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.

An interview with Ken Fenner, Part 2

Part 1 of this interview can be found here.

Q: What is the difference between owning a job and owning a business?

A: I define a business as a vehicle that creates steady, sustainable income. If you have passed the point of startup and have four or five years in business but still find yourself assuming all the roles in your company, you own a job. The business is you and you alone. A simple look in the mirror analysis can be done by answering one question. If there were to be an unfortunate turn of events and you could not work, would your company remain operational? Who would paint? Who would do the estimates? Sell the jobs? Would your family survive without you? It is scary to contemplate. Most of us like to think of ourselves as stronger.. more invincible than the general public. Unfortunately, fortitude cannot prevent bones from shattering if you are in a car accident. Things happen and insurance is only going to carry you so far. Every maneuver, every part of your plan should  be executed to get you away from assuming all the roles in your company.

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Q: A common complaint among painting contractors is the inability to find good help. What advice can you offer?

A: This is a difficult one, Brian. One needs to know their numbers and factor a payroll accordingly. If you can only afford a low wage, then your results are going to be predictable. Of course the wage offers no certainty of performance. One key is to refine your painting techniques for maximum efficiency and organize each task into a teachable system. Training is vital. Each worker needs to know exactly what his tasks are as soon as the truck pulls to the curb. If the leader of a crew walks into a job empty or short handed, his workers are going to do the same. The job is going to take longer and cost you more money. If instead the crew is proficient and knows what it needs to do, jobs are going to get done quicker. That frees up dollars that allow you to hire a better workforce.

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Q: Painting contractors seem to very concerned about price. Is this a legitimate concern?

A: Not nearly as much as many would believe. Here is the statistic… One of out every five people makes a purchase decision based solely upon price. That leaves 80% of the people out there looking for more than the best price on merchandise or a service. If this wasn’t true, companies like Starbucks, Mercedes or Bloomingdale’s would not exist. These are premium offering companies that are in demand. What keeps them successful is that these companies know how to market and sell  their products.

If you answer the homeowner’s concerns versus telling them what a great job you will do, you’ll get results. It is beneficial to listen to what a person is telling you during a sales estimate. Your ability to paint a straight line may pale in comparison to a mother that is looking for a paint that resists scuffs and can be easily washed. If you continuously touted your superior ability to paint you lost her because you did not address her needs. When it comes down to the part where you give her your number, the first thing out of her mouth may well be “That’s more than we wanted to spend.”  Or, you may get the delay tactic of, “I’ll talk to my husband and we’ll get back to you”. The contractor walks out the door with resentments. After all, his presentation was pristine, he showed her pictures, supplied references, therefore it had to be the price. He couldn’t be more wrong but his ego will not allow him to follow up or take ownership of his mistakes.

One thing I have witnessed over the years that amazes me is the amount of contractors that mention to me that once they raised their prices, they actually got busier. That is a predictable phenomenon. If a business is selling quality, quality, quality, then turns around because they think price is so important and offers a low or medium rate,  it triggers a red flag. You message has to be consistent.

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Q: What is the single most important skill  the owner of a painting company should possess?

A: The ability to request help. Once owners lets go of the reigns and are honest they realize they cannot do everything  themselves. This opens the door for growth and working smarter. Its wisest to check ego at the door and always do what’s best for the business. Most often this means learning to delegate as much as your budget allows.

An interview with Ken Fenner, Part 1

Ken Fenner is the owner of PressurePros, Inc and its subsidiary company, Restore-A-Deck located in Havertown, PA. Ken started PressurePros, a commercial and residential pressure washing company, in 2003. Employing union painters, an interior residential repainting division was added in 2005. While no longer performing painting services, Ken is familiar with the industry’s issues. In 2006 a company expansion was made to incorporate product sales. The Restore-A-Deck company is rapidly becoming an industry leader in the of selling high quality, eco-safe deck restoration products. Servicing several counties in Southeastern PA and having a database of nearly 800 customers, Pressure Pros, Inc has is one of the area’s leading companies providing deck restoration and pressure washing services. Ken’s formal education is in economics with a Bachelor of Science degree received from The University of PA in 1991. Ken is also a partner in CRK Holdings, a family conglomerate that operates Curves For Women and Cold Stone retail franchises. For more information on Mr. Fenner’s companies’ services or products you can visit www.pressure-pros.com or www.restore-a-deck.com.
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Q: What advice would you offer to someone thinking of opening a paint contracting business?

A: Start your business with a plan. There are many aspects to owning a successful business outside of knowing how to paint or having a strong work ethic. Two of the most important things to address in a business plan are defining the job roles for a smooth operation and formulating a plan to make the phone ring.

In the beginning, a business owner will have more time than money so he or she will wear the hats of marketing expert, estimator, salesman, laborer and secretary. There is nothing wrong with this as it will give the new owner a true understanding of each role in the company and allow him to make educated decisions as his company moves forward and he focuses on making the business more profitable. Some forethought has to be put into hanging a shingle that reads “Painter For Hire”. There is only so long before someone assuming all the roles I listed above realizes that their time is being under compensated. By defining and analyzing each role in the company, an owner can have a standard of criteria to begin hiring qualified employees as his or her profits increase. Its important to understand personal limitations and not get caught in a conundrum of “nobody can paint as well as I can.” If a person comes to the realization that business management is not his forte then he may need to consider the need to hire someone to do the marketing and promotion of the business. It comes down about taking your strengths and capitalizing on them and surrounding yourself with a strong team to support your weaknesses. Every maneuver made during the startup phase should be geared towards that end.
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Q: A frequent question on many contractor forums goes something like: “What form of advertising works best?” What type of advertising do you think works best?

A: This leads perfectly into my second criteria for success, making the phone ring. No one is going to start off with a customer database. The business is new, therefore it has no credibility in the marketplace. To begin building that consumer confidence that turns into sales one should approach marketing as a whole versus focusing on any single form of advertising. If you speak to any contractor he will tell you exactly what doesn’t work. Unfortunately, many forms of legitimate advertising get a bad reputation via this word of mouth. Often, when I inquire further, the pundits disclaiming a certain media’s failure to generate leads comes down to poor execution and tracking. Placing a single ad in the classified section is not going to generate enough leads to build a six week book. When looking at the ROI (return on investment) at that particular form of advertising, I find that it yields a good return. Its very important to ask the customer “How did you hear about us” and document the replies. Different things work for different areas. It takes a bit of fine tuning to get together the best forms of advertising that makes people respond.
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Q: There are a lot of choices when it comes to marketing. How does a contractor avoid getting his message spread too thin?

A: I prefer to break down my marketing campaign into smaller, digestible areas. This is how someone on a budget can become a dominant force in an area. Your marketing should be based upon people seeing your message multiple times. The first thing that tops my list is to make sure the right people are hearing my message. If I were targeting higher end residential work, having people living on a fixed income would likely not get me the type of leads I would want to spend time upon. I like to utilize direct mail to generate these types of leads. There are services that offer very specific mailing lists to insure you are targeting people that can both afford your service and demand the quality you offer.

Once you begin performing jobs in the right demographic area, the ball begins rolling. Soon your yard signs, door hangars, flyers, direct mailings, and newspaper ads begin having a collective effect. Your name gets known within a defined demographic area. Statistically speaking, people may need to see your name seven times before there is enough built in credibility that will create an action on their part. If a new company sends out 10,000 post cards there is usually little left in the budget for subsequent advertising. I feel this is a huge mistake many contractors make. I have had much greater success sending out my message to 2000 people five separate times. Not only do I generate more overall leads than one mass mailing, Towards the end of my campaign my close ratio increases. People already trust me before I walk through their door.
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Q: A lot of contractors think that referrals are the best form of advertising. Do you agree?

A: That can depend upon where the contractor is in his time line. Since we are discussing startup companies, the answer is no. There is a common misconception that just doing a fantastic job insures people will refer your company. That is just not the case. A painting job could have been done to near perfection but the homeowner may not have liked the overall process as much as the contractor may have thought. We are dealing with people and real people have emotional hot buttons. If the work was sold as nothing more than a paint job, even if it was performed well there is no emotional attachment. It was a paint job, nothing more, nothing less. There is no incentive for Mr. and Mrs. Jones to run and share your company name at their next social gathering. The reality is… they won’t.