From Painter to Multi-Million Dollar Business Owner: John Neubert's Journey to Success in the Painting Industry
Episode 8 // From Painter to Multi-Million Dollar Business Owner: John Neubert's Journey to Success in the Painting Industry
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Building a Multi-Million Dollar Painting Business
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Scott: Today I'm looking forward to my conversation with John Neubert, owner of Neubert Painting in Brook Park, Ohio outside of Cleveland.
John has built a multi-million dollar business before there was YouTube, social media, or influencers, if you can believe it. He did it with sound business principles, and I know we can all learn a bunch from John. I'm really looking forward to our conversation, so let's get to it.
My name is Scott Lollar and I'm a 35 year veteran of the painting industry where I've been part of growing several multi-million dollar painting companies. I have worn all the hats and have experienced everything you have experienced, are experiencing, or will experience. There is lots of chatter about getting to a million dollars, but what very few focus on is what it takes to blast through Death Valley and create the multimillion dollar company of your dreams.
We don't focus on bad tricks or shortcuts. We focus on solid, foundational business principles and data that deliver results. This is the [00:01:00] Consulting4Contractors Beyond A Million Dollar podcast. The.
Welcome, John to the podcast.
John: Oh, it's great to be here. Thanks, Scott.
Scott: Yeah. So John, take me back to the beginning. Tell us a little bit about, how you started back what, some 48
John: years. 48 years. ago.
Scott: Take us back to the beginning.
John: Yeah. I graduated from high school in 1975. And my first summer I painted six houses and eight, eight houses the second summer. My brother had painted for some guy and I said, one day I just quit my job in the supermarket and said let's start a painting business. And I was, I just kept getting bigger and bigger.
I was in business school at Cleveland State and eventually got my MBA also. and my mentor was the head of of Department of Labor during part of his years at Cleveland State. And he taught [00:02:00] entrepreneurship and strategic planning. So I had a pretty good basis to start with, but we, I just generally got bigger every year.
Had to learn the, business school didn't teach you the people part of trying to manage business and manage customers and employees. But we I, through trial and error, I learned how to manage people and hire managers that would run the business. And we figured out the sales part too. We did a lot of sales training probably about 20, 25 years ago that really helped us out.
And we've but we still got a really good business. We today we do about, about three to 4 million. I think we just barely hit 4 million, I don't know if it was last year or the year before. I think it was the year before we hit about 4 million. And, but we've had a pretty good run.
Scott: So, you kind of glossed over this. So you went to college though, and you basically painted your way through college, is that the way you'd say that?
John: Yeah I paint, I actually painted for [00:03:00] nine summers. I even did some interior work and then I worked, then I eventually started hiring managers, I started hiring operations managers and people that would both manage and sell, and basically I worked myself into more of a managerial position and, I've always been a salesperson, so to even today I'll sell about over a million dollars worth of paint work a year myself. And so I never, that's a lot. I know a lot of people that build these businesses, they get rid of the sales role, but I've always kept the sales role, so I'm even in right now, the busiest time of the year.
I'll be in the office about a couple days a week and maybe part of Saturday. And I'll be out selling four days a week. So I have some good people. That's hard to do, but I have good people around me.
Scott: [00:04:00] Yeah, so you got your undergraduate and then went on to get your MBA, so I would have to think you're really not thinking that you're gonna be a painting owner, paint contractor, you're actually thinking you're getting your MBA and you're gonna do something else. Is that fair to say?
John: No, by the time I was working on my by the time I graduated my undergrad, I pretty much knew I was gonna paint. Well, i, let's have to think about that. Yeah. After I finished my undergrad, I was still dealing with whether I wanted to be a painter or do something else. I did, I became a college agent at Northwestern Mutual and tried to sell life insurance, and I was too young and I'd been horrible at it.
And finally when I got married, I probably, I was about 24. Made, pretty much made the decision that I was going to just run the painting business, but I don't even think I'd started my MBA a work yet. So by the time I was in the MBA program, I was using my work in the mba, a program to learn how to [00:05:00] run the a painting business.
Scott: Great. So you're a painter initially, so you're actually applying the paint. How quickly did you stop applying paint and start being more of a business owner, sales manager, whatever.
John: Like I said, after my ninth I, by my ninth year, I completely weaned myself from from actually painting. So I didn't, I never painted again. So it was just, you wear a lot of hats when you run a painting business. So you're, everything your sales, HR, marketing you name it, you're but, but I took a completely different role and had to learn how to ma, how to manage a ma, manage a small company.
Scott: Okay. And so who, who was your first hire that wasn't a painter? What? What did you do first?
John: My first hire. Would be probably my office manager. She was, she got hired in [00:06:00] my 12th year in business. She's still with me. She's, she was 18 and she's she so I hired her and another young lady. They were both off hired as office managers and they're best friends. They still, they're still friends today, but one, one works here and ironically, the other one sells us our health insurance.
So she, so I still connected with her, but that was my first one. Our, all our our operations managers have come up through the system a hundred percent and we have never hired any managers from outside.
