A Painting Business
The rewards of owning your own painting business are huge and many.
First, you have the potential to make a lot of money.
When I first started my company, I started out making $25 / hr and I thought this was pretty good. Eventually, I got better at painting, bidding, selling and marketing and my pay rose as my skill set rose. I was making $50 an hour, then $75, $100 and eventually I was consistently making $150 an hour.
I was able to do this because I had a high demand for my service, delivered the best quality possible and found a niche that was willing to pay well. It was during this time when I ran the smallest business I had run, just me and one helper. I averaged $150 an hour while my helper was able to pull in $75 an hour (I paid him $20 / hr and ended up making $205 an hour on my jobs).
Second, you get to decide your own hours. I don’t like rushing out the door in the morning and fighting traffic, so I would start my jobs typically at 9 am (unless a client had special needs). I would usually work until 4 and wrap up my day. If business was going good and I wanted a long weekend (assuming my jobs were complete), I would take one. Same with vacations.
Another reward is that you are building an asset.
It may not always feel like it, but you are building an asset that has value as you build your painting company. Your database of all of your past clients along with your website and lead generation will be a sellable asset if you ever choose to get out of the business.
Forming Your Business
You’ve read this far, you’re obviously committed to starting your painting business, so now what? How do you get started with a legal business?
Creating A Business Plan
Before you get started filing your paperwork with state and federal governments, you need a plan in place, this is called a business plan.
According to Wikipedia, a business plan is a formal statement of business goals, why they are attainable and how you plan on reaching these goals.
Typically business plans are used to help secure loans from banks or to encourage investors to invest in your business.
You’re not going to need loans or investors for your painting business. As you’ll read later in this guide, a painting business can easily bootstrap their startup costs and stay completely debt free if done properly.
Even though you will not need a formal business plan, having one is still a good idea. By physically writing down your goals it forces you to think of what you want out of your business, why your goals are possible and finally exactly how and when you plan on achieving those goals.
Don’t worry about Googling how to write a business plan or what they are supposed to look like, your business plan is for you and your benefit alone, so wasting your time writing a fancy plan will not help one bit.
Before you start writing, know this: A business plan is an ever-changing document. I review mine on a monthly basis as my knowledge in the business grows, so do my goals, what I perceive is possible and how I plan on achieving my goals. Feel free to revisit and revise your goals every month, quarter, 6 months or yearly.
Writing Your Business Goals
Start by creating a large heading at the top of your paper called “Annual Business Goals”.
Just below this heading write “5 Year”, “3 Year” and “1 Year”.
As you think through and write these goals, start with the farthest out and work your way in. Think about how each goal is a stepping stone for the next goal in sequence. Your goals can be financially based such as “I will be making $250,000 a year within 5 years”, “I will be making $150,000 per year within 3 years” and “I will make $100,000 within 1 year”. It is also good practice to add personal goals along with this since many personal goals are tightly related to our business goals.
After this, creating another heading called “Monthly Goals”. Under this, you will plan out your monthly goals. Think about these monthly goals as stepping stones to your yearly goals. If you want to make $100,000 in your first year, then your monthly goal should be $8,333 in profit per month.
If you’d like to create a heading called “Weekly Goals” feel free. I prefer to skip this and accomplish my goals on a monthly basis. Many people claim that adding weekly and even daily helps them stay on task though.
Why Your Goals Are Attainable
In this part, you will need to explain why you can achieve the goals that you have set out for yourself.
Is the market you plan on working in big enough to support a new company with goals of $10,000 per month?
Are you willing to work 50 hours per week? Will your family support you if you have to work more and make less to begin with?
Do some research on your competition as well. How many painting companies are in your area, are they good at marketing, are they reaching their maximum potential. My guess is that most are quite bad at marketing and reaching nowhere near their potential. A well-run business such as yours should be able to come in and easily take a nice piece of the market.
How Will You Achieve These Goals
Basically, you want to lay out what services you will be doing, how much you will be charging for them and how you will be getting these jobs.
Let’s assume you are going to only offer exterior painting and the average exterior painting job is $5,000. You would need to land 2 exterior painting jobs per month to hit your $10,000 goal.
