Beyond $1,000,000 Podcast

 Introduction & Overview

Hey everyone, I'm excited for today's podcast. At Consulting4Contractors, we're all about leveraging the expertise and experience of our coaches for the betterment of our community, and today's episode is a great example of that. We have some Q&A with C4C coach, Mike Katounas of Home Works Painting, and we're talking sales processes.

Thanks for joining us. Now, let's get into the questions.

My name is Scott Lollar and I'm a 35 year veteran of the painting industry where I've been part of growing several multimillion 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 multi-million dollar company of your dreams. We don't focus on fads, tricks, or shortcuts. We focus on solid foundational business principles and data that deliver results. This is the Consulting4Contractors' Beyond $1,000,000 Podcast".  

Understanding the Sales Process

The first question is, on sales process. You know, what is a good sales process, uh, pre-appointment, post appointment, um, what is the best process here? How do you do it, and how can you use these tools or processes to increase your close ratio?

Mike, I'm interested in, You know your process at Home Works Painting, what do you do prior to the appointment or once the appointment's made?

Appointment Scheduling and Communication

Once an appointment's made, we wanna make sure that, we set off good communication from the start. We use YouCanBookMe.com at the appointment. We put all the information in there from the customer and it has automations in there so that once the appointment is scheduled, can can now send, follow-up emails or texts and what we do is immediately we send a confirmation email confirms the appointment, the date and the time.

And it also sends some background information on the company about, what to expect when the estimator arrives. Here's, some, some reviews that you can click on, whether it's Google reviews or, other websites. And, Then from there we do, two reminders. We do a 48 hour email reminder and then a 24 hour text reminder.

I do that partially for, selfish reasons, so that if, uh, there's somebody who doesn't show up, um, at least or, has to cancel, they'll remember to cancel it. but mostly just to establish we haven't forgotten to, we're not gonna be that stereotypical contractor who will set up an appointment and not show up or forget or something like that.

Yeah. Now, do you ask in your, um, questions in, your questionnaire on, YouCanBookMe, do you ask 'em their communication preference, whether it's phone, text, or email, or do you ask texting permission?

I, we used to, we stopped doing that because we got bad at really following through on what that is. We can usually tell with the person, sometimes they will let us know if, they don't do email very much or they would prefer a call, beforehand. That kind of a thing. And, you know, sometimes you can kind of tell if it's, a, if it's a baby boomer, an older generation email.

In most cases, I won't say all, but in most cases they, they would prefer a phone call. Usually if it's, someone younger, you know, maybe millennials prefer text messaging. so we kind of, we don't necessarily ask it, but that's part of the reason why we do texting and email so that depending on what their preference is, they'll at least get one of those reminders.

Yeah. Okay.

Pre-Appointment Process and Automation

So I make an appointment on, YouCanBookMe online, on your website, or at on occasion someone might, call in. But we're, either way, we're gonna make this appointment on, YouCanBookMe, you instantly send a, an invite and you send a second piece of marketing collateral, which is a little bit about your company.

Is that correct?

Yes.

Yeah, I love that. And so already what we're doing here, and this is, you know, we, this is the model we, coach on at C4C is you are already setting the stage that you're different. There's a communication process. You're, quick, there's automation here, and yet not feeling too, robotic.

But you know, we're giving you a little information.

Importance of Follow-ups and Communication

So after that, prior to the appointment, what's your next touch and when is it?

so on the way to the appointment, I always like to call or send a text to say that I'm on the way. . So I will usually get in the car, get driving and you know, if it's, 20 minutes out or 30 minutes out, I will typically, call and just say, Hey, I'm on the way. If they don't pick up, I will send 'em a quick text. I actually have a, keyboard, shortcut on my phone that I just press a few letters, and the phone pops up the text message that I wanted to say, and I just fill in the person's name so that I'm not sitting there texting and driving and, and you know, let 'em know that someone's coming.

do you send any other, email or anything else about your company from be in between the moment they schedule the call and moment you show.

First, we'll send the email that confirms their appointment. 20 minutes later, they get the real big email that gives all the background information on us what to expect. Check out our reviews online, check out our website for pricing information, that kind of a thing.

but then two days prior, they get an email and then one day prior they get a text.