Scott: So your first hire was your office manager and she's still with you today.
John: Yep.
Scott: Wow. Okay. So you're running the business. Sales, you're doing hiring, you're scheduling. So there's two of you for a while. How long did you run with just the two of you, and then what did, where did you go from there?
John: It's hard to, it's hard to say. We we, by when I hired her, I had about [00:07:00] 30 employees in the summer. Maybe a couple off season. We really didn't have a big, we didn't have an inside operations set up yet, so we were just mainly strictly seasonal business. I'd say when I when she was hired on, I probably had a couple managers, the guys that ran crews for us that we hired as summer managers, and eventually they started getting like a full, became full-time people.
And so I started experimenting with hiring other other people managing crews.
Scott: And you just said something that jogged my memory. Back then, you were primarily a summer contractor that hired temporary college students to do most of the work. Is that correct?
John: Correct, and our summer operation is still largely the same model today.
Scott: So you hire people to manage and do the work, and you hope to get a couple years out of 'em, hopefully before they graduate and move on?
John: We hire high school [00:08:00] seniors that fit our hiring algorithm, which is high point average, been active in school and they've had a good work history. So that's the people we want and that hasn't changed. And then our managers though are people that have successfully performed in our business and then we'll hire them on in a full-time position to, to run the company.
Scott: Okay, so at what point did you start adding some non-seasonal work or year-round work, or whatever you call it in your business? When did you start doing more of the, bread and butter, normal, whatever you want to call it, versus just your seasonal work?
John: We probably started doing some of that about 30 years ago, but we really weren't that good and we didn't really know what we were doing. And I'd say in the last 20 years, we're way more serious about it and we, our model for interior work is to hire [00:09:00] experienced painters, and we don't, we have, we do have painters, we've trained from scratch, but it's far more efficient to hire a professional painter that's already been trained by somebody else.
And that's, so that's how we hire. So we've learned so much through the years by some of the people we've brought on, and we have very low turnover in our full-time jobs. My head cabinet guy has been with me about 25 years, and I have a few, I have probably, we have 10 inside painters and I'd say half of 'em have been with us over 10 years.
Scott: Wow. Okay. So you start developing a segment of your workforce that is year round. And then you have the second component, which is seasonal work, and that is essentially exterior work.
John: That's correct. Yeah. It's a pretty simple business model. It's pretty tight. It's a pretty tight model, and we don't vary too much about it. A lot of our competitors that, when we've [00:10:00] had people leave our company and started their own companies they all veer into commercial work and they can hit higher sales in commercial work. I'm not sure they make any more money doing it. I think there's a lot of landmines in doing commercial work. Sometimes lower margins, possibly payment issues, and maybe, how quick you get paid in the residential market.
Like last year we did, somewhere three to four million in sales. And we, knock on wood, we didn't have, we finished the year clean without any payment problems.
That's a rare year. There's usually always something that you're chasing somebody down. But in the commercial world, I don't know. I don't think it's the same as, I don't think it's like that. And we get paid pretty quick.
Scott: Yeah. So in the earlier years and even me maybe now, but take me, I'm really thinking about how you built this how did you manage your cash flow when you were doing the bulk of the work, say in [00:11:00] a seven and eight, seven or eight month timeframe but needing to have money 12 months, how did you how did you even come up with this concept and how did you manage your payables? And of course, paying yourself for 12 months when you really are working closer to seven?
John: We've never had, we've never borrowed money. We're all, our cash is internally driven, so we, when you have a painting business, have to save enough at, when you're a seasonal business, you just have to save enough money to make it through the winter and have enough money to get your marketing going and everything else going in the following year.
So we always had enough money, and by the time we're in March or April we're low in cash, the business was always low in cash. And that's what you have to do in this business. And if you don't do that and you spend it all, you're in trouble. You don't have the, you don't have the funds to to get the [00:12:00] business started the next year.
Summer Direct Mail Marketing Strategy
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Scott: Great. So tell me a little bit about how you built your customer base. How did you get the work in the early days, pre-internet? We're talking at this point.
John: We build up we have our own mailing list, which we still use. We build internally. We build our own mailing list of, we decided where we wanted to market. And so we, in those markets, we know where where the houses are that we wanna market, whether they're brick houses or frame houses, or aluminum siding.
And we, we did big mail marketing campaigns. We still do big mail marketing campaigns, even though they're not as effective as they were back th 34 years ago. There's still plenty effective. And we do all the other stuff. We do stuff on Facebook and we, we don't
do any AdWords.
We organically show up high on Google and most [00:13:00] of our searches, we're under all the paid stuff, but we're still, we still get plenty of calls on, every day I get probably half dozen calls, half dozen, a dozen, calls that are straight from the internet that aren't even related to any of our direct mail marketing.
Scott: So even today, what does your direct marketing campaign look like? How do you do it? And how often do you do it, and maybe even what you spend on it.
John: We this year we're, I don't even know what our budget is exactly. We're probably sending out about 150,000 pieces. We're, we have a scale back campaign because we had a huge backlog and exterior work that, so we don't have the, we don't need, have the need to put as much marketing dollars out, but when we bring our marketing campaign back online, full strength we'll mail out about 300,000 pieces.
And I think next year we'll be bringing it online because the demand for painting [00:14:00] work has been on a, the mon the call rate we're getting has probably been on a decline for probably for the last 18 months, but it hasn't hurt us that much because of backlogs. But next year is gonna be really, even this year will be pretty lean for some painters because our target customers, these upper income people are traveling all over the world this year.
And paint jobs aren't high priority.
Scott: Yeah. So when you say next year, you think you'll bring it, I think your words were in house. Does that
John: No, we'll bring it, we'll bring it up, we'll bring it up to up to where we normally do it
should be about three, 300,000 pieces. Yeah.
Scott: And are you doing that through a mailing house? How are you actually fulfilling that? Because this is something actually relatively new to a lot of the younger painters of they've only known promotion of their business through the internet. Through either organic, either website or buying AdWord that, mailing a postcard or a, or something like that is, it's foreign.
So tell us a little bit about how you actually do that.
John: We're
Scott: that.
John: Well, a little, [00:15:00] we're a little bit different. We have a, actually have our own mailing lists, so we skip whole streets and neighborhoods. So we actually built, we're still working off wi lists that we built 20, 30 years ago and we've added lists and stuff like that since then.
But we, ours is highly tailored to the where we wanna market and we take homes everywhere. So we get homes all over our metro area. But we have certain cities we ha, we market really hard and we direct it in. There's other ways of doing it. Some people will use a postal program where they can pick their own care routes and zip codes and things like that, that's efficient for some people.
But we want our piece to come in on its own and we don't want it mixed in with a bunch of other mailing stuff. So we're willing to pay the, to have our self mailers, which we use. Go out to our go out to [00:16:00] potential customers. And so that's
Scott: Okay.
John: pretty much what we do. Anyways, that I forget what I was gonna say.
Scott: Pretty and pretty simple message, or is it a, is a stock thing that's the same thing every time. How much energy do you put into the, oh, it has to be different or design, or the offer or the call to action. Tell us a little bit about your philosophy there and what's worked for you.
John: I'm a believer in direct copy, and so what we write is a sales letter in inside there. Obviously there's a lot of graphics involved. Today you send out stuff and it's there's, yeah, obviously you're gonna have a graphic designer design it, but it's still a letter. I don't like the idea of just sending postcards out with just pictures and stuff.
Pictures are really effective. You really to really get your message and your story is so important. You really direct having a long piece, which is a letter, is the best way to tell your story.
Scott: Yeah. And how did you come up with this? Is this Dan Kennedy? Is this pre Dan? Is this, give us a [00:17:00] little feedback as how you came up with these ideas and who's your guru? Who do you, who
John: My direct mail, no guru. I just did all this stuff on my own.
So I, eh, I wrote, I learned how to write long copy. I wrote, I got advertising books. There's a old guy, there's a guy that's deceased now named Dave David Ogilvy, who was one of the gurus of Dr of marketing and direct mail marketing and a whole bunch of stuff that's still relevant today.
And you own a big ad agency and I'd, so I'd study some of that. But most of it is just stuff that, that we wrote ourselves.
Scott: Okay, let's talk about Your summer workforce? I don't, doesn't matter the timeframe, those 3, 4, 5 months you scale up. And how many people, painters, now I'm talking about will you add for those peak those peak months?
John: This year. This year, we'll go from around Around maybe 15, 20 employees up [00:18:00] to about 75. And that's not, and that sounds like a lot, but we, my, when I was younger, my peak year was 130 people in the summer. Which was crazy outta your mind? I don't know if I could find that many people today.
And paint costs are way more, way higher than they were back then.
Managing and Training a Large Workforce
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Scott: Sure. So how do you onboard and train and manage an additional whatever, 40, 50 people what, how, what? That must be extraordinarily organized and not for the faint of heart.
John: It's not that easy. It's you just you bring people on. You have, it's a lot of planning involved in bringing people on. And you have training meetings. You do your your onboarding meetings. You do safety meetings. Safety meetings are key here. We do safety meetings the beginning of the year and every two weeks of payroll.
I think it's every week [00:19:00] I think we do a safety meeting. It's a paid meeting for safety. So safety's our number one value. And a lot of that is we like, like we're a painting contract. You saw our crews out. Painting, you're, we're probably the one of the only painting company you're gonna see all harnessed up on the roof and all that.
We don't go up on roofs without harnesses. So safety's huge. We we just did a workshop this yeah, this last weekend we had about 20 guys in here, 22 guys in here. And we did orientation Friday for a coup about two hours, and we had 'em back the next morning and we were showing a bunch of skill stuff to our painters and it's really more just exposing 'em to it because you really have to do it on the job.
And then on the job we. We have a certification program. And so you have to certify in these 12 different skills that we think are really important from painting a door to handling a ladder. And so from their base pay they get, [00:20:00] every time they pass the skill, their pay goes up 25 cents. So potentially by the end of the year, they could have another $3 in base pay added on for get it going through our certification program.
Scott: Okay, and you also are really counting on return. And painters from the high school year all the way, hopefully you'll get four summers out of 'em. Is that what you're thinking?
John: Today, you don't get that many years out of, because today we're competing with internships in large corporations. So the guys, the people we want are the same ones the big companies have. So you're, most cases you're having people that work here one summer and they'll run a crew for one or two and that's it.
And once in a while you get a few people that, that work longer or don't or stay longer, maybe work a longer season because they don't go back to school or something.
Scott: Yeah, so that's one of the one of the ways you really onboard an extra 50 people is because it's really not 50, it's maybe another [00:21:00] 20 or 25 and 25 have been there before. Heard the speech, run the process and they already know your systems, and they're now more in management of the newbies.
John: Yeah, but they, they, there's still a lot that they don't know. So you're always train, you're always training, and even your crew leaders don't know everything. And so the operations managers, they're out, they're out in the field. I was out in the field today, with the crew I had estimate on a street and I, one of our crews was working, just happened to be working nearby.
And so I went to see 'em and they were I was talking to the crew and they were caulking some stuff that I wouldn't caulk. It was some vertical siding. They were trying to fill all the cracks on vertical siding, and I pretty much had to take 'em around the house and show 'em that vertical siding, I wasn't too interested in caulking, but I showed him that the caulking had to be done where the wood met, the brick surfaces and the windows and the corners and stuff on this wood frame house.[00:22:00]
Scott: Okay, so tell me a little bit about your organizational chart. So what's your. What's your management team or, whatever you call them, what are they, what do you call them and who are they in your company?
John: We have Uh, we, we have two two operations managers. We're, we and three, and we have, and they have a support staff of one, two, they have five office people supporting 'em during the summer. And we're running, this year we're running a little lean, we're running 12, 13 crews. We. Yeah. So that's not a, for us, that's not a real big setup, but that's what we're doing for this year.
But we'll still have, we'll still have, between that and our inside work and everything will be about 70 to 75 employees.
Scott: Now, do you have a right hand person or someone that acts like you or has the same type of authority?
John: Yeah, my operations manager, Matt's been with me since 1987. He started here when he was 18 he painted [00:23:00] initially and then he got moved up. Within a few years. He moved up into helping running crews and eventually years later, he became a head operations manager.
Scott: Yeah, So with your year round crews, is this a different marketing message? Do you do anything different for them, or this is just into your work cabinet work, et cetera, et cetera? That just comes in organically as well?
John: Interior work is a different business, and so we, so we have two businesses on the inside. We do kitchen cabinets, and so we have four people working on kitchen cabinets, and we do three kitchens every week. And so that, that's, and we have a $50,000 spray booth, legal spray booth, which is important.
Important because if you get, you'll get busted by your, the fire department in your city if you don't put a legal spray booth in. And we heard rumor that one of our competitors got busted and shut down on that recently. I don't I haven't confirmed it, but I heard that as a rumor.
And we and we have six O [00:24:00] six painters that do interior work. We we do all, almost all of our, I'd say about 80% of our interior work comes from repeat customers. And we, once someone's on board with us we market to them forever. We would, we when once someone's hired us they're gonna get a letter from us once a month and they're gonna get an email from us once or twice a month reminding that we do inside work.
And the good news is you're not in competition with anybody on any of that work. You just get hired.
Scott: So, the, uh, yeah, the spray booth is an important one to make sure you dot your i's and cross your T's. So it sounds like you do a lot of cabinet work, and that's especially for you guys if you're running 40% of your year-round people in that.
John: Yes. Yeah, it's it's it's a great business. I don't know how long it'll last, but people have a lot of cabinets [00:25:00] that are they're old cabinets and they don't have a budget to put a new kitchen in. So they may be doing, they might be doing countertops, maybe floor, sometimes appliances.
And they'll, instead of getting brand new cabinets they'll just spray the cabinets. And it's it's the, someone has a real expensive home and a multimillion dollar house. They're not gonna spray cabinets. But the more moderate market, especially a lot of older people from maybe in their fifties on up to, senior, people up.
I've had customers 80 years old having us spray their cabinets. That's a really, it's a real nice market.
Scott: Yeah, you said something very interesting. I want to just dig in there. You said, I'm not sure how long it's gonna last, and this is something that we've talked about a bit. How long do you think it will last or what, how do you think about the cabinet spraying and the refinishing business refinishing business there?
John: Well, I mean, I [00:26:00] think the, I think that market could go 10, 15 years easier. Whether it stays as strong as it is now. It may not. The these trends changed. So the trend went towards white cabinets and now it's going back to a different type of natural wood cabinet that looks more, with more what people want today.
But people who don't have that kind of budget to do that, they're gonna take some old oak cabinets that really are past their useful life is and they'll paint them and get maybe 10 more years out of them. And I think that's gonna continue. And there's a, there's prob, there's a lot of cabinets that haven't been touched.
So I think
Scott: Yeah.
John: I, but it, it's hard to predict, but it's not gonna go on forever.
Scott: Okay, but you think you get another 10 years without question.
question
John: Who knows for sure, but it still seems decently strong.
Justin: Well, we are about halfway through this episode of The Beyond $1,000,000 [00:27:00] Podcast from Consulting4Contractors, and we still have some great content left for you. Before we get to that though, I wanted to let you know about some resources that are available to you via the show notes. You'll find links to our website, social media outlets and highlights of this show.
You'll even be able to schedule a discovery call with Scott and our team to find out how Consulting4Contractors can help your contracting business. It's very low pressure. We'll ask you just a couple questions, see what your current situation is, and then get you started toward the contracting business of your dreams.
The best part about, it's completely free, so just click on the link in the show notes, or you can visit our website at www.consulting4contractors.com and reach out to us there. Again, that website is www.consulting4contractors.com. Now, here's the remainder of the show.[00:28:00]
Exit Strategy, Compensation and Management Style
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Scott: Okay. So you've been doing this a long time. Is there a exit strategy for you or how do you think about the future for you personally in regards to your business?
John: I have a daughter in the business. She doesn't, she, I don't think she'll be running the business. It'll be she's, she'll probably be running this business with my My operations managers, am I and my what? Something happens to me, they'll just keep running it. They may need to bring in a finance type person that, that the balance things out.
I'm a. My natural skillset is I'm gonna, I'm a spreadsheet guy. If I was in a big company, I'd be a chief financial officer. I'm a numbers guy. I'm really good at building bonus programs and doing all sorts of crazy stuff on, on, on on on, on spreadsheets. And my operations manager is more, we're both introverted, but he's more outgoing than I am.
He's more of a people person. [00:29:00] If we were gonna hire a new operations manager at some point next year, we think we need to hire an additional manager, he'll be the one that will identify that person be he'll identify that person before me.
Scott: Okay, so how much time do you take off now or do you just love work and you work all the time?
John: Oh I'm I'm Oh I'm I love work. I work Monday through Saturday, but I've always been out of town about a month of the, about at least. 30 da 30 days a year except for the pandemic. And so I totally like to travel. So I'll probably go to Ireland for a couple weeks sometime before the end of the year, early next year.
I did that, that was my last trip. Big trip before the pandemic was Ireland. My wife heads off Italy for a couple weeks a year. I'll probably have to do one of those. I don't know if I'll do that this year, but we do a lot of domestic trips. I go up to Mackinaw Island and New York, so I go about, I'll do that in September.
I'll go up there for about five days. And so [00:30:00] I think that getting outta the office is crazy important. And then when I'm at home I'm like a master gardener. One of my friends owns a big commercial landscaping company and he says he's glad he is glad I didn't go in the landscaping business, cuz that's my real passion.
I love landscaping and I have, I have all sorts of crazy plants on my property. I spend a lot of time taking care of it, so I like landscaping a lot, probably a lot more than I like painting.
Scott: If you had it to do over again, but it's a little late now.
John: Yep.
Yep.
Scott: So this is years ago when I saw you and heard you present at a PCA AST function. Talk to us a little bit about the way you look at finances and compensation and how do you compensate your management or your I guess I just call 'em management. So your key people. Talk to me a [00:31:00] little bit about how you view money, profit, all that.
John: You were listening when you were there. Okay. So
Scott: I was,
John: We we pay really well. We pay really well through the whole system. So even our starting painters this year will be making around $21, $22 an hour. So we and we got a little underpriced during the pandemic and that hurt us.
And this year we brought it up above, above market average. And we're we're swamped with painters. We're overhired right now, so we're trying to figure out what to do with more people than we need. But anyways we're a believer that you can't be cheap with people.
You have to charge enough. You don't. Being the cheap guy is a really bad strategy. I believe in sharing the the money with my managers. We we all operate outta the same bonus pool. Obviously I get the biggest share of it. I'm the equity owner. I don't share any equity.
[00:32:00] My business mentor is very adamant that you, that businesses make their biggest mistakes when they start doing equity partnerships. Cuz they always end up. The divorces are almost always ugly. So I, I've always, so my mentor though said you just pay well. And my operations manager he just finished two years ago, made a couple hundred thousand dollars and my other operations manager, I mean he is, makes over a hundred thousand.
My office manager makes over a hundred thousand dollars and obviously I make more than that. So there's, I pay, I and, but we work outta the same pool. It's partly based off sales, but also they get their percentage of the pot. And so in good years, I probably make, I.
I don't, some company owners in good years just make runaway and take a lot of extra money and don't give it to their people. And I do. And in bad years, my bad years aren't as bad as other people because we all share in [00:33:00] the down years too. And those are tough. So we, I try to have almost equity without having equity.
And it works. It hasn't worked for every managers. I still, I've still had guys leave here that were making, 130, $140,000 and they thought they were being underpaid and went off and did something else and all that. But but we, I'm a big believer in sharing the sharing the money.