Assuming you land 1 out of every three painting jobs you bid (which is a bit low, but a good starting number), you would need to bid out 6 exterior painting jobs per month to land 2.
So, you will achieve your goals by bidding out 6 exterior painting jobs per month and making $5000 per exterior. You will also need complete each exterior in under two weeks in order to do two per month.
You may want to go even more in depth and talk about how you will get your 6 bids through your marketing. Such as, it takes 8 leads to get 6 bids, you plan on your website generating 4 leads, 2 from referrals/repeat business and 2 from offline marketing per month. Don’t overdo it though, your business plan should be 1 page, 2 pages at most and be a relatively simple document.
Choosing & Registering A Business Entity
Now it’s time to legally form your business.
First, you have to start off deciding what type of business you want to create. Your options sole proprietorship, a corporation, a limited liability company or a partnership.
Typically, new paint companies are formed as either Sole Proprietorships or Limited Liability Companies.
I am not going to get into the nitty-gritty of each type of business, but rather provide a brief overview and link to more resources that you can read if you are interested.
A sole proprietorship is a business that is not separate from its owner in the eyes of the law/government. While a sole proprietor is the easiest to form and most common business entity in the US, it also holds the most risk. Sole Proprietors are legally responsible for their business debts and if the business gets sued. If something terrible happens on a job site, a sole proprietor can be personally sued and lose their savings, house and anything else.
Read more about a sole proprietorship at Entreprenuer.com.
Limited Liability Company
Personally, every business I have formed has been an LLC. There are lots of reasons to form an LLC over a Sole Proprietorship but mainly for me, it is that it allows you to separate your business liabilities from your person and your personal assets. Hence, if your business falls into debt or gets sued, your personal savings, home, and other assets are considered safe.
For $149 you can easily Form Your LLC At LegalZoom.com
Real more about Limited Liability Companies at Entreprenuer.com.
Forming a new business used to involve hiring an expensive lawyer to draft and file everything for you but today you can simply go to LegalZoom, fill out all of their questions and easily file all of your paperwork online. Literally, in less than 1 hour you can have your LLC formed and ready to go.
Naming Your Business: Doing Business As (DBA) & Domain Names
Once you have legally formed your business, you will need to file a DBA. A DBA tells the government what the name of your business that you will be promoting to the public will be. This does not have to be the same as the legal name that you chose when you filed for your LLC.
When determining your DBA, you will want to make sure that the name you chose has an available domain name as well or you won’t be able to register a website with the same name. For example, you don’t want to name your business “Amazon” only to find out that Amazon.com is already taken (of course).
Start by coming up with 5-10 name ideas, each with at least 2 variations. Then head over to www.Godaddy.com and check to see if the domain name is available.
If the domain name is available, go ahead and register it. Then head over to LegalZoom and file your DBA to register that name with your business.
Every business needs liability insurance, no matter what area you do business in, and painting is no different.
Investopedia defines liability insurance as an insurance policy that protects your business from the risk that it may be sued or held liable for damage property or injuries.
This means that a liability insurance policy will protect you if you damage something while working on a home, accidentally burn a house down, spill paint all over an expensive carpet or rug or a resident climbs your ladder when you’re not looking and gets hurt.
Typically, interior painters can get away with smaller coverage than exterior painters and if you plan on working commercial or construction projects, they will require you typically have over 1 million in liability coverage.
Homeowners also see liability coverage as a way to know they can trust you, which is very important when bidding projects.
I personally like Hiscox Insurance for liability coverage. They are a large company that covers nearly every state in the US and has been around for over 100 years. Their prices are also fantastic and they can help you with other types of insurance needs as well (such as workers comp if you plan on hiring employees.
Planning Your Business
Determining What Services To Offer
It can be tempting, especially when you are new in the business, to offer any and every service under the sun. If a client is willing to pay, you’re willing to do the work.
However, this is usually a recipe for low profits, unhappy clients, and long hours.
By narrowing your focus, you can become really good at one area of painting and become known for being the best in that area. It also allows you to have fewer specialized tools, increase your efficiency and really focus your marketing efforts.
