If you’re trying to improve your painting company’s profitability without taking on more risk, one of the best ways to do this is to measure your company’s financial results. By recording three financial metrics, you’ll be able to see which jobs are producing the best results and which ones are losing you money. Identifying your most profitable work, and aiming your marketing and sales efforts at landing those types of jobs, will allow you to make more money without doing more work.
Here are three metrics that you should measure for your painting jobs.
Gross Margin: When you subtract paint and labor expenses from the money you’re earning on a job, how much money is left? For instance, if you do a $4,000 job, and spend $2,500 on paint, painting tools and labor, your gross margin is $1,500 – or 38% of the $4,000 job.
Painting jobs that earn the most gross margin dollars over the shortest period of time are your money-makers. These are the jobs you advertise to earn. Jobs that earn the highest gross margin percentage are also attractive, but if they’re very small jobs you might lose money focusing on these just because you aren’t getting paid to drive back and forth to all of those small jobs.
Profit: Of course, running your painting company costs more than just the paint and paint equipment you use at a job site. You have phone bills, software costs, marketing expenses, truck payments – all of these expenses may not show up on a customer’s bill, but you still have to pay for them. Taking all of the gross margin dollars you make in a month and subtracting your monthly bills leaves your net margin, also called your profit.
There are two ways you can improve your painting company profit. You can focus on your best-paying jobs – those with the highest gross margin. You can also work to bring down all of those overhead expenses mentioned earlier – software costs, marketing costs, any other bills that come due each month. The odds are high that you can’t get rid of most of those bills, so increasing your overall gross margin is the best way to increase your profits.
Productivity: How many working hours each week do your painters spend painting? It’s important to keep your painters on paying jobs for as many working hours as possible – those overhead expenses keep coming whether you’re working jobs or not. Productivity is the amount of time your painters (and depending on the size of your company, the ‘painter’ category may include yourself) spend each week doing work you can bill customers for.
Of course, it’s impossible to reach 100% productivity. If your painters spend any time quoting jobs, they won’t be getting paid by a customer for that work, but it’s still essential work if you’re going to land new jobs. Painters also have to travel from job to job, which will be deducted from their productivity. Keeping an eye on this number, however, will help you focus on making money (on jobs) while you’re spending money (on labor).
To learn how ProPainter Websites can help your painting business improve its financial results with a website that attracts your highest-paying customers, call us at 855.385.1134 or email us at Team_PPW@ProPainterWebsites.com