Scott: Yeah. Excellent. Tell me a little bit about your meeting rhythm now. It's been interesting to hear a little bit that you're an introvert and I think for those that are listening this is always fascinating and I don't talk a lot before we record these cuz I really want just to be live and fresh.
But if you've caught John a couple different times saying, He's not sure about this or he's not sure about that. And that's because he is hired good people and delegated to them. So is he aware of what's going on in his business? [00:34:00] Yes, he surely is. But every detail, some of it's handled by other people.
Company Meeting Rhythm and Hiring Strategy
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Scott: But on a macro level, tell me a little bit about the meeting rhythm of your company. Like what, how do you keep it all in order? Who do you meet with? How often, when do you meet and you know what, how do you keep it all straight within your company?
John: We Um, meet informally all every day, so we're being a small company, you work outta the same office, you get you certainly have our informal thing. But the, we, work off of like a master to-do list every year, and that, and that gets divided up by, everyone has certain things that they do, so we have a rhythm of what we do off season.
So when we're doing marketing and stuff like that's all that stuff was done back in November to December. It was all put in the bag and maybe January. So we're, but when, so when we go into our season, all the hard work's already been done. I got a feeling that a lot of people do it at the last minute, and that you're [00:35:00] at a disadvantage.
But we meet we meet like once a week. I think our, our, our I the way we do it is very similar to the book that that a lot of people follow, which is the
traction model. Track traction's, like traction's, a phenomenal book. I don't think we follow that to the letter and we, I definitely, we definitely don't follow to the letter, but we do use a lot of that stuff.
You have to keep people accountable to what they're promising and all that. So we meet for about an hour once a week, but we have plenty of meetings in between and all that.
Scott: Yeah. And do you Yeah. have you're talking about November, December, as you're rolling out, do you do some kind of a company retreat, offsite meeting who's involved with that? How does how do you determine what, so for instance, using 2024, when will you start [00:36:00] that process? Who will you start it with and then how do you roll it out?
John: Some of Um, well, the process is just the same every year. So we, it's just, we just know by certain dates we have to have it done, and it's all on a big master list, which we work off of. We do have offsite we don't have offsite. We have we have meetings onsite for two day meetings. We did not do one this year.
This year we knew finishing last year that we that we had done poorly in recruiting for a couple years. We, just last year we couldn't get people in our office to come in, show up for an interview. We were hiring people off over the phone. And so we knew that we knew that we had to go into the season with with focus with mainly a focus on recruitment.
We put a recruitment program together that basically just give us a, gave us a foot of really high quality applicants and we're overhired and I think we're helped out by the economy. I think big companies are cutting back in [00:37:00] their internships right now. There's a lot of hiring freezes, so I think that helped us and all that.
But
Scott: Yeah,
John: we just went focused on one thing and next year, we'll we'll have off we'll have a we'll, be back to a two day meeting, which is a little bit more motivational.
Scott: You spoke earlier a little bit about an algorithm you called it about starting in high school and so tell me a little bit about, who you're looking for and how do you get the candidates to answer the questions honestly, so that you get a candidate that you like?
John: What Well, what what I've learned is there's a lot of hiring books out there on how to hire people. You get behavioral interviews, so we've trained ourselves in behavioral interviews, but really our algorithm matters way more. I could have a guy that blows it in a behavioral interview and could be a great hire and I could have another, these can't, these people, young people, have already figured out how to get beyond the behavioral interview.
They under, [00:38:00] they understand how it works. And so you could have someone that knows how to interview really well and they could be a ter terrible candidate. So we're looking mainly at past performance. We're hiring a high school senior, we want hike point average. The, we're looking for their involvement in extracurriculars during school and a good job history.
And when they show up with, low point average and not too much involvement in high school and maybe mediocre job history, they're, they come in here complaining about their past job. If they do get hired, they usually wash out pretty quick. So we rely pretty much off the algorithm more than anything else.
Scott: Do you have financial targets, revenue targets I'm talking about now? How do you determine what your goals goals are?
John: Um, I'm
Scott: are?
John: I'm not a big goal person. Some people are, some people have all these stretch goals. I we, [00:39:00] we don't even set budgets. Now I have a budget spreadsheet, but it's updated about once a month and it's, it always changes and you have to spend the amount of money you gotta spend.
You gotta buy a truck. You gotta buy a truck. I set a target for the year, but. If we have to go over budget, that's fine. We'll just spend the money. That doesn't matter. But goals for the year like this year, we're limited by how many crew leaders we have. So we have around 12, 13 people that we can put out and run crews.
We'd like to have more, but that's all we have trained so we'll keep, we're so act we're actually gonna run. We're not gonna, we're not gonna try to beat that. We're not gonna try to do the impossible and then start messing up jobs and and have having bigger problems. So we know our limits.
We're a lifestyle business and we're pretty comfortable at pretty much the size we are and. We're I don't have any ambitions at this point that this company will go to five or 10 million or [00:40:00] anything like that, and my operations manager might want to grow it if I was out of the picture.
But that's where we're comfortable with where we're at.
Scott: So you talked a little bit before about you're a spreadsheet person. Tell me a little bit about what you're looking at in your data. What do you, what are your KPIs that you've created for yourself that you're paying attention to? What are the, some of those things that you might share?
John: Okay, so one of the things that painters, one of the things, when you talk to painters, they always tell you what they're charged per hour. Oh, we're charging, we're getting $60 an hour. We're getting 70, $80 whatever they're getting per hour. I don't believe any of that. So you have to track actual hours.
So in your whole system, in your job costing you're tracking actual revenue, and actual hours. And actual revenue means you and I don't really look at part at necessarily individual jobs. I'm looking at the whole picture. But if you damage something and it cost you a [00:41:00] couple thousand dollars, that comes out of the revenue.
If you have a painter working in your warehouse doing just helping stuff, and it's not chargeable to a job that, that has to go somewhere. So ultimately you have to have a system where when you're my, my guess is a lot of people that think they're charging 60, $70 an hour might be bringing in as little as 45 or 50.
And so you really, have to have a system that catches as much, what I call leakage as possible. And there's always gonna be leakage. There's no per, there's no perfect system, but you really want, you really wanna minimize your leakage. But spreadsheets, we do our bonus system for our crew leaders on our crew leaders are paid off of productivity and survey quality ratings.
So that's on our spreadsheet. We keep track of the hourly stuff for all the jobs and those are the two main things. But that, that's what I'm worried about.
Painting Company Culture and Bonuses
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Scott: Yeah, so when you talk about the crew leaders being bonused off of [00:42:00] productivity, is that based on dollars? On hours? How do you, what do, how do you consider someone productive?
John: Yeah, so they get they're getting part of their money off of their dollar per hour, and it's not, so they have a scale that they can reach and and again, that gets affected by if they're running clean jobs and they don't have, they're not, they don't have a lot of charges on against their job, they can do really well.
So some crews crush it and make a lot of money and other crews struggle with it. Then we also, again have survey ratings, and I'd say half our ratings are surveyed based off customers. So they, it's, so they, on a scale of one to 10, and the other half is managerial managers will rate people on things like are they getting paperwork in, on, on time and things like that.
So that, that's how you that's one of the ways you can get people to follow your
to uh, uh, follow, follow your, program.
Scott: [00:43:00] Yeah, so let's talk a little bit about what we call culture. Tell me what's it like to work at Neubert Painting? What. What would I expect? What's the vibe there? What are the activities? What do you guys do that is interesting, unique, or would keep me there or keep me coming back?
John: We you try to keep a good culture that people like our best cultures are inside people. They, most of 'em really love working here, so we really, we're really lucky there. Our management team has a pretty good culture. We get along really well. Summer culture. Summer part of the company is a completely different part of it.
And right this year we're getting back into what we way we were pre pandemic. We'll be, we'll have pizza every payroll. We'll be cooking steaks, cooking burgers and things like that. And that's pretty much every payroll, which is every two weeks. And so we have a good we basically have a good culture.
The other thing is we've done is through [00:44:00] the years, we've our culture has gone from when I started the business, we probably worked we work tons and tons of overtime, and today we run these crews with hardly any overtime. People don't want the overtime. And so you run a real flexible system. You hire more painters, you have people to fill in and, you just don't, they you, they most of the people, if they hit 40, 45 hours, that's, they're probably one of the hardest working crews in the company that week.
So that's a culture change too. We don't fight people on on days off. They want days off. That's fine. They get 'em.
Scott: Yeah, I'm glad to hear you say that. That's one of the things that, I'm an old dog, like you, I'm not quite as old as you, we used to work a lot of hours back in, in the day and people wanted more money and more opportunities and today I think some of the desires have shifted and I think it's, if you get nothing out of our discussion, what John just said, I think is gold, which is, hey, we're flexible [00:45:00] with what's important to them. We're not gonna fight 'em on days off, or, they don't wanna work 50 or even 41, so be it, we're gonna take where they're at and use 'em. I think that's really wise.
I know that you also in these meetings with food, seem to celebrate people. Talk a little bit about that, crew leader of the week and these types of things. Talk a little bit about that.
John: Yeah, so we we have a crew of the week at at every week. We're always celebrating that. And we Our operations managers will bring food out to their they'll ask their, the crew of the week what they want for their crew of the week lunch, and the operations manager will bring the food out to their job and they have lunch together.
My office manager has for our office people has birthday lunches, even though not everybody has birthdays in the [00:46:00] summer. So we have birthday lunches during the summer, and again, the person that we're celebrating their birthday is can pick where they want the food from. And it's really not about the birthday, it's about just having food together and stuff like that.
And so it's so a lot of what we do is people oriented. W during we we very often go to an a Cleveland Indians game. Last year we went to a Frontier League game. We have a team locally, and we got like a whole patio thing for ourselves. We went with our full-time our managers management team and our full-time painters went there.
And we're doing that again in June. And we're probably gonna be doing something like that with our with some of our painters during the summer too. We have some stuff planned, so.
