An Interview with Scott Burt

Scott Burt owns and operates Topcoat Finishes, Inc, a small custom paint company serving homeowners, homebuilders and design professionals in Vermont. Topcoat has a particularly strong track record in custom new construction painting, with projects appearing in national publications such as Taunton’s Fine Woodworking, Architectural Digest, and Builder/Architect magazine over the years. With a B.A. in English and an M.A. in Education, Scott enjoys blending his literary passion and professional knowledge into articles about paint products and processes for both local and national publication. Scott is a Senior Editor for American Painting Contractor magazine. To learn more about Scott and Topcoat Finishes, visit www.topcoatfinishes.com.

NOTE: This interview was conducted several years ago.

Q: A lot of painting contractors think that there is little money to be made in new construction. What do you do differently from other contractors in new construction?

A: First, its critical to carefully select the contractor you work with. Make sure its a reputable company. I usually find out who their other trade subs are and ask them. Second, presenting a detailed contract is very important. You have to spell out the scope of work, but also be clear about what is not included. Establishing a relationship based on two-way honest financial disclosure does work. Then, if the first job goes well, you work on retention.

Sometimes contractors, like any sub trade, get lumped together as generally bad to deal with. Bad ones are bad, and good ones are great. Its similar to paint companies, when there are so many bad ones, it is really easy to identify the good. I think where its a problem is when painter companies are not selective enough. In general, quality finds quality.

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Q: How do you select the contractors you will work for? What does that process look like?

A: I rarely seek them out. Often times, they are referred to us by other sub trade business owners who we currently work with on jobs for contractors from our existing base. Other times, a contractor that we already work for will refer another similar level contractor to us. If a trusted colleague refers us, that works well. When the initial referral is made, the new contractor will contact me, or vice versa. We have an initial meeting where both companies discuss what each desires in a relationship. They usually come to us after many years of dissatisfaction with painters they have used, and skepticism of the paint trade in general. Its refreshing when they hear about our company. This all happens before we even break out a set of plans and talk project specifics. Its a case where you believe in what you are offering and enjoy the challenge of demonstrating exceptional service. And it is more about service, the experience, than it is about quality craftsmanship. The painters that worked for these guys previously could do a good job, they just couldn’t manage a large budget accurately and handle the business relationship.

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Q: Could you give an example of how your company’s service differs?

A: Primarily, and this sounds ridiculously simple, having a solid business model in place is a method of differentiation for paint companies. Many times, the painters we replace are great technicians with no business model or even an entity in place. The better contractors prefer dealing with a professional paint company that has a reliable workforce with payroll, extensive insurance and tangible resources that go far beyond a couple of guys who can paint really well. That comes with a confidence that when I estimate for them, the numbers are based on something more sophisticated than what I think it ought to cost to paint a big house. There is a sense of security associated with that. They know they will get accurate pricing forecasts and financial tracking throughout the project. And of course. excellent product and service. Finally, our company will be around in the future to back it up. That is worth a bit more initial investment in a paint company.

Listening to what contractors need from a paint company is key to continuing to improve service. Offering wider ranges of service, beyond interior and exterior, makes for a more valuable company. When you can prove that value in the field, it translates to the bottom line. As an example, pre-finishing, whether onsite or off, has been one service that has made our field operation much more efficient. So, over the past 5 years I have constantly looked for ways to play to that strength and improve that offering. When you differentiate, you can position yourself so far ahead of the curve that even if your competition tried to jump on the bandwagon, your service is advanced and refined to the point that any other would look crude to the customer.

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Q: Are there different skills required for new construction versus repaints?

A: In our experience, yes. We paint large new homes when they are built. Sometimes one job will be going on over the course of two years or more. For me, the ability to look at the project as a whole is critical. There are a lot of variables involved, especially when there are 12 other trades with similar scopes of work happening during the same timeframe. That part of it involves fostering good cooperative relationships with the other subs. We are able to help each other out a lot.

In terms of the actual paint work, because everything is new, there is a lot more time spent on initial prep such as filling nail holes, priming, caulking, in between coat sanding, etc. Sometimes our painters will spend weeks prepping several rooms for paint. I think both new construction and repaints require diverse skill sets.

The difference, as it applies to paint companies working for contractors, is that there is a much larger picture happening compared to repainting for a homeowner. The contractor is your customer and they have a lot of other people working for them at the same time. The type of communication and relationship maintenance are different because, while the contractor is your customer, the architect might be their customer and the homeowner is the client of the architect. And sometimes, the homeowner brings their own interior decorator on board. There are more layers in the communication process, so you have to be thinking weeks in advance to make sure you are asking for information in a timely manner. You cant expect the GC to have your answers, you have to be proactive and educate the GC about what you need, and when, to be sure that the process is in motion at all times. When a paint company owner/operator tries to sling paint for 40 hours and do all of the above, it is really difficult to do it all well, so they defer to the paint slinging because it is easier…the comfort zone. Communication suffers and the slippery slope is on.

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Q: I can see where communications would really suffer for the guy who is in the bucket. Any tips on what he could do to improve the communications?

A: I came to the conclusion, and it took a long time, that to try to paint 40 hours and run the business on the side is an exercise in frustration – not just for me, but for the contractor. It is better to at least start with a 50-50 split. You have to be surrounded by a strong team with systems and processes in place to assure consistency and accountability. Transitioning out of the bucket requires a presence even when not “in the bucket”. When I am not on the job, I am in constant communication with my crew and the builder about the job, several times daily. I do a lot more exchange of information with builders by computer than ever.

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Q: We’ve all played the game “telephone”, where a statement is relayed around the room and by the end it is something completely different. When you are not on the job, how do you make sure the information you are relaying is correctly understood?

A: It depends who the information is going to. Flow of information to my crew is flawless. It happens each morning and several times per day by telephone. With contractors, by doing as much as possible with email and file attachments, there is less room for error than phone conversations and scribbled notes. It is to the point, for instance, where the builder receives paint color and spec info in email from the architect, forwards it to me by email, and I can forward the same email directly to my supplier to begin the paint mixing. That limits the error margin and makes it easy to document when the homeowner shows up and says “that’s not the color I asked for.”

On the operations side, the painter (s) in charge need to know the exact scope of work, what’s included and what’s not. There are always items that I suspect may pop up and I give my crew a heads up about those items and remind them to contact me directly when it happens. Its my job to anticipate change, and communicate with my crew so that we are closely following the agreed upon scope. Changes have to be tracked carefully. It’s in everyone’s best interest.

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Q: I can imagine a situation where the GC tells you one thing, the home owner another, and the decorator a third thing. How do you avoid getting caught in the middle of such situations?

A: Chain of command. The classic, and most dangerous, is the wife telling you one thing and the husband telling you another about colors, details etc. Nothing is done without clearing it through the GC. The GC cuts our checks. If I am not there, and someone other than me requests something, my crew calls me immediately and I call the GC. When you go outside that chain, you do so at your own risk. If the homeowner or decorator requests something outside the scope of work, it requires a change order. If we do the work without an approved change order in place, we may have a hard time getting paid. Change orders are documented with the weekly billing.

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Q: Sometimes relationships, despite the best intentions, are not a good fit. In the middle of a project, what are some signs of an unsuccessful relationship with a general contractor? How do you handle it?

A: On the business side, I watch cash flow. For the first few weeks, there is the honeymoon period where bills are being paid quickly and consistently. I watch for changes in receivable patterns and address them immediately. You also can monitor changes in the quality of communication with the contractor. I have in the past had to drive to a contractors house to get a check that was late in coming. That is not a good sign.

Just as it is our responsibility to educate the contractor about our needs, it is the contractor’s responsibility to pass that education on to the architect and homeowner. I try to keep it a bottom to top process. When bad ideas are handed down from the top, and you have no influence as the paint expert in the chain, that is not a good sign.

On the operations side, if our finishes are willfully compromised by the actions of the contractor, in terms of how they are using other sub trades in wet paint areas, that is something to address immediately. Rework, in this case, will be an extra charge and they need to be reminded of that. If they instantly accommodate and change for you, that’s good. If they choose to operate that way and not pay you for rework, not so good.

Questionable contractors will pull out lots of parlor tricks to entice you to do free work. If they are holding 30 days of payment on you, their influence can be considerable. On top of that, you may be told that if you take care of this situation at your own expense, they can guarantee you the next three houses that they have lined up. That is not a road to go down. It doesn’t get better. So, the best you can do when it starts to sour, is revert to your contract, follow it to the letter, complete your professional responsibilities, be sure to get paid, and move on. Then, revisit your contract and add in any new terms that need to be emphasized based on the bad experience.

