After making the previous changes to the finances of my business over the past 2 years, I've been able to see a decrease in my expenses of about 30%, and an increase in my profit margin by about 12%. It wasn't nothing and I'm sure glad that I was able to implement those changes when I did.
The next phase of financial reform in my business is something I just implemented...
One the final key pieces that I changed in my business when I attempted to overhaul the way money worked in my painting business was changing to weekly invoicing.
In the past I would take a large deposit - 25 to 50%, a progress payment on large projects, and final draw upon completion. I operated that way for 12 years or so. As mentioned in part one, the large deposit carries risk for both the homeowner and myself as the business owner. The large span between deposit and final payment also caused stress on cash flow because I often have little control on the project. There were times where general contractors would botch the scheduling or change specs and there went my profit. Other times homeowners would take 12 months to complete the other trades prior to me returning for final coat. Even with a 50% deposit, most of that goes to paint and materials, other job costs like fuel, business operating expenses and a little bit of labour. So I quickly found myself upside down on projects and that could last several months sometimes. Not ideal...
The decision to stop accepting large deposits had a ripple effect on the finances of my business in many ways.
The most significant adjustment that resulted was that I was no longer comfortable purchasing paint for my client's projects. It was too risky. Customers frequently change their mind, delay their projects, do it themselves, hire someone else, stop returning phone calls, or are indecisive about colours and sheens.
So with no or minimal deposits, it freed me from purchasing paint. This is a big change for a painting business. Most painting companies include paint in their quotes. This way they have more control over the materials they use and it can make things more convenient for the client.
But does it have to be this way?...
In January 2017 I implemented some changes to the way I was operating my business, particularly how money was to be handled.
Partly out of necessity, partly to optimize, and partly as an experiment. I had been doing business the same way for the previous 13 years and I was in a rut. Time for a shake up.
After nearly 2 years I can now look back and see if those changes stuck and how they affected my business.
The first financial change I implemented was...
You know how there are certain author's you look forward to reading all their books...well I think Steven Pressfield's non-fiction books are up there for me. His very popular book The War of Art made a big impact on me and it is essential reading for anyone creating something new that they care about deeply - a business, a book, a work of art, etc.
Since then I've read several other books of his that expand on the concepts in The War of Art. Just finished Turning Pro and I wanted to share one of my big take-aways that relates to running a business...
I love this paint. It's the best interior water based paint I've ever used for trim and doors. It is worth the price and performs beautifully both during application and as a finished coating. It is pretty much all I ever use now for interior trim packages. That is my conclusion after 18 months of using this product regularly.
Here is what I like about it specifically...
I've been thinking lately that a transaction between a home owner and a painting contractor is a very meaningful exchange, perhaps more than most other transactions.
In a previous post I've discussed that what we, as independent painting contractors, are in the trust business. I still believe that. I still believe that what clients are looking to buy is trust - trust that you know what you are doing, that you can solve their problem effectively, that you can join the family for a couple of weeks. Home owners need to trust you with their money, access to their home, care of their valuables and assets, safety of their family members, their schedule, etc. That is a lot of trust that they are shopping for. And all that trust has a high value to them - they are willing to pay a premium to deal with a company or craftsman they have confidence in.
But I no longer believe that what we are selling is trust. We should be marketing trust, our customers should be buying trust, but that is not what we are selling - the thing that we are exchanging for money is not trust, but it is even more valuable...
This article is a guest post kindly written by Paul Denikin
Staying on top of your to-do list can feel like an endless chore. If you let things go it can lead to lowered energy efficiency and costly repairs. Use these tips to simplify fall home maintenance.
Replace furnace filters. The experts at Dummies explain that furnace air filters trap allergens and dirt. Replacing the filters routinely helps your unit run more efficiently and extends its life. Here is how to perform this easy but important task:
This article was originally posted February 15, 2015. It has been the most read post on this site so I am re-posting it in the hopes that it may help someone.
Steve Montador, aged 35, died today. He was a well liked and respected professional hockey player. News articles are indicating a possible connection to his long battle with depression.
During the pre-game skate at my weekly hockey game tonight, I noticed the sign above.
Rick Rypien died on August 15, 2011. He was one of three NHL hockey players that summer to have their life cut short due in large part to depression.
It is true that there is a strong link between concussions that many hockey players suffer and depression. Still, it got me thinking about how if such successful, talented, wealthy, physically strong men, in the prime of their lives can have such serious battles with depression, surely it can affect anyone.
Experts claim that mental health issues affect at least 20% of people. The thing with depression is that it also affects the people you have relationships with. So a lot of you are dealing with the fallout of depression...
It was a strange feeling.
Friday at 2:00 pm and I was clean, sitting quietly paying attention to a speaker, surrounded by business people from diverse fields.
Last week I took an afternoon off of the tools and spent about 5 hours at an event hosted by our local Chamber of Commerce. It featured networking opportunities, a trade show, panel discussions geared toward small business owners, talks about the local economy and some presentations to help business people to deal successfully with the many challenges they face.
It was difficult investing the time and money to attend an event that had no clear ROI. But I'm enjoying getting out of my comfort zone this year and I figures that just meeting one person, or learning and implementing one thing, could make the investment very worthwhile in the long run.
I had to create some space in my regular routine for this event. And it turned out my biggest take away from the day has to do with space...
