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Painting Pro Times, the source for paint professionals!

Are you a commercial contractor? Or maybe the better question is do you work for general contractors? Well, if the answer is yes, we have an excellent, best practice guide for you to consider. The Associated General Contractors has a subcontractor’s group called the Specialty Contractors Council (SCC). The article is an interview with the SCC’s newly elected leader, Tim Sinclair from Wichita, KS. Tim’s career has been dynamic with widespread experience working as an estimator, project manager, and general contractor. Now he simultaneously runs several companies. Make sure to scroll down below the interview to read the checklist: Commercial Preconstruction Best Practices.

Next question, what is the best way to make a profit? This is not a trick question. In any service business including doctors, lawyers, plumbers and paint/coating application, the best way to increase or just maintain a profitable operation is to raise the billable hourly rate. Sounds simple, but the pressure of bottom feeder competition and the lack of owner knowledge about charging enough to fully recoup overhead expenses keep many in the grind. By grind, we mean the everyday situation where professionals charge more than a wage, but not enough to sustain a vibrant, growing business.

By the way, how do doctors and lawyers get away with calling their companies a practice? Imagine if we asked customers if could get a little extra time behind the brush on their property? Most likely, they would expect free work not $400 an hour.

Also, the idea of many professionals holding close to the vest a secret that their overhead is exceptionally low or non-existent is not so secret or real. These outfits are usually small and function without the benefits of business organization or systems. Essentially, these professionals work for what is actually elevated wages, but find the most value in being the ship’s captain. This model can often be observed taking on projects at “market rate” or lower. Just as popular is the absence of fixed contract proposals. Many of these professionals keep busy and are most comfortable with working on projects for an hourly rate.

The “mind” safety of time and materials work shields this business model from the risk of losing, but often stunts profit. The craftsmanship and overall skill level can be excellent, yet the profit is frequently unremarkable. When individuals bump into the wage ceiling, they commonly rise out of the field and hang an open for hire shingle. Unfortunately, without some degree of business acumen, many float high and low with the tide of the economic time. The inability to break out of riding waves can lead to extended periods of treading water or what we call the grind; working for less than the service and craftsmanship is worth.

Back to making profit; the best way to operate in the black in any service business is to elevate a company so it does not have to be a low cost provider exclusively. The hourly billable rate goes up so the gross profit potential is increased providing the opportunity for improved profit. PPT has more detailed explanations at Estimating for Profit Part I and Estimating for Profit Part II.

The more popular way service businesses try to make a profit is controlling costs, which mainly revolves around holding hourly wages low. To make cost cutting work effectively, management must have a detailed handle on all the costs. This goes beyond wage and into overhead. The owner must breakdown fixed (common monthly expenses like rent and truck payments) and variable costs (project costs like worker wage, materials and equipment rentals) and accurately spread both into the hourly billable rate.

Typically, owners focus on the variable and do not fully understand or recoup fixed expenses. The variable watch-dogging is over focused on wage. If owners want good people, it might be worth offering an improved compensation package, which will attract and retain more first rate professionals. One overlooked area of variable cost that owners should better manage is insurance. We have an informative article titled 3 Ways to Lower Insurance Premiums. Consider the tips and if you are not performing at that business level yet, now is the best time to start!

Here at PPT, for more than five years, we have sounded the worker shortage alarm. It was easy to predict: the slacker generation has not entered the construction industry in any sort of numbers to replace the gray and now a more regular sight, white hairs. The 2006 construction market collapse sent more than a million workers permanently packing to other vocations or to early retirement. Next add the simple math of the everyone-go-to-college push across America, which gave us 22 year olds (many university students spend 4.5 years obtaining Bachelor’s degrees) living in basements, debt ridden, and graduating to work as clothes folders and coffee makers. Butta-bing – a craftsmen famine.

We have a follow up article from Professor Jeffrey Selingo, Skilled Workers, Degree Required, which explains the action that big, international companies are taken to get good, young employees. The irony is that these huge global players are copying what union painting companies have done for generations: combine career academics with on the job training. In the paint and coating application profession, we call it an Apprenticeship Program.

We have another fun Color Selection column, titled Making Color. At least the PPT nerds think it is fun… Historically, how where colors made? Well speaking of book worms, while searching for a cure for malaria, an 18-year-old English chemist accidentally discovered one of the early synthetic colors. Making Color is the second of four short narratives from the Smithsonian Libraries exhibit titled Color in a New Light.

Over in wooden shoe land, the giant paint maker takeover-dance continues, but looks more like corporate wrestle-mania.  Go to AkzoNobel rejects third takeover proposal from PPG to learn more. Three deals and billions more offered and the answer was short (the meeting was less than 90 minutes) and negative (a flat out no). As one may imagine, PPG’s reaction was somewhat restrained.

Formally, the Pittsburgh-based world paint and coatings leader stated that PPG May Walk Away from AkzoNobel. Although not mentioned prominently around this wrestling acquisition ring, it has been reported that AkzoNobel has a poison takeover pill, which seems to be the deciding factor in blocking merger/takeover advances. It seems that most of the stockholders who own the stock do not get a vote. Instead, the voting power rests with a relative few and specifically with the board and management.

Generally, in stock owned business, the management is supposed to maximize profit for stockholders and large block owners usually gain seats on the board with voting authority to determine where the company’s direction (expansion, cut costs, sell the company, etc.). Apparently, at AkzoNobel, the voting steering wheel is in the hands of a few who have exercised their authority to repel PPG. Some market analysts claim that course is at the expense of the larger owner group. The paint giant match may not be over, stay with PPT, we will monitor and report.

We have a separate PPG News item: PPG Architectural Coatings Dealer Video. We wanted to share it, since the clip provides a glimpse at the company’s wide range of products and shows a different perspective than professionals usually see.

In a move that is somewhat unusual and certainly bold, RPM International’s main architectural paint supplier brand moves into the car washing products business. Check it out at Rust-Oleum and Dubois Chemicals Announce Licensing Program.

According to senior vice president, Steve Revnew, “Property managers and residential paint contractors have many things to consider in keeping resident satisfaction up and costs down.” Sherwin-Williams Introduces Extreme Cover is a News item where the company asserts the need for priming in multi-family, commercial property management and residential repaint jobs is reduced saving time and resources.

Also, from SW we feature a video with what must be the first mention of next year’s colors. Well, we are almost half way through 2017… go to Behind the Scenes of Sherwin-Williams Colormix Forecast 2018. Sue Wadden and the whole Sherwin-Williams Forecast team are underway working hue-ly.

Have you seen the green yet? Not money or the spring bloom…it is the Pantone Color of the Year labeled Greenery. The company says the color symbolizes the re-connection we seek with nature, one another and a larger purpose amid a complex social and political landscape. Maybe we did not stare at it long enough to mind hop to a jungle or more likely, we were thinking whether or not it would cover in two coats…

And remember do not be too busy working to work on improving the business side of your company. Most importantly, focus on a fair and reasonable profit by knowing and recouping all fixed and variable overhead costs. Now is always the time to be better…start by raising hourly billable rates to completely cover overhead and an increased gross profit margin!

Please send comments and corrections to MarkCasale@paintspecialists1.com.

Thanks for reading PPT!

Mark Casale, Editor