From 2011 – 2014, I focused my business on refinishing and painting kitchen cabinets. I created a system where I could quickly and efficiently do these jobs for maximum profits. And because this was 90% of my work, I was always looking at how I could do this one thing better and faster.
By 2014, when I would bid a project I carried a brand new pre-finished door along with a 1980’s cabinet door that I had painted and asked my potential clients which one was which, they could not tell the difference. Through my marketing they would get to “know me”, hopefully during my bid they “liked me” and after showing them that door they now “trusted me” and knew that I could do everything I said I could.
By specializing, I was able to deliver unmatched quality which allowed me to charge the best prices possible. On top of that, since I was only offering one type of work, I was able to become as efficient as possible and create my own process that allowed me to be as fast as possible. These together allowed me to make the most money possible.
When you choose a service niche, you become more focused, which is good in every way.
To choose which service or services you want to focus on, first start with what type of work you are currently good at and that you like. Personally, I don’t like exterior painting, so I didn’t do it. Some guys do extremely well with exteriors and love them.
You could focus on just interior painting, exterior house painting, faux finishing, electrostatic painting, commercial painting, kitchen cabinets or any other niche such as apartment turns or office painting.
A Quick Note: Many guys look down at apartment turns, but like anything else, if you create a system, they can be incredibly profitable. Just make sure you are not competing on price, that is an un-winnable game. Side Note: I actually landed a senior living complex where I refinished the kitchen cabinets in every unit. It was insanely profitable. They asked me if I would paint the units as well, as tempting as it was, I turned it down and stayed focus on what I did best.
Pricing Your Services
To price your services, you need to know all about your businesses expenses, how much you need to make to achieve your goals and how valuable of a service you offer (this is all about presentation).
What you don’t need to know is how much your competitors are charging. Trust me on this!
Often times painters create their prices by looking at what others are charging and then try to charge less. This becomes a never-ending game of competing on pricing, which will result in you never making a good living. When you compete on price, nothing else matters except how cheap you can complete a job.
If a potential client tries to get you to compete on price, walk away!
Let me explain it like this: If you’re hurting for cash, you have a tendency to do jobs cheaper just to make money. When you do jobs cheaper, you make just enough money to cover your bare necessities but you don’t get ahead. This leaves you still hurting for cash and willing to go low again on your next job. This is a never-ending cycle that so many painters are stuck in.
When you raise your prices the opposite will happen. When the job is complete, you will find you not only have enough money for the present but maybe even a bit of money to save or take a day off. This makes you less desperate for your next job and more willing to stand firm on your pricing for your next job.
If you are worried about landing jobs, you need to remember that bidding is all about getting the client to know you, like you and then trust you. Once these have happened, you will be able to consistently get your pricing. I will be going over how to bid your jobs in more detail later on.
Determining Your Prices
If your company is just you, you should expect roughly 15% in operating expenses. Your operating expenses are your marketing costs, cost of tools, vehicle payments, etc. This is not your job materials. Job materials will be billed on top of your labor and should be tracked separately since different jobs require different amounts of materials.
To figure out what you will need to charge, let’s start with the goal we discussed earlier of making $100,00 a year back in the goal setting section. We determined that if your goal was to make $100,000 a year, you would need to make $8,333 a month and roughly $2,083 a week.
That number was profit though, so we need to add the 15% of overhead to this number to get our real monthly sales goal.
To figure out what you will need to do in total sales, take the $8,333 number and divide it by 85 (100%-15%). $8,333 / 85 = $98. Next, multiply that answer by 100 to get the total sales goal for the month. $98 x 100 = $9,800 (round it to $10,000 for a nice even number). Now you know that in order to make $100,000 a year, you need to sell roughly $10,000 a month in total sales.
Next, you want to take that $10,000 monthly goal and divide it by how many hours you plan on working per month.
When I say “working” I mean physically working on projects, not bidding. If you are running this business on your own with no employees, you should plan roughly 15% of your time for bidding projects and another 10% of your time for marketing, bookwork and other stuff. So if you think you are happy working 50 hours a week, that would leave 37.5 hours for actually working on projects.