It's been a while since I wrote a post on this blog. I've just needed a break from the blog while I focused on other things for a while. If you've stuck around, thank you very much for your patience :)
The last couple of years have been full of challenges and there is always so much to do. The over-whelm gets to me sometimes as I struggle to tread water. Just the other day as I was commuting to work it occurred to me...am I so conditioned to work and life being difficult, that I have just accepted that it has to be that way? I know it isn't constantly hard for everyone. I work for a lot of people that have a pretty sweet life. But I also know that adversity finds everyone sooner or later, in one way or another. There is no escaping it. Maybe some of us get extra practice. Anyway, this is not a woe-is-me article. My life is pretty good overall, I know that, and I have much to be grateful for.
But I'm always looking for ways to make my life easier and it usually involves some type of simplification. Simplicity is often the answer when nothing else seems to be working. Back to basics!
Just finished reading the book Born For This by one of my favourite authors, Chris Guillebeau.
It is a good read and I may do a review sometime. But I wanted to share one simple and effective tool that I learned from this book that I've been able to use with success when it comes to managing multiple tasks on a given project...
Article by Seth Murphy
Tackling home improvement projects on a house you are about to sell can seem complicated. You have to anticipate what buyers want, make your house seem as universally appealing as possible and may not have the satisfaction of using your redecorated spaces.
Nevertheless, it’s worth it. The average home improvement can increase the value of your home by 9 percent. Depending on what projects you do, you may not have to spend that much money to get your house looking in top shape. Here are the main home improvement projects you need to consider if you want to increase the value of your property...
SIMPLE > COMPLEX
TIME > MONEY
VALUE > COST
HEALTH > WEALTH
FAMILY > ENTERPRISE
PEOPLE > THINGS
FOCUS > BALANCE
STARTING > PERFECTING
FINISHING > STARTING
CHARACTER > EXPERIENCE
LIFE > RESUMÉ
TESTIMONIALS > PROMOTIONS
GIVING > GETTING
APPRECIATION > EXPECTATION
CHOICES > LUCK
Time for a short rant...
After being in this industry for 14 years full time, I still don't understand something that should be really simple - sheens, or gloss levels in paint...
There is an ancient book that many today see as merely allegorical, while others may consider it out of date. But I have found that the Bible contains business principles that are very simple to understand, practical today, and that add value to my work. Here are a few principles that have helped me confront the challenges of self employment and build a business that stands out a bit from the competition...
The choice to work for oneself, to start a business, is a choice that brings adversity into our life. As the Chief Problem Solver in our business, it is our job to face it, contain it and overcome it.
If you are going through a tough stretch, here are just a few thoughts on coping when life tries to take the shine off your apple...
On this rainy West Coast Sunday morning I'm thinking about how many contractors I have personally talked to over the years that have told me that they grew their business to sometimes 2 or 3 dozen people, only to hit a major crisis (health, family, bankruptcy, lawsuit, etc) and decide to scale back, way back, to just themselves and a helper.
Like a cool Sunday morning rain, running a small business is just more laid-back.
Small is low risk. Small is low stress. Small is manageable. Small is profitable. Small is freedom...
Many opportunities await a hard working and self-motivated young person who is interested in starting a painting business...
So a few years back I was paying for my paint when my friend and colleague Mike walked in.
And that's when it hit me.
At the time I was busy and had a closing rate of about 1/3 of my estimates. But taking one look at my friend, I realized that if I was a customer, I would hire Mike, not me. Why?...
How do you know when it is time to make a change?
There is a theory that says people generally do not change until the pain of the status quo is greater than the pain of change.
“Change happens when the pain of staying the same is greater than the pain of change.”
- Tony Robins
That is why we hear people say things like: 'getting fired was the best thing that ever happened to me'. They likely hated their job, were to afraid to leave a stable paycheque, but since the decision was made for them they were then free to move in a direction of their choosing. We change. What made us happy and brought us satisfaction at 20, becomes different at 30, or 50.
So how do you know when it is the right time to make a move if you are unhappy about an aspect of your life? Do you have to wait for someone else to make the decision for you? Do you have to wait until you just can't take it anymore and you have a breakdown? When to initiate change is something I have struggled with over the years...
I've come to love a good sandwich bar. Quick, healthy, cheap. What's not to love?
In Penticton it was Il Vecchios. On Vancouver Island, Red Barn has become a favourite.
Here's an observation. I order the same dang thing every time. Depending on who makes my wrap, it tastes different. And the service is different - sometimes friendly and sometimes rushed or indifferent.
Having your own business requires a lot of different insurances. You likely have vehicle insurance for your service truck, WCB, and liability insurance in order to get work. Outside of those basic policies, you may also have tool insurance, home insurance, health insurance, accident insurance, critical illness insurance, or life insurance. But which one is the most important insurance to carry?...
With all the heartbreaking natural disasters striking Mexico and the Caribbean this month, it got me thinking about the importance of taking small steps to prepare for the worst.
Living in Western Canada, I appreciate how quickly natural disasters can strike. Whether it was the wild fires that almost trapped the residents of Fort McMurray, the floods that instantly struck High River, Okotoks and Calgary, or the 'Big One' that the Pacific Northwest is anticipating. Living near a fault line in a subduction zone makes emergency preparedness is constant a concern. Everyone should have a Go Bag ready of course.
But I wanted to share another simple hack that can save your life in an emergency...
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: