THE COMING STORM
When I lived in Philadelphia, anytime the weatherman said it was going to snow, the region came to a halt. To prepare you went to the supermarket and loaded up on bread, eggs, and milk. God, knows we didn’t eat those items much, but it’s what you did in case you were snowed in.
Don’t Get Caught Unprepared.
There a different kind of storm coming. If you get caught and you’re not prepared, this one could really hurt.
What Could Happen
- Imagine not being able to find enough customers because of inflation.
- Imagine having to pay your employees 50% more just to keep or hire.
- Imagine a severe materials shortage.
- Imagine inflation and a recession.
Hope for the best. But prepare for the worst.
so many reasons and a few more coming down the pike. A good client of mine recently went to hire an employee he lost during covid. It was a decent position that paid $60K a year. After hiring several duds, he opted for a more experienced candidate.
The Bottom Line…. That position has gone up to over $90 K a year. Unless he raises prices, it comes straight out of the owner’s pocket. OUCH!!
It’s more important than ever to raise and sell at higher margins. If you’re reading this, you most likely own a painting business. What that means is for every dollar you make, 40 to 60% of your sales goes to pay for labor and materials. That means you have only .40 to .60 cents of every dollar to cover all the costs of running a business, and still have a net profit.
Labor is in Short Supply
Labor prices have gone up more in the last two years than in any decade since World War Two. There is a major shortage of skilled labor, due to the aging-out of the Baby Boomers. The US Department of Labor claims that for the last two decades, for every five skilled laborers leaving the trades, there has been only one new person coming in. That means hiring good workers is more competitive right now than in any time in almost the last century. To recruit, hire and keep good employees, it is going to cost you a lot more going forward.
Materials are Going Up
The trades have enjoyed a relatively very low inflation rate over the last couple of decades. As of 2021, however, that seems to be coming to an end. COVID has turned the supply chain on its head, and there are many other forces at work conspiring against you.
Manufacturing is experiencing the same labor shortage as the trades. So is transportation and logistics. All this is leading to the fact that manufacturers are having to pay more for production. They are passing the cost along to you. Then, once they get the paint and supplies made, the trucking industry can’t find a driver to get your paint to store shelves. Brushes, sprayers, and rollers manufactured in China are sitting on ships, with no dockhands to unload them.
Everything is costing you more, and raising prices is going to be the only answer. If you don’t raise your prices, gross margins will fall, and that comes directly out of your profits.
Customers Don’t Understand Why They Should Pay More
It’s already tough to convince customers to spend more on painting services. The thinking goes, “I can’t wire my own electrical services, I can’t run my own water and sewer lines, I’m not about to frame anything, but I can slap paint on a wall myself,” which is so many customers think it should be inexpensive to hire painters.
Many Low-Cost Alternatives
You’ve got college kids, handymen, siding guys, and of course everybody’s favorite, good old’ “Chuck in the Truck” or “Stan
with a Van.” These types of non-professionals are driving down prices at a time you’re facing higher prices on labor and materials. They have no employees, no insurance, no taxes, no workers comp to worry about. All this adds up to the fact that you can’t compete with them on price.
In Absence of Value, Customers Will Choose Low Price
I recently had a call from a painting contractor in Virginia. He was upset that he lost a recent estimate. It was a past customer who went with a quote that was half the price of his own $30,000 bid. There is a right way to sell that job. I have clients who close that sale all day long. But they know how to sell the value of what they offer.
The Perfect Storm
Take all the above forces at work, and combine that with estimators who are well-meaning, nice, and helpful people, but who lack real-world selling skills, and BAM! The perfect storm.
Take Action Now
- Get yourself some real sales training- (My personal favorite)
- Get your estimators sitting around the table rehearsing objections.
- Go to YouTube and start watching how to videos.
- Create a step by step selling system.
- Read My book, The Painting Contractors Guide to Doubling Sales
- Read books and have estimators talk about what they are learning in meetings.
Don’t be caught in the storm. Prepare for the worse but hope for the best!