In an earlier post, I discussed the importance of Respecting Capacity.
But I've come to appreciate another facet of capacity that relates to our business - viewing capacity as an asset in your business and leveraging it for maximum profit.
Used to be that I got nervous if I was booked up for less than 3 weeks in advance. I was used to being booked 6 - 12 weeks out and that demand felt good, felt secure.
But these days...
If thinking of buying a home and of starting a business in the near future, it might be prudent to get the mortgage sorted while still steadily employed. Starting a business or financing a vehicle can be done anytime, but it is not always easy to obtain a mortgage. Doing things in the right order can help one reach goals years earlier.
If already self-employed, all hope of owning a home is not lost. Self-employment does make a lot of things in life more challenging, but by now you and I have honed our skills to become tenacious and creative problem-solvers!
Here are a few layman tips to increase the chances of approval. Use at your own risk.
1. Maintain a very good credit rating. Fix what you can, pay off outstanding and overdue accounts. If you need to improve your credit score, consider an RRSP loan. Most institutions will automatically approve RRSP loans where the funds are invested in a bank product. Make the loan payments regularly. Use the contribution to reduce your taxable income, this will generate a lower tax bill or a refund come tax time. Take the tax savings and pay down your loan, or keep building up that down payment. Once you are ready to buy, you can borrow your RRSP money to use as a down payment if you are a first time purchaser. In Canada you have 15 years to repay the money to your RRSP account. If you fail to do so you will need to repay the income tax to the government.
2. Save up a down payment. For most people a 5% down payment may be sufficient to qualify, but if you are self-employed and show lower income, or have less than ideal credit, you may need to have 10% or 20% to put down in order to get approved with a competitive interest rate. It is also wise to account for closing costs on your purchase, which can add up to a few thousand dollars. And don't forget moving and improvement expenses, hook-up fees, etc. A sound financial move would be to save 20 - 50% of the cost of your property as a down payment, and choose a shorter term mortgage of 10 to 15 years. Who wants to be in debt for 30 years? That is a huge burden to carry and it can restrict your choices in life.
3. Stay up to date with your financial statements - bookkeeping, income taxes, GST, NOAs, etc. Being able to show the stability of your business over several years and being up to date with your taxes will go a long way.
4. Find the right professionals to help you:
The idea for this list came from a list Chase Jarvis made for Creatives, which was a variation of a list Guy Kawasaki made titled What I Learned From Steve Jobs.
Here is what I believe when it comes to running a small painting business:
1. There is no substitute for craftsmanship. Be wary of jobs where craftsmanship is not valued. Quality work should be non-negotiable.
2. Work begets work. Not busy enough? Get out there and add value somehow. The easiest way to find work is to be busy working. Too busy doing jobs you hate for people you don't like? Stop doing that, otherwise you will get more of it.
3. Profit is a proportional bi-product of the value you create.
‘FOLLOW YOUR PASSION’ '
FIND YOUR PURPOSE'
‘DO WHAT YOU LOVE’
These have become the de-facto career advice you hear these days. It’s as if we all need to be doing something incredibly inspiring and challenging in order to feel time spent at work is worthwhile. Does work need to be a spiritual, higher-calling endeavour to be satisfying?
Oscar Wilde is quoted as saying, ‘Everything popular is wrong’. Could today's popular career advice be wrong?
What if, on the next 5 estimate site visits, instead of going in with a mindset of 'How can I get this job?',
we asked ourselves...'Is this my ideal customer?'.
It may be a more difficult question to answer, but it is the more important question for the success of our business and our personal well-being.
When we started our small contracting business, time is something that we invested heavily. Funds and experience and equipment may have been minimal, but time is something we all get an equal allotment of. If working for ourself is a priority, we will spend as much time as needed to get it off the ground.
The danger is that we stay stuck in departure mode. Imagine being on a long journey aboard a jetliner that was in lift-off mode for the entire 12 hour trans-atlantic flight. How stressful! Take off is exciting, but everyone's happy to sit back, take a deep breath and order a drink once everything is under control...
