There is an unfortunate, and exploitable, lack of business acumen in much of the commercial painting industry, because most owners of commercial painting businesses don’t actually view themselves as businesspeople. Instead, they see themselves as painters who happen to own a business. Because nature abhors a vacuum, painting contractors who do operate as professional businesspeople will fill this vacuum and overtake the competition.
In his bestselling book, The E-Myth, Michael Gerber points out that most owners of construction trade businesses see themselves as “technicians” (painters, in our industry), and theirs are the businesses that tend to fail. Technicians are experts in their craft and may go into business for themselves because they know they are good at what they do and want to reap greater rewards from their labor. Many are happiest doing the work they are good at but ignore or grudgingly perform the duties required to run a business. This, of course, is a recipe for failure.
Are You a True Entrepreneur?
Being in business for yourself does not necessarily make you an entrepreneur. Gerber writes that, to be a successful business owner, you must get beyond being the best technician in your business. You must focus more on the business of contracting than the work of contracting. Your ability to make a profit should be based on established systems and standard operating procedures, because system-generated profit is repeatable.
Gerber points out that if you, personally, cannot be removed from the business without it failing, then you haven’t created a business; you’ve created a job. Business should be thought of as a series of systems that can be repeated over and over by all members of the organization. He calls this the franchise model.
This is where a true businessperson fills the vacuum mentioned earlier. Businesspeople don’t “work for wages” — to use a popular phrase — and they don’t rely on being the lowest bidder to get work. They build long-term relationships, based on trust and quality, and are of service to their customers. To take it a step further, they don’t even consider themselves to be in the painting business. They are in the customer-service business and use painting as the vehicle by which they provide exceptional service and earn a profit.
A successful coatings company owner is in the customer-service business, not the painting business. PHOTO: COURTESY OF the author
Smart Systems Yield Higher Profits
Let me share a remarkable story with you. One evening at an industry function, a competitor who had begun his career as a painter told me how many millions of dollars in business his firm had done the previous year. It was almost as much as our company had done, but when I asked how many painters he had, I was astounded to learn the number was double the size of our staff. We both had done the same volume of work, but our team had done it with half the number of painters. Why? Because we are businesspeople — not technicians — first.
Another business owner recently revealed how much volume his company had performed the year before. It was almost double ours, but when pressed for details, he shared that their gross profit was only 20 percent. Our gross profit was 40 percent. Let’s do the math:
His company did $20 million at 20-percent margin for a gross profit of $4 million.
Ours did $10 million at 40-percent margin for a gross profit of $4 million.
So which company was more successful? The company that risked $16 million to make $4 million or the one that risked $6 million to earn the same $4 million?
At Merit, we have earned these kinds of profits because our systems and our numbers-oriented approach to estimating, sales and project management are efficient, reliable and customer-centric. We do not work in our business. We work on our business. We can be removed from the picture and the company functions well because of our repeatable systems.
This approach has made us a market leader since 1994 and ensured the success of our three franchise owners in Houston, Boise and Charleston. In fact, the first project of our first franchisee was over $600,000.
The Right Fit for Franchise Ownership
We’d like to help more aspiring businesspeople. If you have dreamed of ownership, contact Jeff Clarke, president of Merit Professional Coatings, at jeffclarke@MeritNow.com, and learn what it takes to own and operate a Merit franchise.