Systems, Strategies and Real World Lessons Episode #1 Strategic Leadership

Hi everyone and welcome to the Pro Painter Playbook powered by APPC, a podcast where painting contractors come to get plays to help them stop guessing and start scaling. I’m Tom Tucker, senior adviser, business growth and performance at the Painters Academy.

And I’m Tara Riley, COO of the Academy for Professional Painting Contractors.

In each episode, we will break down systems, strategies, and real world lessons that help painting businesses grow faster, run smoother, and become more profitable and without the owner burning out.

Before we jump into the playbook, I want our listeners to know that that you and I work with painting contractors across the country, from guys just starting out to multi-million dollar operations.

Right. And no matter the size, we see the same patterns over and over again. Oh, yeah. And it’s almost predictable. different business, same problems.

So, if you’re ready to build a business that works as hard as you do, you’re in the right place.
Let’s get into the playbook and I’m going to lay out what we’re going to cover today. Awesome.

Well, Tom, this is the beginning. So, we’re going to start by just talking about the basics and honestly, I I have learned over the years not to overlook basics. I never assume that people understand all the details. So, I think it’s important to go through. Let’s talk about a little bit about what this playbook solves. You know, bottom line is what we see, what you and I have seen as we coach these painting contractors.

And you and I have been coaching not only painting contractors, but business owners for well over 30 years each. The bottom line is we see that most businesses are reactive and that when we’re reactive and we don’t have good system, growth stalls, right?

Absolutely. And it doesn’t matter what the business is. I mean, really, that that last line, you don’t rise above your systems. You just don’t.

And I I think it’s important to talk about what a system is. Again, we we’ve worked with lots of contractors and bottom line is everyone knows, hey, they’re supposed to have systems. I’m supposed to have systems. I know I should have systems, but really, what is a system? Bottom line is a system is a repeatable way of doing something that produces a predictable result. I’ve lined it out. I see it as having really three pillars. First, it has to be repeatable. Has to be able to be done the same way every time and not be dependent on just somebody’s memory. I think it needs to be predictable so that you know what outcome to expect and that your most importantly your results aren’t random. I think a big thing I see is that I think people often think that results just happen. They don’t realize they how well how much they could actually control the results of their business if they really work at it.

Yeah. And I think one one of the things you had up here, you know, I think folks forget sometimes that things need to be transferable as they grow in their business. And you know, things can’t just be dependent on them. And like you said, it can’t be random either. It’s a you know, a system is something that you replicate, you know, day in and day out. And uh that’s a missing piece sometimes.

Oh yeah. Well, and then this is what’s interesting. I think the other thing we see and I first of all, let’s talk about whether you have a system. I think every I think one way or another people have systems. The question is are do they have those pillars? Are they repeatable and transferable? A lot of people have a way of doing things. I think we see a lot of our the folks that we work with
are really in this column on the left, right?

You know, they they have the s they do have a system, but it’s a system that’s going to break really easily when they start to scale or if they try to transfer it. You and and honestly, I’ve been guilty of this, Tom. I think you have too. I mean, you know, sticky notes. I mean, you ought to see my desk.

I I I’m a little guilty of not necessarily being the most organized person all the time, but bottom line is, you know, when you don’t have good systems, things happen. We’ve got missed calls, things fall through the cracks.

That’s these are the things I hear from from the contractors I work with. It’s they’re afraid. And the owner is trying to do everything. And the the bigger they get and the more they’re trying to be the chief everything officer, the more they become the barrier in their business.

Absolutely. And I got to tell you, when I visit with owners and I see a bunch of sticky notes, I I can tell you at some point in time during that conversation, the owner’s going to tell me that they’re overwhelmed and they just feel like they can’t get a hold of the day and they’re being pulled in every direction.

Yeah. And it’s stressful when you’re trying to remember everything. You know, I think one of the things we learned especially from like the time management systems is right, you know, is having reliable places to write things. Even that just the time management system, right? being having reliable places to write things down that you know it’s there takes it out of your brain and then you don’t have to be constantly remembering. I know when I’m not making good lists, it’s like my brain is always going 100 miles an hour. What did I forget? What did I forget? What did I forget?