Take this 37.5 hours and multiply it by 4 for your monthly total hours. 37.5 x 4 = 150 hours. That’s 150 hours spent working on projects every month.
To figure out your hourly rate you need to charge to hit your goals, take your $10,000 goal and divide it by 150 hours. $10,000 / 150 = $66 per hour.
You need to charge $66 an hour and work on actual projects for 37.5 hours a week (150 a month) to make $10,000 a month. When I first started, I charged $25 an hour, by the time I quit, I was charging $150 (while making $225 an hour due to my employee) per hour and working roughly 25 hours per week.
$66 per hour is a great place to start.
But we’re not done yet.
Sadly, you can’t tell a potential client that you charge $66 an hour and bill them your hours when you are done. Clients want to know EXACTLY what you will be charging them for the entire project. So, the $66 per hour is just for you to help you figure out how to price your services.
Next, you need to figure out how long each step of the service you are offering takes you on average. This is a never-ending process and definitely involves some trial and error. So don’t be worried if your goal is $66 per hour and you only hit $40 per hour on your first job because you misjudged, just adjust your pricing for your next job.
NOTE: If you want to see the processes I use for different painting projects, just check out the blog here on DIY Painting Tips, I have lots of different “How To” articles that are very in-depth, estimated times and I am always working on new ones.
If your service is interior wall painting, the process may go something like this:
Painting a 16′ x 20′ room with 9-foot ceilings
First, let’s break this down into actual square footage being painted. Add up all four walls: 16+16+20+20 = 72 linear feet (don’t exclude doors and windows, just ignore them). Now take the length of all the walls times the height: 72′ * 9′ = 648 square feet to be painted.
Now let’s figure out how much to charge per square foot:
- Bringing in tools and materials into the home and setting up your workspace: 30 minutes
- Laying out drop cloths: 10 minutes
- Spackling minor imperfections in wall: 10 minutes (NOTE: I charge extra for everything larger than a quarter sized hole)
- Pole sand all walls smooth: 10 minutes
- Vacuum and wipe all base, window and door trim: 20 minutes
- Tape off all trim: 40 minutes
- Cut in first coat along ceilings and trim: 40 minutes
- Roll on first coat of paint: 40 minutes
- Check for missed imperfections in wall, fix and re-sand: 10 minutes
- Cut in 2nd coat along ceilings and trim: 30 Minutes
- Roll on second coat of paint: 30 minutes
- Allow room to dry: 15 minutes
- Remove tape and check for paint on trim: 10 minutes
- Check for missed areas and imperfections: 5 minutes
- Cleanup area and remove tools and materials: 30 minutes
Total Time To Complete The Job: 5.5 hours
Now for your pricing: 5.5 hours * $66 per hour = $363
To figure out what to charge per square foot, take $363 and divide by 648 square feet (we figured this out earlier). That’s $0.56 per square foot for labor.
But Wait, There’s More!!
We still need to add in the cost of materials.
Cost of paint: Average gallon of paint is $30 per gallon and covers 400 square feet. I know the cans say 300 square foot coverage, but we can assume it will go farther on the second coat and assume some window and door areas that don’t need coverage.
If you are painting two coats, you need to cover roughly 700 square feet of walls. So you will need 2 gallons of paint which will cost another $60.
So your total price for a 16′ x 20′ bedroom with 9′ high walls is $423 or $0.65 per square foot.
If you think that sounds high, it is, but people are willing to pay it if they know you, like you and trust you. I consistently charged $0.75 per square foot and at the end of my career was charging $1.00 a square foot.
NOTE: Take the time to figure out your per square foot price, it is worth it in the long run as it is more accurate and repeatable.
Purchasing Tools and Materials
Now that you’ve determined what services to offer and how to price them, you need to determine what tools and materials you are going to need.
There are definitely a few general tools that all painting companies are going to need, but most needs are going to be dictated by the services you plan on offering.
Another thing to consider is that you can and should bootstrap most of your more expensive tool purchases. Bootstrapping is the idea of only using the money you have already made to re-invest in your business, you should never need to go into debt growing your business if you do things right.
Interior Painting Tools:
The nice part about interior painting is the barrier to entry is very low. For roughly $500 you can have all your tools and equipment ready to start your first job.