For those of you listening, there's several ways you could do this, but the easiest way or a very easy way, is just in your, scheduling program. We're talk, we're preferring. YouCanBookMe for a couple different reasons. There's acuity, Calendly, I think is not the best one for this industry.

I use it personally, but I don't have as many needs of bells and whistles. It's very simple, but, YouCanBookMe, allows you to trigger These, pre-appointment emails. one that I really like is what they can expect in our, during our appointment. We want to condition the prospect or the, customer that we're going to see that this is what's gonna happen.

This is how much time we need from them. This is how we're gonna do the walkthrough. this is, you know, we need their undivided attention. So just to kind of, get them prepared. No one else is probably doing that. And some of these people, um, Don't often have contractors, um, doing this type of thing. it's not every day that you are having an estimator into your home.

So they may or may not have ever had a good experience or been conditioned. And again, it's another touch to say, Hey, this is the way, our company behaves and what you can expect from us when you hire us. So it's, really setting you apart as a leader. And the other thing that you know, to Mike's point is anything you want to tell them, like, Hey, check out our gallery, or check out our reviews on Google, or Here's a video about our process or anything that would add value.

You can put that in there. they may or may not have looked at it. but for those that are interested in information and want, that warmup, it's a good way to really introduce you to them. So.

Yeah. I, and sometimes, people will, it's one of the first things people will say to me when I walk through the door and they'll say, "Wow, you were really on top of communicating with us. And so I always pause and I go, sorry, is it a little too much? And I've never had anybody tell me that it's that we're overdoing it. but then they will usually nod and kind of say, oh, I get it.

You know, it, you wanna stay on top of the communication with the customers. And even some people recognize that it's an automation, but still, I think they appreciate the fact that, they don't have to worry about if we're gonna show up or not. My preference is on a residential estimate that you can get good enough with. Your estimating program on a tablet that you would present on the spot. Now sometimes the job is bigger or you need some time, or maybe time doesn't allow so you don't present. And I know that Mike doesn't typically present on the spot, and that's just his personal preference

Post-Estimate Follow-up Process

. So, either way, once you deliver the estimate, Mike, what is the post estimate follow up look like for you?

In terms of walking the actual estimate, if it is not a very big job, I . You know, if it's like three bedrooms, two bathrooms, something like that and it's straightforward and just paint the walls and the ceilings and the trim and that kind of thing, I can usually give them a quote right there on the spot and I will.

But like for instance, this morning I looked at a 6,000 square foot home and they wanted every inch of it painted. So it was not gonna happen for me to walk. everything, do all my counts and then sit down and put an estimate together. So they wanted it like different options of this and that and the other.

So it was really something I wanted to sit down and do. But what I will do in some cases, while I'm on the spot, if, I can't get them an actual number, I will. And. Like talk numbers and just try to get a general sense of where they are in terms of their budget. I do have like, some line items kind of pre-made in my paint scout program for certain room sizes with certain substrates so that I could look at a 15 by 15 room and say,

it's gonna cost X amount of dollars through your wall ceilings, trimming doors, and then kind of extrapolate that and say, well, I don't have an exact number, but I think this job's gonna cost somewhere between six to $7,000. and kind of, you know, go from there.

But in terms of your question, as far as the follow up, um, once I actually do the estimate, if I email it out. the quote will send a text and an email and so that way I like the text feature because it makes sure that they get it. Sometimes with email it can go into junk mail or spam or that kind of a thing, but I usually would give it about two days if I don't hear back from the customer.

And then I will follow up with the customer, and I'll do it by email as well using monday.com. And, I've got automations set up in there so that I can just click a button and it will send an email to the customer saying , Hey, just following up. Wanted to make sure you got it. Let me know if you have any questions. within Monday it will then send me a notification after I sent that follow-up when the next follow-up is due, which for us is typically about seven days later.

so then we'll do the second follow-up and just say something to the effect of circling back. Wanted to see if you got it. And remember this is if if we have not heard from them. if, if they have been in communication with us since I sent the quote, whether they've called me or, just acknowledge the fact that they've received the quote, I will update it in Monday, but I won't use the Monday automations.

I will just do a normal email follow up, like usual and, go back and forth there. But we usually do about three follow ups, unless they are just not engaging with me. I'll email and say . Hey, we're still waiting on this, or we've gotta push the timeline back I usually do it via email, but I can also with Monday tell if they did open or not open the quote.

And certainly if it shows that they have not opened the quote, then I'm picking up the phone and giving them a call all. we're using monday.com to send those follow ups and here's why. you can send an automated follow up through your estimating program for sure. there's other ways you can send automations, but if you have an automation set up that's say 2, 5, 7, whatever, you know, I don't really care the number. Those things typically go out and a lot of estimator salespeople are busy. Slash lazy sometimes, and they won't stop the automation. So, sometimes, and it's not, it's very common that you have a extended conversation with someone. They add some questions, maybe a revision, or they even said they'd like to go forward and you went home for the day or didn't do anything about it, and the next morning they get another Email that says, Hey, I haven't heard from you. I'm gonna close the file. And that tends to really amp up some people because they're like frustrated that they got this email, even though they've been engaging you. And so while a lot of people wanna set it and forget it and just have automations and not touch anything, it's unrealistic. And especially if you're trying to have a personal sale. So that's why we have used these follow up templates in monday.com where even though they're templated, you still have to trigger and send them based on where you're at in the sales cycle because not every person needs the same pace of email.

So, it's something to just keep in mind. And I also am a firm believer in phone call follow up. It's really easy for me to blow off your email. In fact. I'm sometimes a lazy buyer and sometimes I want to buy what you're selling, but I'm just struggling a little bit with the price. So I've already picked the contractor.

It's you. I liked you, I want you. But man, I'm bummed out that it's that much money, and so I just kind of kicked the can a little bit. And because you send these emails, it's super easy for me to just blow you off. Now if you call me and say, Hey, Scott. love to do this work. Why don't you, why don't you just say yes and let's get it scheduled.

I'll probably go, okay, let's do it right, so it's easy for me to blow off your email. It's not as easy for me to say no to the phone call. So especially those of you that have estimators, I would be definitely requiring my estimators to do phone call, follow-ups, and while this is another topic, It's also a pre-engineered agreement that should be happening in your sales call that says, Hey, I'm gonna call if at any time, you know, it's a no, would you just tell me so I can move on and stop bothering you?

You know, so you kind of make that agreement to expect a phone call. sometimes owners don't follow the best system because they're busy. and so, but if I had an estimator, I'd definitely be making them follow up with a phone call. I did have a question, Mike. Going back to the a takeoff section or the, walkthrough.

I love that you said you're giving some verbal pricing no matter what. And also if you caught, what Mike's doing is he's ranging, so he's trying to get a reaction, trying to get a sense of if it's worth even writing up. So if they, you know, their eyes rolled back in their head or something weird happens and they can talk about it and Mike can, you could just Tee it right up. That sounds like a number that you weren't expecting. Or maybe, you could say something else like, Hey, have you heard some numbers different? And I, and then you can go into the sales process to sort of, you know, talk through what the differences are or, you know, your sales pitch. But Mike, if they say there's no way they're paying that amount of money, or you guys are not on the same page. How often will you no bid or just say, Hey, I'm not gonna write this up, or what, you know, what, do you, how often do you do that and what do you say to the customer?

It hasn't happened very often, a few occasions, but in many cases,

I.

in the cases where there has been a big divide between the price that I am gonna put out there, price that they're thinking of, and, you can kind of see that, surprise on their face. In most cases, they'll still tell you, well just go ahead and write it up and, I'll take a look at it.

And so I really, I it's hard for me to say, well, it doesn't sound like you want me to, work with me, so why should I do this? I don't want to come off, selfish there. So I will go ahead and put it together. but in tho in the cases where I, you know, I think back to, um, I think a time where I, did a cabinet estimate and The openings and the doors and drawers. I was able to come up with a number real quick and say it was, I think I was quoting something around like $8,000 for this, particular kitchen. And I think they were thinking like 3000. And I was just going, there's nothing in our process that can get me down to $3,000 for this.

And, you know, you kind of saw it in their face like, that's not what, we're just not gonna do that. And I said, well, hey, is it okay if. We just don't move forward. It sounds like we're just not on the same page, and that's not a problem. and I try to be as respectful as possible. And, they were, they agreed with it and they were like, yeah, thank you for your time. . And I have had, on the other side, this is Celine with Bruno Painting, where even though sometimes the in appointment was not as favorable as responses they'd hoped. because their estimates are detailed and thorough that it's kind of the cherry on the Sunday, so to speak. So all this communication and all the professionalism, and then they get the estimate and they're like, you know what? I wasn't thrilled with the price, but I'm convinced that you guys are the right company and have, and they've had some wins simply because they went ahead as submitted. So, yeah, it's something that you have to just gauge, the right way to the right path. is there a final email if you're really getting no response, some people, would take the approach of, yeah, I'm gonna email them till they either die or tell me to You know, stop sending 'em emails. I'm not sure that's my favorite. That's not really my preference, I don't think

myself. what do you do when you're not getting a response? There's no engagement. Do you send them a final, we're moving on type of thing, or what do you say?

Yeah. typically it's three strikes and you're out. For me, I don't follow up forever, that kind of a thing. ' cause sometimes they might just block you and, you know, . You're just gonna keep following up for, and you're not gonna get anything out of it. But, I will put in there and saying, Hey, it's been a while since I've heard from you.

would you mind letting me know if you've hired another contractor? and if you did, that's okay. I just wanna be able to close the loop on this and during the actual appointment itself. I will say that to them and I'll say something to the effect of. hey, I know you're getting other estimates.

Or they may even come to me and say something like, Hey, just to be fully transparent. We're getting other estimates. And I go, of course that's not a problem. if you wouldn't mind, you know, if you decide on another contractor, I. Just let me know. I always appreciate communication. I've taken the time to, to put this quote together.

At the very least. I would just love to know if, you've, what direction you've moved in, just so I can close the book on it and we can go our separate ways. and what that also does is it Keeps the line of communication open. It's not uncommon for a client to choose someone based on price and then be frustrated that they made that choice. So the next time, or even maybe this time, they're gonna call you back and say, Hey, can you come clean this up? Or, Hey, you were out last time.

I didn't pick you, but I wish I had, would you please come look at the next, my next project? So being respectful, can pay off even if it's not today. the other I like what Mike's response was. I like the idea of a, I haven't heard back from you, and I'm starting to feel like I'm being a little bit of a pest and I don't wanna be that, so I'm gonna close the file on my end. If something changes on your end, let me know. So that's not threatening pretty much. Just, you know, basically you're acknowledging like, well, we're not, you're not engaging. And very often when someone wants to use you, but they just have had Circumstances, vacation life that got in the way that actually motivates them or shakes them up a little bit.

Say, no, Then you'll, so if they have been, ghosting you. That, that easy, very carefully crafted statement, sometimes will trigger them and go, no, don't close the file. No, I'm a buyer.

I want, I wanna be your customer. I just need some time. Or I've been meaning to call you, or whatever. So sometimes that takeaway like, Hey, you know, sounds like we're not gonna do this, so I'm gonna move on.

Wish you, you know, wish you all the best type of thing. Can Shake some people up and to, to the point where they will engage. So it's not like it's a threat, but sometimes we'll work, because it feels like you're moving on. And it's like, no, don't move on. I'm, interested.

So,It's sometimes it's that goodbye like, I'm, you're never gonna see me again. Then they go, no, wait, I'm not done. So, yeah, it does trigger a, it. Finally, it does finally get a response Sometimes I think, you know, and, I understand it's a lot of our email boxes are so full these days, it's hard to stay on top of it.

And so, some, sometimes you gotta push a little harder just to, get that, just to get some kind of response of, I'm still thinking about it or something, you know? And then, okay, well, we'll, we'll keep going.

Yeah, I the takeaway here is to have a process and a system, some sort of combination between automated templated and You know, actual managed by you, but to have a sequence and a process that everyone gets, everyone follows. you know, we, typically are working with growth-minded contractors that are growing towards the million and beyond. And what we know is you're gonna hire salespeople. you're, and you're gonna need them to follow a process. You know, you might get away

with a different process or you might be able to cheat the process, or you might just be. Able to get away with selling a lot of work because you're amazing. But when you hire a salesperson, they need a process, and I would develop the process now that you follow, or that your whole company will follow, so you can have the results, that you're, you know, expecting when you get to that point.

Right.

KPIs & What to Look For

Another great question that we get a lot from people is KPIs or key performance indicators. there's a lot of 'em that you could look at, but I wanna talk between you and I, Mike, a little bit about what are the key performance indicators you are looking at? How are you tracking them? When do you look at 'em? You know, tell me a little bit about your process and, you know, what are you looking at and, how are you getting these numbers?

there's several numbers that we, track on a, at least on a monthly basis, some of, many of 'em on a weekly basis. Of course, it's leads. We get, the number of estimates we do, so if they're a lead doesn't necessarily mean we book 'em into an appointment, so we kinda like to see what the percentages of, leads turn into actual, appointments, um, wins, losses, dollars of course revenue , the number of painters working, every day, what the average is since we use, subcontractors as well. it's not as easy of a number to trek as it would be if it was just all employees. So, I do talk to my subs a little bit and I don't, it's not super detailed, but I do get a feel for how many, crew members they'll have on the job. 'cause some three guys on it. Some jobs they may put more or less painters on it just depending on, the size of the job.

But we get an idea of, you know, What's the average number of, painters? I have, every, day, working.

Let's go back to leads. So you, you made an interesting statement that you're tracking leads. To estimate. So why do you, why does it matter how many phone calls or leads as we're calling them, don't convert? What's, what, is that? What, information is that communicating to you?

Well, when I dig a little deeper, it's, finding out, well, why did they not turn into an estimate? Is it because we have a job minimum? And it was just somebody wanting to paint a door and it was just too small of a job. Is it their timeline and that they needed a, the job done within the next three days and we couldn't get to it fast enough.

so I'm trying to figure out, you know, how many people we don't because the, we're paying for those leads and I don't want to, I, certainly want a good, R O I on all of my marketing spending, so I want to be able to figure out Are we marketing to the wrong audience here? Is it just, it maybe a certain demographic people who don't, know, realize how long it takes to get a job done?

it could be a lot of different things. so just trying to figure out, it's more about figuring out why, and then if it's reasons that we can tweak or a little change , maybe maybe hiring another estimator, that would cut down on our number of lost leads. Maybe that's what we do. So it's a, it, yeah. It helps us figure out, if we're doing something that we could be fixing or if it's just something that we can't really help.

Yeah, and this is something that, a couple years ago, I think maybe it was even three. Now, Mike noticed, I used to little joke with him a bit that, I think they were booking the soonest that they were available to have to look at a job was, I think approaching three weeks. And I, I thought that was just way too long. I know that there's a lot of philosophies, but I think, there's a lot of things people are doing when they're looking at this information. They're like, well, first of all, I would say if I'm a person that really kind of wants something done pretty quickly. I mean, that might be not fair. I don't know, but I'm not thinking that I'd like to see you in three weeks.

I'd like to see you probably tomorrow. So you know, the idea of availability. And then if you're three weeks booked out for appointments, I'm gonna assume that you're booked out insane amount for work and I'm probably gonna pass you by now. If you can't see me for three weeks, then hey, there's all you can do.

There's nothing else you can do, but. I do have clients that are stingy with their time, so they don't have a lot of openings or the, sometimes their appointments are taken up by crappy leads. So maybe there's a little bit you should be doing on pre-qual and go, Hey, I saw that, You've, you've requested an estimate and it looks like you just want a door painted, right? or whatever. So there's some things you can do to open up your schedule a little bit. And in Mike's case, what he did was he hired another estimator because his, availability was getting to the point where it was a hindrance. the other thing, this is sort of an aside, but I would always Be available as best I could if someone needed something done last minute. it's typically a lot of bravado that people say, well, I'm booked out, you know, months and I can't possibly, you know, help you and this is ridiculous and you should know better and whatever. I'm like, well, I think the opposite. If someone has an issue that they have something that they consider urgent and I have capacity, it's a way for me to make premium. dollar on my manpower. So now it depends on the size of your company, but when I was running, um, larger company with a lot of painters, I always kept a two person crew unscheduled all year long. Because if you called and said, Hey, I have a bridal shower and my painter didn't show up, and I need three rooms painted, can you help? Well, the first person to say yes is probably gonna get that job without worrying too much about the price, you know? So,

Right. I think when someone says, I need something done right away, or How far are you booked out, I would never answer that question. I'd answer that question with a question.

Well, of course we have lots of work. Why do you ask? Or was there something that you've heard or is there a timeline involved? Tell me more. You know, so if you just answer that question and you say, yeah, I'm booked out two months, that might be the end of the sales call.

So I would, always, you know, follow up with a, qualifying question there.

Yeah, early on in my, business, I remember feeling the pain of losing Potential work with repeat customers, or referrals where I'd be booked out, you know, five, six weeks and then you'd get that referral coming in and they're like, so and so told me to call you. They were really happy with the work you did. So, hey, I, gotta, get this job done in the next, you know, however many weeks

Did you get to it? And I'd go, oh no, we're booked out. And, you know, they move on and Oh, I'm sorry to hear that. I really wanted to work with you. And it's like, it's a knife to the heart when you hear that. And so, kinda like what you were saying, I, learned, I didn't have the way you do in terms of just like a two man crew always available, but.

In my schedule, I would build in what I call flex days. And they're basically, if I was booked out five weeks, I'd have openings of a day here or a day there. And it helped me one if, especially in the spring and summer with the rainy day here or there so that I could stay on schedule and not have to keep bumping people back.

the other way I looked at it too was if it's always, it was always easier for me to call somebody and say, you know, I know we were gonna start your job, next Wednesday, but actually I could start it, you know, a couple days earlier. Would that work for you if you didn't have anything to fill it in, with a last second request or something like that?

So I always felt like people preferred to hear good news like that, that you could start their exterior project a few days earlier instead of a few days later. And it actually kind of can catch him off guard in a good way.

Yeah. The other thing, that I would say is that People a lot of times have a first in first out mentality, like, oh no, they were, they signed before that person, so I have to do them

next. I, every time I get an acceptance, unless there was already a predetermined, like, I need this bundle by July 1st or something, I would always just say, Hey, we've, we've received your acceptance and we're looking to schedule you.

And, I would push them out farther than maybe I would think is reasonable and just You know, engage them with, if that was an issue or not. Because if they're willing to wait two months and I'm booked out one month, then that frees up one month for someone else.

So I would always push people, out that don't have a timeline, or yeah, I need it done. As soon as possible. Like, no. Some people say, I don't really don't care. Get it done before it snows again. Or, you know, they don't have a timeline. if you say, Hey, is this a coup? we've got, you put a scheduled soft schedule for a couple months from now, they're not gonna think anything of it.

So this idea of stacking your jobs just because that's when they were signed, I think it's something you should think about, and figure out if that's your head trash and maybe not the customer's expectation because You know, you're gonna, you're gonna be stuck if you don't have some gaps to, squeeze in.

Right.

now, Mike, we talked, you talked a little bit about keeping track of your estimates to close ratios and dollars. one thing I always recommend, and I think you do, this, is, um, I like to count number of estimates, but also the dollars and then the number of closes and also the dollars. And the reason why is. That we wanna also monitor how many dollars we close versus just how many numbers of estimates. sometimes there's some information here that would be helpful. So if, you're, for instance, uh, selling 40% of your Jobs, but only 20% of your dollars, there's something there that you should dig into. So that tells me you're losing your big jobs. So maybe you're estimating, your numbers are bloated. So as the job gets bigger and bigger, your, numbers get insane. We've seen that before or maybe, um, as we are looking at today's economy, sometimes people are a little hesitant to spend 10, 15, $20,000 on a paint job. But they might spend five or eight. So if you're giving them the $20,000 bid, it's a no. But knowing that information, you might chop up a bigger bid into several smaller, bids would be helpful. So to understand the close ratio, both in number of estimates, but also dollars is really important to me. and we see this, especially if you have estimators that are not, you know, yourself, not the owner, because, We need to look at a lot of different ways, the data in a lot of different ways to see how they're doing to make sure they're, you know, closing in the appropriate, number. Anything to add there, Mike?

Yeah, I absolutely agree with you. for me, I don't know if it's a. I wouldn't say this is scientific, but I, like my, I, understand that my percentage of wins might be higher than my percentage of dollars. I usually like to keep them within about 5%, really no more than 10%.

and for the reason you just expressed, it's always gonna be easier to close the fifteen hundred dollar job Than it is to close the $15,000 job. But if your percentages are vastly different, if you're closing 50% of your jobs but only winning 25% of your dollars, then it may speak to, yeah. Are you ? Over-inflating your numbers. Do you need to check your production rates or how you're estimating or how is your sales presentation?

Are you, because you, probably do need to put in a little bit more of a presentation on a $15,000 contract versus a fifteen hundred dollar contract. somebody might be able to pull the trigger a little bit quicker on a smaller job. So, it helps me look at, well, what do we need to do a little differently?

and kind of look in the mirror and, see what, what needs to be changed.

The other thing you're talking about is your manpower. Your headcount. You're trying to count heads, which is, I agree. in, in our methodology, I would always recommend a projection, a budget. Some people hate the word budget, but it's difficult. To know what you need to do and how many people you need to do it.

If you don't have a projection, it's like running a marathon without knowing where the course is. And if you're an athlete, especially if you're a runner, I'm not. But, you know, these, a runner knows the pace they need to be running at in order to complete the race and not gas out and not complete the race.

So if we're trying to complete a race, call your race 1.5 million. Let's make it easy. 1.2 million and you're a flat company, so a hundred thousand dollars every month, we can back that data and say, how many people, how many bodies, how many head count you need to produce that a hundred thousand dollars.

And then we can We can back down one more and say, and at your close ratio and average job size, how many leads do you, need? So we talk a lot about the science of business and what Mike just said is, Hey, if I need to do a hundred thousand or you need to do 300,000 in a month, I, don't really care what the number is. You, you'll need a certain, number of people. And if you don't have that Head count, then you're, straight up not gonna finish the race. you're gonna, you're gonna miss the finish line by whatever you're short. So counting your manpower and your, you know, your productivity, you know, they're always gonna lose some productivity to weather, to vacation, to illness. So you need to build that in. But you do need to make sure you have enough staff. And I would encourage most people to overstaff slightly so that they can always, accommodate for Someone being terminated or quitting or like we just said, the, vacation seasons or the illness. if you just plan for the perfect

Nothing's perfect,

never happen. Nothing. Perfect.

Yeah,

You definitely need to prepare, I agree, you need to prepare. but it's, you gotta find the kind of the right amount of over preparation. certainly if you overstaff and your sales are not catching up with it, then you're gonna be laying off people pretty quickly.

So, but you do wanna be careful. But I mean, I can't count how many times I've either had guys call out 'cause they're sick, flat tire . Um, something they had to just take care of. And I mean, we offer PTO so our guys do have time to take off. but so we factor that into kind of our projections as you talked about with the budget as well.

So, yeah, you, just know, prepare for the unexpected

Yeah. Another number I'm typically keeping a, a little bit of, some, attention to is your, gross profit. So we talked about revenue. That is literally the work that you got done and, we've talked about. close ratio and lead flow. So you need enough leads at a certain close ratio to have enough work.

So assuming you have enough work, I'm, looking at the gross profit to say, Hey, did we get this done? with enough money left over, now you're gonna have to determine what that number is from for you. I'll tell you that 50% is typically kind of nirvana, but under 40% if you're a business with a significant amount of overhead. you're gonna need to be probably 40% or above or else you're gonna struggle, but you need to pay attention to your gross profit, whatever it is for you. You need to make your own. don't listen to some other person, but through the budgeting process, you'll be able to understand what your gross profit is and what it needs to be.

and that would be another place that I would be always kind of keeping an eye on. Mike, is that something you monitor and how often do you looking at that?