And another thing is just, you know, having that in place at the bottom, you know, talks about process and accountability. What better way to train your folks and get that next generation going by having good systems in place, right? Some of the keys there is a checklist or you know that it’s in writing. You’ll hear the terms SOP or standard operating procedure which really is a documented checklist really important are having some kind of measurement key KPIs key performance indicators having some form of scheduling scheduled follow up on it making sure that we’re looking at the these KPIs these numbers on a regular basis. probably the most important thing is who owns it, right? who absolutely you know I think what happens you you know I’ve seen in my past where they people will develop a actually a pretty well-written system and yet it’s still not operating right and part of that is like well who’s in charge of it and it’s a little bit of this well I thought you were doing it no you know so making sure that we have clear accountability and as we say in leadership clarity is kindness people are always worried in my world I don’t know how you see it Tom but I see people worrying about being being a micromanager. They feel like they’re just and it’s not.

No. And it’s, you know, it’s it’s one and I and I remember you and I have had these conversations especially with husband and wife teams where it’s like, okay, if you don’t define the accountabilities and you don’t write it down, guess what? It’s not going to get done and both people are going to point the finger at each other. It’s it just doesn’t work out.

No, absolutely not. So, I think it’s important. So, we’ve talked about what a system is, but I’d like to introduce just start here and introduce there are I think we see seven core systems in our painting businesses. Uh, and the bottom line is people will recognize these. So, when we look at the systems and I like to take it from the flow of how like if we were starting a brand new business, you know, first thing we’d have to do, we’d have to get some leads, right? We’d have to start, you know, you don’t have a business till you have some customers, right? Now, you you know, you’ve seen me do this for years. I tried to refer to these systems in their what I call their lowest common denominator now a lot of people would refer to this system as marketing or advertising right but Tommy do you remember why I say I don’t like to call it that you know because it well number one it just isn’t and that’s it right the way I looked at when I and this happened in my years of coaching is I started realizing that everyone has a has already has an idea in mind if I say marketing or I say advertising I think we paradigms and we start to narrow our thinking when I say hey this system is how you generate leads and it becomes all-encompassing because it’s not just advertising it’s the it’s everything we do it’s networking it’s our operational marketing you know putting out yard signs you know having having logoed shirts it’s it’s loving on our lists right it’s it’s you know marketing internally so I I I like to make sure people understand that this system by hook or crook is just how do we get leads and there’s a lot of ways to get in there and we really do need diversity in that system.

So I I that’s why I’ve always liked to call it that and the same thing with the second system which is okay once we get a lead we got to convert it to a paying customer right now most of the world calls that sales um and it is definitely the sales process here but again I think we have we we we start to run into paradigms of what is sales when we realize that the big picture here is can we convert it you know um hey good news we got a converted sale what do we got to do next.

Well, we got to be able to get it on the we got to coordinate it, right? So, we got to get it on the schedule and produce it. So, we get our scheduling and operations. For a long time, I was just I just put scheduling as a subset of operations. It was kind of like, okay, it’s ancillary. But I started to realize, Tom, as we really work with scaled companies, this really is a standalone. In fact, it it’s a not only a standalone system, it’s one of the most critical systems. One of our members I love Mike Balding loves to call this well we started by calling it four-dimensional Tetris and then it became sadistic four-dimensional Tetris and it it really is you know when you are looking at trying to coordinate all the variables that can come into a schedule especially in exterior season you have weather you have the the skill levels of our crews how many crews the customer itself it is a it is a very challenging role and there’s another little tag under here and that’s called job planning and I’m going to tell tell you that this is another kind of hidden area that I’ve been running into and that is a failure or a lot of challenges with being able to really be efficient in our operations is not having good job planning.

So, I think this whole scheduling and job planning piece is is something that I’m going to really look forward to when we break this out, but I think it’s going to be really impactful for people.

I was just going to say, you know, it was a long long time ago when I started out in the business as a kid. I I actually started out working for Pepsi Cola on a on a on a truck as a as an operations person and I and I remember a mentor that I had there and it was it was funny because it was so true. I ended up coming back to work for that company after I got out of the service.

Told me, he said, Tom, he said, learn operations well, but he said, remember, if you’re going to advance in our company, he said, you got to learn about the whole company and how the business operates. And he says, you have to spend some time in finance. You’re going to have to spend some time in marketing and sales and also in human resources to understand how the whole business comes together. He said, “Without any of those pieces, we’re not successful.” And he was so right. Tommy, it’s interesting because um you know there is these are all core systems. You can’t operate without them at all. I mean you really think about like which one of these could you drop?

You know you have to drop them all right. Well, but you know it’s funny because we do see as an owner of scaling especially when they’re still the chief everything officer something has to fall off the plate. And I you know one of the things I see I don’t know what you see but I see that things that can wait. So I I always like to break activity the business activities down into two categories and really there are just two categories. We’re either producing revenue hopefully profitably or we’re protecting our profits. So I I refer to them there’s two types of activities.

There’s revenue generating activities and profit protecting activities. The ones that tend to fall off the plate are all the profit protecting activities to be honest. So the things that are profit protecting really are often are down here, right? Doing our numbers, understanding like doing our job costing, which we should do on every project every time in real time because we need to know were we project level profitable. Going back to I mean that is a critical component. Um knowing you know a lot of our administrative things can be long-term safety profit protecting even something as knowing the rules around RRP. Are we doing everything right for a lead project?

Those are things that may not jump up and bite us right now, but they could in the future. So, if they do, they’re going to hurt our profit. So, those activities, even though they don’t sound like a lot of fun, help protect our profit in the long run. You know, that’s a key component. Quality assurance, you know, we’re in our, you know, our quality assurance steps. I see young project managers and and crew leads like to kind of leave that off the table sometimes. They’re they’re done with the project that’s all you know but but QA quality assurance is really um important for protecting profit and also for long run health are we going to be referred are we going to get a five-star Google review well those are all really because of these steps so yeah it’s interesting and of course resource acquisition you know who we’re hiring um what we’re paying for our materials all those things are definitely profit protecting so well and it goes back into that one you got in the center too that strategic leadership you think about having those meetings safety meetings things are so critical in this business of ensuring people don’t fall off the ladders and, you know, setting goals for the team and and holding them accountable and having scorecards so you can recognize great performance.

Well, and and Tom, you’re leading right into what I was about to say because again, what I what I see and and a lot of the folks that I’m working with now in my coaching programs, this is the system we work on the most because this is the system I think is missing in a lot of people’s businesses. I think people understand I oh I need to I got to I got to do marketing I have to have a sales process you know I I got to get this all these kind of in isolation but what they don’t see is there’s a system that ties them all together and and strategic leadership and management system our our our SLM system as we like to call it is the system that runs the systems it’s the system that makes the other systems work it’s the the follow-up we do to also to understand the health of all these systems and once, once we start to see this as really a holistic um kind of an ecosystem, not just individual components, that’s when you really start to run a business that runs smoothly.

Absolutely.

I’m changing slides here because this is a little different presentation of that same of those same systems but in a sequence.

Flashback in time. I thought it was deja vu looking at I know Tom, you’ve seen this before. We’ve you know I’ve been teaching this for actually for quite a long time and not just in painting. This is, you know, honestly, these core systems are are systems that all businesses have. I like to say whether it’s your kids lemonade stand or Proctor and Gamble, they all have these systems. And this becomes what I call the business model, right?

And I like to say the business model is a lot like mother nature. You can’t fool mother nature. You if you drop one of these out or you don’t execute well on one of these, it’ll jump up and bite you over time. So, but this is I like to think about like strategic leadership and management. That’s the head of the business. It’s our thinking, right? It’s where we start. At some point, the germination of any business started here. Somewhere along line, every one of our clients, every one of our painting members started, I’m going to start a painting business. At some point, they may have been painting and decided, I’m going to go out on my own.

Or some people literally started, I think I can see where this would be a lucrative business. I’m going to start a painting business. But that was, you know, when they were there, that’s they were in their starting in the thinking.

They started planning it out. How’s it going to happen? And so this system thinks about how to execute all those systems. I want to point out the key thing here. And then what I like is that one, we can see that the flow goes through here, but eventually it lands in the financial and administrative systems. And again, this is a system that tends to fall off of people’s plates, getting your data put together, having a weekly scorecard, having your profit and loss statement statements.

This is the data. So this is where we generate the data that comes back over to the head to say, how are we doing?