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Q: You’ve mentioned that you do a fair amount of work on a time and material basis. I’m not a big fan of T&M as you know. Why do you choose that pricing method at times?

A: When we create our initial budget, we have a large set of plans and that is it. The trim scheme is not confirmed and colors are months away. As this information comes in, the preliminary budget is adjusted to reflect the new information. We knowingly price an incomplete scope initially and it is constantly changing from start to finish. The time and materials format is set in a way to allow for our target profit margin. And with weekly billing cycles, I don’t have to figure out percentage of completion, which would be ridiculously small and difficult to demonstrate.

I tell contractors that if they can guarantee us 4 months in the house with no other trades and everything ready to paint, I will commit to a fixed price. We know our unit costs, production rates, costs and overhead well enough to be able to do it in a vacuum. Large scale custom new construction is more like a circus of subs than a vacuum. Schedule realities do not allow for them to take me up on that suggestion.

In our case, it’s the most responsible approach. For smaller residential repaints, I am not a fan of t&m either.

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Q: How do you avoid some of the problems—such as disputes over time—that can arise from T & M?

A: When working t&m, I bill weekly. Time cards are in on Friday afternoon and I email the invoice on Monday morning. If there is a question, my employees can quickly tell me what happened, so it is easy to track. Also, there is never a large sum of outstanding receivable out there, and cash flow is constant. You are much more likely to be questioned over 30 days worth of time and materials than 5. It is very rare that there is ever a question. In fact, the builders appreciate the fact that it is consistent and predictable.

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Q: You work in a more rural market. What challenges does this present and how do you overcome them?

A: Logistically it can be a challenge. Most of our work is almost an hour from the towns where myself and my crew live. We have trucks on the road daily, so its become more of a priority to carpool when possible and to cluster smaller jobs closer together during the same time frame. Last week, we had two projects happening right next door to each other. I hope to see more of that.

Marketing-wise, a lot of our work is repeat contractor business and, as above, requires a different kind of marketing that is more geared to relationship building. Most of our contractors are physically located up to an hour from us, so a lot of effort goes into constant email and phone contact by me with them, whether we are working on a project or not.

Also, because it is a rural market with a tenuous local and national economy right now, I have been more focused than ever on putting together a marketing campaign to target other markets than the new construction. I have learned a lot about marketing strategy through the Out of the Bucket manual and other resources. I have been, over the past few months, preparing a few different ideas to put into action this spring. Its critical in any market, but especially in a rural market, to have a solid plan B in place. So, I am expanding all of my little plan B’s! Planned growth strategy.

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Q: Perhaps I’m wrong, but it seems like it might be easier to develop name recognition in a rural market. Is this true?

A: Its all in the marketing. I have gotten a lot smarter about putting our name and website in more and more places to keep it out there consistently. Like in any market, there are a lot of one man shows and small operations here that are “Joe Smith Painter”, and many of them do excellent work. A colleague of mine was telling me about a house he estimated recently and the previous painter had done a great job with Satin Impervo. He asked who the previous painter was, and the homeowner couldn’t remember the painter’s name. That could happen in any market.

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Q: If I’m understanding you correctly, you’re looking to expand your repaint business. Since that requires a different skill set than new construction, how do you handle this?

A: I think any paint company would be well-advised to be as diverse as possible in a sluggish economy. Our ratio of new construction to repaints had been out of balance for a while. As part of learning my numbers better, I began to analyze each market and approach a better balance. I have learned a lot by communicating with repaint specialists through online forums like Painttalk. The repaint business is deceptively complex.

The business side of repaints, in terms of marketing and lead generation is very different from new construction. So I have been enjoying the challenge of putting a new marketing model in place and not relying on word of mouth and referrals so much for repaint work. Its better for my business as a whole, and consistent with our growth goals.

The field aspect of it is different as well, and further makes the case for being more out of the bucket, because the jobs are generally smaller and require efficient systems in place for operations in the field. Repaints require much more frequent estimating and careful scheduling. Communication with the customer is important here too, as well as educating them. Repaint customers are usually more appreciative of our services, and that is rewarding. Its a refreshing change on both fronts, for the paint crew and for me as the owner.

That can’t be done

It is very easy to find people who say that it can’t be done, no matter what “it” is. Propose some idea and you can find no shortage of people telling you that it is impossible. If you surround yourself with naysayers it will eventually have an impact on you. You cannot listen to continual negativity without some of it rubbing off.

There are those who say that you can’t make much money as a contractor. Or, you cannot advertise successfully in the yellow pages. Or, you can’t find good help. Or, you can’t find customers willing to pay decent prices. And the list goes on.

I have recently experienced this. For several years I have thought of investing in real estate, and last summer decided to do so. I was, and remain, well aware of all of the horror stories regarding rental real estate. But as I investigated real estate I realized that nearly half of all housing is rental and almost all commercial property is rental. If rental real estate is such a bad thing, why are so many people involved?

So rather than listen to the naysayers, I sought out those who are successfully investing in rental real estate. I joined a mentoring group. I attend workshops and seminars. I subscribe to newsletters. I talk to people. In other words, rather than listen to those who say that it can’t be done, I chose to listen to those who are doing it.

Nothing will be successful if you approach it improperly. Invariably, those who say that real estate is horrible either: 1. Have never invested in real estate; or 2. Did it all wrong.

Having developed a network of successful investors to serve as mentors, I have avoided many mistakes common to new investors. I have developed systems to locate properties well under their market value. I have developed systems for locating and screening tenants. I have developed systems for keeping the properties maintained with virtually no effort or personal expense.

Even better, I have learned how to buy properties without spending a single penny of my own money. Indeed, I did so yesterday.

I don’t say this to brag, but to demonstrate that it is possible to start a new business and do well, even when others say that it can’t be done. It is possible to build a thriving business even when others are trying to fill your head with negative thoughts. Rather than listen to the naysayers, try listening to those who are proving them wrong–those who are actually doing what supposedly isn’t possible.

How is that working for you?

I seldom watch Dr. Phil, but I do like a line that he has made famous—“How is that working for you?” The basic idea is that if you are doing something that isn’t working out well, maybe you should try something different. We can usually see when someone else is spinning his wheels, but recognizing the same behavior in ourselves can be more difficult.

The proof, as they say, is in the pudding. Are you getting the results that you want? If the answer is no, then you need to re-evaluate your actions. And more importantly, you need to re-evaluate your thinking.

Ultimately, our ideas determine our actions. What we think determines what we do. If we don’t change our thinking, we can’t change our actions.

For example, I once was consulting a contractor who was having trouble generating leads. “I’m doing retention and proximity marketing,” he said, “but I’m not getting enough leads. I’m running out of marketing money.” I suggested that he do door hangers, which he did. But he didn’t follow my advice completely.

When I suggested door hangers, I meant (and said) that he should hand them out himself. He was sitting at home waiting for the phone to ring. Instead of spending the day twiddling his thumbs, he should have been pounding the pavement. However, he found it easier to hire someone else to do this, at a cost that quickly depleted his remaining marketing funds.

This particular contractor refused to question his own thinking. He believed that doing door hangers was a different approach to his problem, but in fact it wasn’t. He believed that throwing money at a problem was the solution, and so he continued to throw money around, even as it dwindled. He didn’t change his actions because fundamentally he didn’t change his thinking. And as a consequence, he continued to get the same results.

Systems vs. a system

Recently I have received criticism on Paint Talk. The criticisms have varied somewhat in their content and focus, but they essentially come down to this: If my system is so great, then why do I spend time trying to sell it rather than simply implementing it in my business.

This is a legitimate question. However, it is a misrepresentation of what I sell and what I hope to accomplish with Out of the Bucket. I am not selling a system; I am selling the concept of systems. There is a world of difference.

I do not purport to have all of the answers in regard to the details of operating a painting business. However, I will claim that, no matter what type of business you have, no matter what kind of market you serve, no matter your ambitions, systems will help you.

Certainly, the materials I sell and the advice I offer are based on my systems. I don’t know any other systems. I offer, as a way to illustrate the benefits of systems, the particular processes and procedures that I have developed for my business. I am not so naive as to believe that my way is the only way. I am not even convinced that it is the best way, which is why I continue to participate in forums, read books, and try to learn.

If I offer specific advice to a problem, it can only be based on my experiences. I cannot offer advice based on experience I do not have. If I explain how I deal with a particular issue or problem, it is because I have found that that approach is usually successful. It would be dishonest to offer advice that I have found doesn’t work.

I won’t respond to these critics on Paint Talk because it only fans the flames. Further, I do not care to spend the time to correct their misconceptions. If they read my posts carefully, they would realize that I have never pushed “my system”–I have advocated for systems in general. And I will continue to do so.

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