Oh, absolutely. Gross profits, probably the, if not the most important, one of the most important numbers. We're checking in. Typically, we're over 40. I'd love to be at 50%. We haven't, last time I was there was probably when I was, just myself and like four painters and I had, no overhead or I had, I, I was kind of doing everything.

but usually I'm, around 40% , so, we're pretty healthy in that sense. but yeah, if you, if it's something you want to keep track of. If we were something just as small as going down like five or 6% from that and getting down into the mid thirties could be a pretty, a drastic drop and, could really hurt our bottom line.

and that those, that money is typically what's coming out of your pocket. So you're gonna still pay your expenses, your . Your overhead is not gonna give you a holiday for payment. That money's just coming outta your pocket. So, I'd be looking at your gross profit, regularly. look for cycles, right?

There's billing cycles sometimes that come into play, but you should be monitoring that every couple weeks probably. and then the next thing would be the expense section. I don't find that most people Really blow it in the expenses that would be like, okay, we bought too many paperclips or whatever.

But you do need to monitor it, and you need to build that expense section to support your revenue. So what I find most people, if they don't have a good net profit, is that they haven't achieved the revenue that they set out to. So you build a company or build a car, so to speak, to go fast, right? And if you're not gonna go fast, then you didn't need to build that nice of a car, and you don't need the overhead, so you need to make sure your expenses are in line with that and they can be adjusted. most times if we are hitting our revenue targets at our gross profit, our expenses are in line, but not always the case. And especially I see people get very emotional about marketing spend and they They get nervous about their lead flow, so they just goose it and spend a bunch of money and it gets way out of line. And it can be, expensive, and it can be, if you're not tracking your leads, it can be really, you know, not helpful. You know, you're not getting anything for that spend. Mike, what, do you think about the expense section?

How do you monitor it and how important do you think it is? Or, you know, where, how do you, view it?

Oh, well, definitely I've had certain times when Yeah, my expenses have been, not projected correctly, you know, where I maybe spent a little bit more on marketing than I wanted to, or I think I've had a year or, maybe a couple of years, Um, where my vehicle expenses were much, were quite outta line. Now, that's not gonna kill me, but it certainly eats into that bottom line like you talked about.

where,

I had, I, can't remember what year it was, probably about 2016 or 2017, but I felt like I had a van in the shop like once a month. And it was just different vans. And then it just was killing me at how much we were spending on fixing up these vans. And it, made me realize I should, You sell a couple of them at least and, buy new ones, or at least buy, better conditioned, vans.

And so, yeah, you definitely need to watch that. and how you're paying for, whether it's your staff. is that in line, are you, overpaying for, your sales team or your project manager? And if you are, then you better be doing a lot of revenue. But, definitely something to watch.

And then of course I'm always looking at net profit. Is there, I'm looking for a total ROI. So is there money left over after everybody's been paid? Depending on your corporate structure, whether you're taking a healthy salary or a salary at all,

or if you're taking only draws, but you need to come up with a way to look at that. are you making the kind of money that you expect to make for the risk involved with owning a business? I don't think any business owner is in this for their For the fun of it, they're in it to make some money. And your threshold for what you need to take out of a business can vary depending on your season. And sometimes you might be in a building season where you're gonna invest more into some things to grow and you might take a little bit less, but it needs to be available. You need to always run a sound business. What you do with that money, we can talk about. But it's never an excuse to not be, have a sound, Business just because you don't need to take a bunch of money. You need the business to operate, in a way that you could take the money if you want to.

yeah. Yeah. Interesting. Mike, are you, do you have a, some systems or some places that you kind of use to report this or to keep track of it or, you know, do you have any spreadsheets or, what are you using to kind of track this?

first and foremost I use, monday.com to track all of my, a lot of my KPIs in terms of my leads and, my sales and that kind of thing. obviously QuickBooks will show . , profit and loss numbers there. So, you know, I can see what I'm spending in terms of my marketing or all my expenses like we said a couple of minutes ago.

but I also used to keep a scorecard, for things such as leads per week, revenue per week, number of guys working every week, that kind of a thing, where, we are with accounts receivable and, so I kind of use more than one place to, to kind of keep

Conclusion and Final Thoughts

track of all of that.

All That's gonna do it 📍 for us today. Hopefully some of this was helpful. if we could help you with any of your KPIs or, um, any of your systems, let us know. We're here to help. And, hope you enjoy the conversation. 📍