And this is what allows us to work smarter. So when we have a good weekly scorecard that identifies the key performance indicators for each of these systems, we can start to see the health of those systems. And so instead of just wandering around in the dark thinking where do I need to work, the numbers will tell us. You know, math is beautiful that way. We can argue with math all we want, but math always seems to win. Um it does. But, you know, the bottom line is that if we’re if we’re having we’re not getting enough sales, it’s going to show up and we know that’s where we got to go work. And and that’s what, you know, I know that when we talk about again doing a good diagnostic, you know, Brandon’s been doing diagnostics for a long time.

You and I do diagnostics. The beautiful thing is that, you know, in a very short span of time, we can look at somebody’s business without being out, you know, they can be thousands of miles away from us, but by looking at the numbers, we can see where the gaps are. I I’ll let our listeners know just a little peek under the tent in a couple weeks.

Brandon’s actually got a video that’s coming out. The myth that I’m not a numbers guy. You know, you’re hitting on something, Tom. So many of our folks are I’m not a numbers guy. And it really is just a confusion of like everyone has these numbers. I mean, or they’re they’re around somewhere and it they’re not that hard to track. But I think it’s just that we’re uncomfortable we’re uncomfortable with things we don’t know yet. But that’s what’s you know again that’s why being a member of the APC putting these tools in place working with us and coaching and peer groups and those kinds of things helps bring people to the and that’s why we’re doing this series quite honestly right so you’re talking about numbers right so let’s talk what’s important yeah what’s important Tom um we can talk about you know when we’re in a group like when we used to do training you know we we remember we’d ask people to call this out but probably one of the first things that always came out and people get this, you know, what’s what’s an important number? Well, profit.

Hopefully, this is one of the first things that comes to your mind. Am I profitable, right? Am I making a profit?

Am I making the money I want to make in my business?

If you’re not you’re not a business, you’re a charity.

Yeah. Oh, that’s Yeah. And um you know, we we never want to be set up as a as a not-for-profit. I don’t think, like I said, we used to ask people, did anyone set up their business to be a nonprofit?

Because I I pretty sure all of you are here to make money. Another really important number, you know, when we start talking about profit is revenue.

Like how much are we how much how much are we producing? How much revenue are we generating, right? Because we can’t have profit without revenue. Um, another really important one is our expenses, right? So, when we really think about profit, well, the bottom line is revenue. Profit is take our revenue, take out our expenses, and what’s left over is profit. And that’s true for every business on the planet. Again, whether it’s your kids lemonade stand or a big Fortune 500 company, the bottom line is profit equals revenue minus expenses.

So, um now KPIs, we we talked about that. Key performance indicators, those are these are a little bit more, you know, the the big three are profit, revenue, expenses. But how do we get how do we improve those? Well, KPIs are what we call diagnostic. Those are the the diagnoses. This is how we know the health of the systems. And I’ll talk about this again in a minute. And then the last one is owner’s discretionary profit, right? So there’s there’s paper profit. Like you know, we there’s a couple different places of profit. But then the question is how much are we making as a as an owner? What is our owner’s profit?

So we’ll we’ll talk about that in a in an upcoming episode.

And then most importantly, and we forget how much cash do we have in the business? Because not having good cash, not having cash reserves puts us in a mindset of scarcity. And excuse me, you know, that is a dangerous place for owners to be. We really need to operate from a mindset of abundance in order to be able to grow and grow healthily.

When we’re tight on cash, we don’t have good cash management practices. The bottom line is we will operate from scarcity.

Um, yeah, you know, as we mentioned, me measurement is the key to success. I just want to take just a second to introduce the concept of KPIs because not all of our listeners will really understand the total what is that and we call them key performance indicator.

It’s a number. It is a measure that gives you an indication of how the system is performing. So just be clear a KPI is a number and we’ll talk about the KPIs for the key systems real quick and that’ll really be the end of this intro. At the bottom it says you can’t manage what uh you you cannot measure and that’s so true but I’d also add on that you can’t manage uh what you cannot measure if you don’t track it as well so you got to look at it yeah so we got to look at it I want to differentiate there’s key success factors key activities um and those are actually they’re not numbers they’re activities which we know are a factor to the success of the system so when we start breaking down a system we’ll talk about okay hey what’s the number we’re trying to hit and then what are the critical control points of that system.

What are the points of truth that we know you have to execute in order for that system to be successful?

And you’ll you’ll see that in these upcoming videos. I’m going to I’m going to leave us just on a real quick uh tour of these core systems and what their core KPIs are. So, we’re just introducing it. Uh when we start talking about our strategic leadership um system and the most important what we consider to be the most important KPI in the business is what we is gross profit margin. This is our prof project level profitability.

Um, and I have always referred to gross profit as mama. And I say, you know, Tom, why do we call gross profit mama?

If mama’s not happy, we got a problem.

Yeah. If mama ain’t happy, ain’t nobody happy. So, if you know, one thing that we do as coaches is like the first thing I want to know is what’s your gross profit margin? Because if your gross profit margin isn’t right, I don’t want to I don’t want to get you more leads.

So that you know if you’re not making money at the pro project level, if we’re not job costing and knowing that we’re making, you know, project level profitability, all I’d be doing if I got you more leads is digging a hole deeper and faster for you so that we could put you out of business faster to be honest with you.

And so the bottom line is, you know, why do you need to know this stuff? Well, you may not understand. You may think, I need I’m not making enough money. I need to get more leads. Well, it may not be that you need more leads.

You just need to be more profitable in the leads you’re getting. So a gross profit is a critical one when we look at lead generation. It’s pretty obvious.

What’s the what’s our metric? How many leads are we getting?

Our lead conversion, our sales. Um there’s a key component here. The number one thing we need to look at is how much are we selling weekly? Like what is our target and how much are we selling?
There’s some sub-diagnostics in this category that are really important too and that’s how fast are we converting it, right?

You know, what’s our um set rate, what’s our closing rate. You’ll see those really pop up. This is a very critical system, and it’s got a little cadre of of KPIs. But most importantly, are we selling enough? You know, if we have a goal to hit a certain revenue level and we’re not selling enough to hit it, it doesn’t matter what the other metrics are.

The bottom line is that’s a problem. Um when we look at scheduling we’ll look at capacity utilization um resources like how many painters do we have available uh when we look at operations the question is you know how much is produced weekly right so you know again if we’re selling weekly we got to produce it so if those two things aren’t in balance like you know hey if I’m going to hit a million dollars in sales I got to be able to produce you know $83,000 a month right well if I’m not selling $83,000 a month, we’re going to run out of pipeline pretty quick. If I can sell $83,000 a month, but I can’t produce $83,000 a month, we’re still not going to hit our goal.

So, you see where these these core critical KPIs really come into play. And then,

Yes.

Yeah. So, I say so central to the business. So, essential.

Yeah. Anyway, we’ll again, as we break down each of these systems, we will um you know, we’ll talk about these in in great detail. So that that I think is concluding this little segment which is the intro the intro to what are systems what are the core systems of our um of a painting business and what are what are the measurements we’re looking at it Tom do you have any questions based on what we just talked about you’re going to do this on a on a weekly basis so there’s several more episodes that our listeners could tune in and watch on the on this particular topic.

Yep. Absolutely. You know, if if you’re watching this and you’re thinking, I need help with these systems, any of them, know that bottom line is keep tuning in because over the next few weeks, we’re going to break down every one of these systems and look at them in depth like what what does it take to have a good system in place, what are the measurements, who should own it, and how do we implement it?

And I’d say just start with one system this week and don’t try to fix everything at one time.

Yeah. And I and at this point I want to draw back you know again if for our members for people who are APC members there is a done for you system for every one of these systems we have in the portal for the APPC you know so the bottom line is hey you don’t have to reinvent the wheel they’ve been done for you these systems are known we have proven systems that work Tom you we used the systems from the APPC at Fresh Coat back in our day you know we have real world experience that says hey you know what these systems work and the good news you don’t have to spend hours and hours plug, you know, reinventing this.

You just get you, like you said, pick a system. Let’s pick the one that’s most important to your business, the lowest hanging fruit, and a good diagnostic can help anybody. If you if you’re not sure which system you need to start with, I’d suggest signing up for a diagnostic.

Right, Tom?

Yeah. And go to paintersacademy.com

uh free biz all and uh get that set up and uh we can help you out. So in closing, Tara, I just tell our listeners, run the place, trust the process, and build the business.