Scott: Yeah, Yeah, so I've never been to John's business in person, but I have followed him on social media and what my inclination is [00:47:00] to say that they do have a consistent time of gathering with food at their shop. They grill steaks. There's, they're, they seem very fun and engaged with their field personnel.
They have 'em around tables. It's not like fancy, Ritz Carlton stuff. It's just being normal, firing up the grill and celebrating crew leaders. And I can just tell by what I can see between the lines is that they generally enjoy each other and celebrate each other. And I think there's a foundation there that, maybe John won't say it himself, but I will, that I think that that his workforce enjoys working with him and they enjoy being together.
Is that fair to say, John?
John: I, I think though, I think that's for the most part true and all that, there's always exceptions. Everybody has employees that are disgruntled and you're not gonna have you're not gonna keep [00:48:00] everybody, but if you're running a good shop, there's no reason why important management people, you can't keep 'em around for maybe 5, 10, 15 years.
You should not be turning people if you're turning people over that every year, two or three years, the problem's not with them. It's the problem is with with, probably with you or maybe how you're hiring people and things like that.
John's Superpower and Keys to Contractor Success
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Scott: Yeah. So just a couple more questions before I we wrap up today, John. In your long career, what would you say has made you successful? I guess the way to say it would be, what's your superpower? What is it that has really helped you get here? That is all because of you.
John: I just stay on track. So every year I'm I do. We just get it. We just we just get it done. And I haven't traced, I haven't chased the "Grass Is Greener" [00:49:00] syndrome, so I'm not always chasing we, we have, we obviously have added services. We weren't doing cabinets at a, any high degree five, six years ago, but we're doing a lot of them now.
So we're not against taking a new service on that's important, but we just stay on track and work really hard. I'm always. Constantly learning. And so I'm a big listener of podcasts and reading. There's a lot of great books out there. "Traction" is a great book. "Good To Great" is a great book. The guru I followed is a guy named Peter Drucker and his, he has a whole library of books.
He's deceased now, probably 10, 20 years, but he was the guru of management and people, all the books today are all based off of him you have to learn, and you have to have good people and listen to 'em. They know you, you can't make all the decisions. So you have to let them do their thing and make a lot of decisions and, and even [00:50:00] if they're, even if you don't like the decisions, you have to go along with them.
You can't be, if you're overriding people's decisions all the time, you're what then why have 'em, why should they even do it if they're, if you're not gonna let them do their thing?
Advice for the Emerging Contractor
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Scott: Yeah. Excellent. And lastly, I always like to ask this question, what would you say to the emerging, or growing contractor that is say in the $750,000, $800,000, the person that's just getting up towards there. What would you say to them if you had a chance to?
John: The cha the challenge is you're, when you're at that range is you're now trying to work yourself into a management role, and you're gonna have to pay people to help start doing things for you. And the people that are gonna run your crews or paint for you, they're gonna be, they're not gonna be as fast as you.
They're not gonna be as good as you. And so you're taking [00:51:00] the most profitable person outta production to grow your company. And that's a real challenge. I found through the years that every time I moved, stepped up, we had a couple step ups. Not a lot, but a couple step ups. My income de declined every time, but I will, was willing to funnel that money into the people I needed to develop, to run the company.
And there was a pretty good payoff for doing that. And that's pr that's pretty hard to do. So a lot of people aren't willing to share pe share, share that money, but that's a real, that's a real bitch though. When you make that, when you make that you're trying to go into management and you got people that are, you get a job done on a hundred hours and they're taking 130 hours and all that, and that's just normal.
That's, that might be the rate you're gonna be, that you'll be. Doing on that type of house forever, but you're, otherwise you could be a, you could stay a one or two man shop and [00:52:00] ensure you can bang the houses out a hundred hours, but you're gonna wear yourself out and you could still make a decent amount of money.
But it, in a way, it's a lot easier to, if you can work yourself out of the painter role.
Scott: Yeah. John, before we roll out of here, is there anything that you wished I had asked or anything else that you think you might wanna add before we say goodbye?
John: No, think we covered a lot. I'm a big cashflow person. You gotta manage your cash. I never felt the money in the business was mine. I always felt it belonged to the business first. And so my, I think the biggest errors I think people have is getting into the ego part of the business. We they buy the big truck and all the ego part and, I drive a. I have a couple Toyota rav4 s and my, when I go on estimate the 2014 one, my operations manager drives he drives, he he drives a Honda Fit, old [00:53:00] Honda fit out to all his estimates. So we're not pretentious in any way. We make decent amount of money and I think that a lot of contractors, whether they're painting contractors everyone else, they just go into the Big Ego thing and spend a whole lot of money with their truck. Of course they have the company name on it and all that. And I question whether that's a good way to spend the money.
Scott: Said. Said. Mm. Well said. Well said. Well, John, this has been a pleasure, I've known you for a bit like we said through suse, some of the PCA and I know you're a rockstar and have done this pre-internet and very sound and I appreciate your wisdom today and your insight and I'm grateful that you shared it with us.
John: Thank you very much. Thanks, Scott. Appreciate it.
Thank you. [00:54:00]