- Paint Brushes – I love the Purdy brand of brush for their high quality and durability. I believe that for interior painting, Purdy’s Pro-Extra Glide 2.5″ brush is perfect for almost all of your needs. It has the right amount of firmness and cleans easily.
- Ladders – Werner is the first and last name in ladders as far as I am concerned. For interior painting, Werner’s 17′ 300lb Telescoping Multi-Ladder will cover you in almost 95% of the situations you need a ladder. I use mine for vaults, cutting in 8′, 9′ and 10′ ceilings, stairwells and more. Wener also has any other size you may need, but I would recommend only buying specialty ladders when you need them.
- Drop Cloths – When I place drop cloths, I like to have enough to completely cover one entire room/area at a time. You don’t want to drag your drop cloth around a room, this will cause you to step in wet paint then the carpet, or get wet paint on the carpet while you move the drop cloth around. So 4 – 4′ x 12′ runners to go around a room and 1-2 9′ x 12′ canvas drop cloths should cover your needs.
- Rollers Frames – My personal preference is the Wooster Sherlock Roller Frame. It’s a classic and durable. Keep it clean and it will live forever.
- Roller Covers – For a roller cover, I like 3/4″ nap Purdy White Dove rollers. These rollers are high quality and can be used on 5-10 jobs before needing to be replaced. They leave a nice looking finish and the 3/4″ nap allows you to cover a lot of wall in between dips.
- Paint Trays – Something you may not think much about is your paint tray. A good paint tray is durable and big enough to hold a gallon of paint, but not much bigger. I love the Handy Paint Tray. This tray holds a gallon of paint, has lines to keep it clean if you like, and has a handy magnet to hold your brush when not in use.
- Extension Poles – An extension pole is absolutely necessary to save energy while you work and to save your back. A pole will keep you in an upright position and drastically speed up your work. Wooster makes a perfect 2′-4′ extension pole that works with their Sherlock Roller Frame.
Basic Exterior Painting Equipment
Exterior painting is going to require a bit more of an investment. You’re going to need more equipment, higher insurance and likely even a trailer (or at least a ladder rack on a truck). Typically, to get started with a decent exterior painting setup, you will spend between $1,500 – $5,000. But, an efficient exterior painter can make some really good money as well.
You need to be able to haul your ladders to and from job sites and to do this you’ll need a ladder rack. The type of vehicle or trailer you have will determine the type of ladder rack you need. Check out ladder racks on Amazon.
A small enclosed trailer can greatly increase your efficiency on the job site and keep your job site organized and clean. It can also save you from needing a separate vehicle just for painting.
You can obviously start you first few exterior by painting them by hand with a paintbrush, and you should if you don’t have much money. But if you want to become efficient and profitable, then investing in a quality airless sprayer is a must. Personally, I love the Graco 395 and small general workhorse, but the Graco 595 is the perfect machine for someone painting exteriors every day. The 595 has more power and thus can accommodate a longer hose, larger spray tips and more.
It is inevitable, you’re going to need to work on a roof at some point, and you are going to need to do it safely. Roof Brackets allow you to slide the bracket under shingles and secure it to the roof. Then you can place a plank across 2 brackets for a safe platform to stand on while working.
- Brushes – As I said earlier, I love Purdy brushes. Their exterior brushes are fantastic
- Drop Cloths
Hiring Employees or Using Subcontractors
In order to grow your business to need to use leverage. If you are a one-person company and wish to stay this way, then you need to leverage tools, knowledge, and processes to become as efficient and profitable as possible.
But you can also leverage other people in order to grow as well.
When you leverage other people, this comes in the form of hiring employees or sub-contractors.
Both employees and sub-contractors have a lot of pros and cons. While one might be right for one person’s business the other might be right for another.
I’m currently working on an entire post on this particular topic, so make sure to check back soon (link will be here!).
In the meantime, here’s a brief overview.
Employees are painters or office personnel that you employ and keep busy for a set number of hours per week (typically 40) for a set amount of pay per hour.
With employees, you have complete say in what they do, how they do it and when they do it (although you must balance this in order to be a good boss). This allows you to have complete control over how they interact with your clients and what type of quality is delivered.
A big benefit of hiring employees is that you can create a system that produces the exact same high-quality results every time.
Potential clients seem to prefer businesses that hire their own employees vs sub-contractors.
If done right, employees typically have more potential to earn the employer profits vs sub-contractors.
You must pay taxes on your employees & have workers compensation for them. This includes state and federal and is typically around 25% of their total pay. For example, if you pay an employee $15 per hour, their total cost with taxes to you would be around $18.75.
You must provide your employees with all tools and materials necessary to complete their projects. This means that you must provide all the paint brushes, plastic, paper, drop clothes and other stuff needed.
You may have to provide benefits to keep good employees. This may mean 2 weeks paid vacation, health insurance or something else. But a good employee usually needs incentives to stick around.
So, a $15 an hour employee will typically cost the employer around $20 per hour in the end.
Labor costs are not fixed. If your employees take 30 hours when they should have taken only 20 to complete a project, you have to pay them and will likely lose money on that project.
You have a responsibility to keep your employees busy for the number of hours agreed upon or they may end up leaving and looking for work elsewhere. This can make slow times of the year difficult and stressful for business owners.
Sub-Contractors are a bit trickier to use legally and have a completely different set of pros and cons.
You are not obligated to keep your sub-contractors busy. If you have a slow period, you don’t have to worry about employees leaving.
Your costs on projects are fixed. If you bid a project for $1,000, you can offer it to your subcontractor for $700. You then get $300 in profit for generating the lead and landing project.
You are not responsible for taxes, benefits or insurance for the sub-contractors. You still will need your liability insurance obviously.
One of the major cons of sub-contractors is the legality of it. To the IRS, if it looks like an employee and smells like an employee, then it must be an employee! Basically, you may have an issue with the IRS if you treat your sub-contractors like employees in any way.
Loss of quality control. You cannot tell a subcontractor what to do, or how to do it. You can only do this with employees. If you do, the IRS will think they are an employee. You can’t tell them when to start or when to quit or what equipment to use.
Typically, the profits are smaller but more predictable.
Like I said earlier, check back soon for my in-depth article on Employees VS Sub-Contractors if you’d like more information.
Accounting and Bookkeeping
Accounting is an incredibly important part of running any business and is sadly, the Achilles heel of many business owners.
In order to be a profitable business, you need to set budgets, track where your money is going and most importantly know what jobs are bringing in the most income. Without this information, the decisions you make in your business are going to be guesses. With proper accounting set up, you can make informed decisions on purchases, what types of work to pursue, how to adjust your pricing, can you afford to hire an employee, are your employees profitable and so on.
A great example of what good bookkeeping can do is with employees. When I was running my business I had an employee who was getting visibly dissatisfied with his job. He eventually came to me and demanded a raise or he would quit. Rather than make a quick irresponsible decision, I was able to go back and look at all of the jobs that he had worked on over the past year. I found that while he didn’t lose me money, he wasn’t close to being a top earner either. He really didn’t deserve a raise and I couldn’t justify it financially. I carefully showed him this information and told him a raise wasn’t possible at the moment, I then gave him goals to work towards to earn the raise he desired. To finish, I told him if he still wasn’t happy, he was free to leave.
Without proper bookkeeping, there is no way I would have been able to make a smart business decision in that situation.
What Bookkeeping Service to Use:
Personally, this is a no-brainer as far as I am concerned. Quickbooks is the worlds number 1 accounting software for small business and it’s not even close.
Quickbooks is affordable, easy to use and comes in different sizes for different businesses.
One thing I really like about Quickbooks is that I am able to do my bidding within the software, not only that, but I would do my bids right on my phone and email them straight to my potential clients. If they chose to work with me, I could convert that bid into a job and start tracking expenses and manhours on that job and eventually see the profits and losses of each job.
Not only that, but I could also do all of my billing straight from Quickbooks as well. I would require a 25% downpayment on all jobs, a 50% progress payment on large jobs and a final 25% payment upon completion. If the job was small, I would get my 25% downpayment followed by a 75% payment upon completion.
I’m not going to try to teach you basic business account here at all. Feel free to look elsewhere for that info. Personally, I like the Intuit Blog (they are the makers of Quickbooks). Intuit / Quickbooks has tons of wonderful tutorials right on their website and within Quickbooks.
Bootstrapping Your Startup Costs
It can be really tempting to invest all of the money you have in your new business or to even borrow from the bank or a loved one.
I am going to highly recommend that you invest as little of your own money as possible and none of anyone else.
The reason for this is that it increases the risk in your business and the more risk, the better the chances of failure.
In order to properly bootstrap your business, start by doing smaller jobs and setting aside 10% from every job to re-invest into your business. This re-investment can be better tools, sprayers, a trailer, a painting truck, employees or whatever you deem necessary.
Another way to bootstrap is if you land a large exterior job for $12,000 you’re going to want a nice sprayer, such as the Graco 595. For this project, you can ask for a 50% downpayment ($6,000) which will be used for materials and tools necessary for the job. Make sure to use what you need for materials on the materials (which should run you about $3,000) but then take the other $3,000 and invest in the Graco Sprayer for just over $2,000.
Now, you will end up making a bit less profit on this job, but you now have a nice sprayer for future jobs as well and didn’t have to borrow to purchase it. Just do not
Just remember, once you have debt, you have increased risk.
Here I am briefly going to touch on some more advanced topics for your painting business and link you to some more in-depth articles here on DIY Painting Tips.
Marketing is an essential part of any business. Without proper marketing, you won’t be receiving new leads and without new leads, you won’t have any work to do.
The above statement is pretty basic, of course, you know that you need marketing to attract new clients, but an effective marketing strategy is far more important than you may realize. Let me explain.
In painting, pricing is important to many potential clients. Many of these potential clients, no matter how well you do in your bid and how much you get them to know you, like you and trust you, are still going to choose their painter based on pricing and pricing alone.
Now let’s say you don’t have a steady stream of new leads coming into your business, you don’t bother marketing and are only getting 2 calls a month. Well, you NEED to land these two jobs in order to have any income. So now you can’t afford to not land these jobs, so what do you? You give away rock bottom prices because making something is better than making nothing.
On the opposite end, with a high-quality marketing campaign bringing in 20 calls a month, you are no longer desperate to land every job. During your bids, you can present yourself as an expert who does high-quality work in a timely matter and stands by your work. Then you can charge the appropriate amount to deliver this high quality work.
You’re never going to be able to stay busy and charge $100+ an hour if you only have 1-5 leads coming in per month. When I got to the point of charging $150 an hour, I was consistently bringing in well over 50 leads per month. I actually couldn’t even respond to them all properly and was selling my extra leads to other businesses.
Rather than cover the huge topic of marketing here, I decided this topic needed its own space. So I’ve written an in-depth post on marketing for painting businesses.
In it I cover:
- Building your website with Wix or Self Hosting with WordPress (Such as on Siteground)
- Creating A Website That Visitors Will Love (WordPress Themes at Themeforest)
- Attracting Traffic To Your Website Through Ads & Blogging
- Converting Visitors to Leads
- Social Media
- Video Marketing
So make sure to check out The Complete Guide To Online Marketing For Painting Businesses – February 2018
Customer service is VITAL in any service based business and painting is no different. Yet, many business owners completely fail to service their clients. Learn how to wow your clients and earn endless repeat and referral business.
Growing Your Painting Business
This is for anyone ready to take the next step in their painting business. You’ll learn advanced marketing techniques, how to find the right employees, getting your clients to pay top dollar, creating repeatable systems and much more.
Referrals and Repeat Business
Referrals and repeat business are pure gold in the painting industry. They are warm leads that convert incredibly high and pay well. With a steady stream of referrals and repeat business, you’ll have the business others dream of.
Bidding Your Jobs
Bidding is a drastically important part of running a profitable painting company. I was always so happy to see my competition show up in dirty clothes, never pull out a tape measure and jot down a number on a scrap piece of paper. Proper bidding will allow you to make more money and have happier clients.
I think that is enough for one post! I hope you found this helpful and learned a bit.
If you have any questions or have other topics you’d like me to cover, please leave a comment below!