As entrepreneurs we must be effective problem solvers. Problems come in all variations: financial, health, technical, scheduling, staffing, etc. One type of problem that we will eventually encounter is people problems.
People problems can be particularly difficult to handle if you have an aversion to confict. Many people would rather experience just about anything but having to confront someone about a problem. I know, I used to be one of those people, and I still have to fight that tendancy. And that is a benefit of the road we travel as business people...it exposes our weaknesses and provides opportunity to confront them one way or another before you can achieve success. Learning to deal with people problems is one of the biggest hurdles facing a start-up. We all want to be liked and we all hope to get along with others, but things can go pear-shaped pretty quickly when mixing money, deadlines, personalities and expectations.
So here are 4 things I have found that help to difuse potential hot spots...
If each party in a transaction over-delivered by 5%, what room would be left for disagreement?...
"Oh, I don't really have a business, I just work for myself."
Is something often heard out in the field. It sounds like a simpler, more manageable way to work independently without all the hassle of running a business. Who wants the headache? Get work. Get paid. Repeat.
But getting stuck in that cycle is a problem...
Over the years I've noticed that there are 3 quick, free and easy things that most experienced painters refuse to do that holds their quality back from producing professional results:
1. Caulk with a wet finger or rag, prior to painting. This reduces drag, leaving a smoother finish on the bead of caulk. It also prevents building texture with drag lines and tiny chunks of semi-dry caulk. The caulking deficiencies only look worse once painted, so proper application will give a better paint finish. Caulking applied after the painting is done will eventually collect dust, discolour and look unprofessional in a short time. Caulking requires top-coating with paint...
The entrepreneurial struggle can arouse some powerful negative emotions - frustration, self-doubt, jealousy, anger, disappointment, exhaustion, conflict, confusion, and depression, to name a few. As a business owner you put yourself out there on a daily basis and face the world, hoping other people will accept you and your offerings. You face judgement and rejection. You battle threatening market forces that are out of your control - competitors, the economy, technology, weather, etc. Your entrepreneurial mind faces negative forces from within yourself, the people you deal with, and the circumstances you work in.
It can be difficult to navigate through challenges while keeping your head right...
You might be thinking about taxes at this time of year. And that maybe causing you some stress.
Or you may be feeling taxed by the stress of a busy painting season just ahead.
I've been thinking about work stress recently, particularly about the toxicity of stress and the toll it takes on our health, relationships and general job satisfaction. Stress is real. The effects of stress can be as simple as being more irritable to more complicated - like the inability to sleep properly, addictions, memory loss, a compromised immune system. Stress can even lead to heart attacks and death. My observation is that some of us don't consider stress enough when looking at jobs. For me, I need to be more intentional about limiting it's influence in my work life where possible.
We are just painters after all, not surgeons, so why all the stress? Is it necessary? What factors lead to some projects being more stressful than others?
Governments tax behaviours that they deem unhealthy for individuals or society, to reduce consumption/exposure and raise money to finance the side effects. So...why not tax stress in your life, particularly in your business? Add a surcharge to jobs that involve more stress, put a premium on that stress to discourage and reduce the amount of stress and raise money to deal with the consequences of stress (vacation, massage, therapy, date nights, exercise, healthy food, etc...).
With that in mind I created a Project Stress Analyzer and Tax Calculator. I fill it out as part of the process for every project I quote in 2017. In fact, I print a bunch of these sheets and use the back side to make my notes during the site visit. If a project has an average (or lower) anticipated amount of stress there is no premium tacked on. But for every degree of stress above average I add 2% to the quote, to a maximum of a 100% stress premium...
So one day about 8 years ago I went to a client's summer home to continue an exterior painting project. It was mid morning and the homeowner meets me at the front door with a serious look on her face and a glass of wine in her hand.
"Simon," she says, as she pulls me inside her house by the arm, "today you won't be doing any painting."
Have you thought about starting a small business but are afraid of either the challenges, or the thought of quitting your job? Or maybe you are already in business but are looking to transition into a different type of business - one that is more creatively fulfilling, is easier on your body, or that can provide a side income for travelling or savings. If you are ready for a new challenge, Chris Guillebeau just launched a project today that might just be for you...
This article is a guest post by Steve Maxwell, one of Canada's most read home improvement journalists and editor of Pro Painter magazine. Pro Painter has been an excellent source of support to my business over the years with technical tips, business advice and industry trends. Look for a re-vamped Pro Painter debuting in 2017.
Every painter wants a schedule full of great jobs, serving clients who appreciate good work and pay good money. But whether or not you actually get this kind of work depends on more than just your skill with a brush, a roller and your estimating book. All these things are critical, but success in painting, as in life, ultimately depends on deeper qualities like energy, honesty, selflessness and humility. Please forgive me if this sounds like a Sunday school lesson, but reality backs me up. A painter I know named Gary Walchuk reminds me how true it all is...
With a new year just around the corner, you as a business owner may be thinking about your sales numbers - what they were like this year compared to last year, what next year should look like, etc.
Like the economy, everyone assumes that a healthy business is a growing business. Progress and increase are quick validation that we are working hard and things are going well. If you are not growing you are shrinking, contracting, losing market share, in a recession...all negative sounding things we have been conditioned to have an aversion to.
Let's assume for the sake of this blog post that growth is good, necessary even, for your micro-business. We want to measure our efforts and see fine results: higher sales, and more importantly - higher profit...
At this time of the year many people begin thinking about what goals they may want to set for the coming year. I've always appreciated the importance of having goals, but have always struggled with the achieving of them. Here are a few things I have learned about goals over the years, as I have begun to use them as an important tool in feeling like I'm moving forward in my life...
As a former high school drop out, it is not my place to say that getting a degree is a bad idea.
However, it is clear that education is changing fast and that the cost:value ratio of traditional post-secondary institutions is becoming more of a burden than an asset for many students.
Technology, industry and economic shifts are developing so fast that a 4-year program is sometimes obsolete by the time you graduate.
The skills that seem to be valued in the current job market are adaptability, life-long learning, working with others, project management, entrepreneurial skills, value creation (rather than getting paid to 'show up'), problem solving, social influence and so on. It is a dynamic work-scape out there, with few guarantees or long term commitments on both sides of the employer/employee divide.
I'm definitely not an expert on any of these issues. And there is no question that some types of post-secondary training can lead to higher paying work. Having a basic high-school education these days doesn't open a lot of career doors. I just thought it would be practical to think about whether starting a painting business is a viable option for a young person, as opposed to pursuing 'higher education'.
The cover story on the August 2016 issue of Consumer Reports stated that 42 million people owe $1,300,000,000,000 in student debt. While many countries around the world offer free education, in North America adult students are drowning in deep pools of debt. Is it a wise investment?
Jackie Crowen, aged 32, from Portland Oregon, with $152,000 in student debt is quoted as saying "I kind of ruined my life by going to college." Let's play with some numbers...
If she attended school for 10 years, that is an average of $15,000/year in debt. If she had worked instead of attending school during those years, lets assume she could have earned an extra $15,000/year in earnings. That is $300,000 over 10 years that she is behind someone who didn't attend school and started painting full time, earning $30,000/year. How many years will it take her to catch up? If she gets a job paying 50% more because of her education, it would take 20 years! But that is assuming she doesn't end up working at Starbucks, as many highly educated people do. You sometimes end up over-qualified for entry-level professional jobs while lacking experience required for middle-tier professional positions. And that is assuming her skills and education are even still relevant after all that.
Now there are other factors to consider...
So about 8 years ago my brother-in-law and I requested a meeting with my business mentor. He kindly granted us a 20 minute meeting so we could run our latest idea by him. In our enthusiasm we never expected to receive the advice he gave us that day.
My brother-in-law Andre and I get along amazingly well. We both paint for a living. We have very different but complementary strengths and skills. We both recognized that painting is better with 2 people, and we had a lot of fun whenever we worked together. So it seemed logical that maybe we should consider a corporate merger and blend our businesses into one.
Let me give you the short version of Mr. Mentor's advice...
1. It is unethical. It indicates that you are willing to sell your integrity and honesty for the privelege of working on a project. You don't pay sales tax - it doesn't come out of your pocket, you simply collect it for the governement. So there is little incentive for you to rip off the government. You may feel pressured in order to win the bid, but consider whether you want to work for someone with such ethics. Interestingly, I've had teachers, police officers, Christian clergy and devout Muslims, among others all ask me over the years to 'work for cash', hoping to save 5 - 12% in sales tax. Either you are honest, or your not, simple as that.
2. It is illegal. Do you want audits, fines, assessments, bank accounts frozen, customers contacted by CRA, interest charges, jail time, legal fees, a criminal record? All these are possible consequences of fraud.
3. You never know if it is a test - to see if you are an honest person. Clients are trying to determine if they can trust you with thier most valuable possessions and working around their precious family. Trust is the only thing you are selling. People assume you are a proficient painter...what they want to know is if they can trust you. Trust and honesty go hand in hand. Best to have a solid policy and stick to it firmly and respectfully. You may even be talking to CRA/IRS auditor...
I just watched a few really interesting talks that contained some good take-aways for me and my business...thought I'd share the links in case you might be interested in some positive psychology...
After 10 years of operating a painting business in the Okanagan Valley I had a nice client base of about 300 customers, which I had worked very hard to acquire and service.
It felt good to have so many happy customers...it gave me a sense of security. The problem is that I couldn't service so many customers well. Sometimes my best, most loyal customers had to wait 6 or more months for me to fit their project in. I wasn't delivering top level service to my best customers and I was often over-booked and stressed.
So when I opened another painting business here on Vancouver Island in 2015, I decided that I would try to get to 100 customers as soon as possible. This, I thought, would give my business a solid base, while giving me a more manageable number of customers, hopefully leading to less stress and better service.
We may think we need a lot of customers to have a successful business. So it was interesting when last week I looked at a report of my sales by customer for 2016 thus far. You know what?...
Greetings from Reykjavik! What a cool place!
We often hear about or strive for 'balance' in our lives. The idea of balance has always kind of stressed me out because I picture myself as a juggler trying to focus equally on multiple machetes in the air coming down on me and me panicking to keep it together and keep it all going while not dying a bloody death.
Balance has always felt unattainable, and thus the pursuit a little discouraging. Lately I've been more interested in the concept of focus...
Little things can make a big difference.
About 4 years ago my brother-in-law gave me a little device called Square that plugs into your smart phone and allows you to accept credit cards. It was a thoughtful little gift. I doubt that I would have tried it out on my own, at least not at that time. Since he bought it for me I felt obligated to set it up.
Turns out it was very easy to set up, the device is free to obtain and it is a huge asset to your business if you don't currently accept credit cards.
Accepting credit cards helps your business look more professional. Being more profssional leads to closing more deals, at higher margins. Accepting credit cards will help your sales and your cash flow...
Being self employed comes with the dream of having the freedom to take time off whenever we want, without having to ask permission.
The reality can sometimes be quite different. For the first 5+ years of being in business for myself I found it very difficult to take off anymore than a long weekend here and there. When I had a few extra dollars I didn't have the time, I was too busy. When I had some spare time in my schedule I didn't have the funds to go on a vacation. Forcing a holiday when you don't have much work or money isn't very enjoyable.
Taking time off can also be tough because you can do it anytime you want...which means it can always be deferred to when the timing is right. The risk is that it never happens.
So over the years I had to develop a strategy to try and get some time off...