What Types of Painting Jobs Create the Highest Return on Investment?

What types of painting projects and jobs create the highest return on investment for painting contractors? It’s more or less a question I’ve been asked hundreds and hundreds of times, sometimes it’s phrased a different way, “Brandon, what type of work should I be doing?” I understand what you’re saying when you say that. I frequently hear from painting contractors that they are struggling to earn as much as they’d like despite working long hours week in and week out. The good news is that there are indeed ways to increase your profits without adding more work or more workers.  Let’s dig into the types of projects that help you make the most money, not only in the short term but in the long term, and talk about which areas you probably want to avoid in your painting business.

Beware of New Construction Projects

First off, new construction’s bad. There’s just not another way to say it. And when I talk about new construction, it’s not because I have a bee in my bonnet about it, or I have some kind of prejudice about new construction, it’s because I’ve conducted business assessments over 2000-hours long and I’ve talked to a lot of new construction and repaint contractors. And new construction is awful. High risk, low gross margins, slow pay, lots of administrative overhead, tons of inconveniences to your schedule, managing other trades.

So why are so many people in it? Well, it’s simple. When someone brings you a client, puts together your schedule, and lays out the scope of work, they have done a large portion of what a business owner typically does himself. So once you give the GC or abdicate your responsibility to market, sell, schedule, and in many cases manage a project, you’re not bringing as much value to the client as you would in a repaint environment, so, therefore, you get paid less. One rule of thumb is that if someone is forcing a bid on you, or if someone is marketing to you to bid something, that means that you’re in the reverse situation that you should be.

The Most Profitable Clients are the Ones You Have to Find

The clients that are profitable and that are great are the ones where you’re trying to find them. Now, it does mean you have to take on sales and marketing and management responsibilities that you typically don’t in new construction, but you get paid more for it. So that market is bad simply because most contractors don’t realize that when you do that type of work, you’re not going to get paid for a certain amount of value because you’re not bringing it, the GC’s bringing it to the table. And what’s worse than all of that is really the fact that in new construction, there’s no equity, meaning you don’t own the client relationship. There are no recurring transactions with that client and it makes your painting business less stable, less predictable. There’s not a future stream of revenue that can be generated through reactivation and retention processes for clients. And if you decide to go sell your business, there’s really nothing to sell because you don’t even have a book of clients. And often people don’t put the processes and procedures in place to make their business sellable. So new construction is bad, just generally speaking. Of the hundred people that I’ve talked to that are in new construction every year, I probably speak with five or six that have found a niche that are super well organized that are making really good profits out of it. Everybody else is struggling. And often they face the risk of bankruptcy or nonpayment of when a GC or even a developer folds. So it’s just really risky, takes a lot of operational overhead, and somebody else controls your schedule. You’re in there with a bunch of other trades. For all those reasons and more, it’s not a very profitable niche.

Focus Your Attention on Residential Repaints

So then what’s that leave? Repaints. To me, the most profitable market on the residential repaint side are just middle, upper end, what you’d call, I guess, upper-middle-class homes. I love them because the clients have disposable income, but they’re not in that elite level that constantly requires a lot of individualized attention, and they typically don’t pick your jobs apart. And the level of craftsmanship they want is not in the category of what super-elite homeowners with multimillion-dollar homes or the top 2% to 3% of your entire residential market would want, which means you can run a business with pretty skilled painters, but not master craftsmen. And also means that your attention to detail can be reduced. And that as long as you give a pretty good paint job with above-average customer service, people are going to be happy and come back again and again.

What About the Commercial Repaint Side?

Well, obviously there’s some things you should avoid. Apartment repaints, a low-end residential that’s facilitated through some kind of other business entity. Those things are terrible. Low margins, commoditization, just not really worth doing. What I like to really teach our guys to focus on and I think you should do this too, is going after the commercial property managers in your area. Those are individuals that manage strip centers, that manage Class A office space, warehouses, different types of even sometimes manufacturing, and industrial facilities. Could be people that manage the property for chain stores that are distributed in a region. Those companies that are basically paid to facilitate the maintenance of buildings, and they’re a separate entity.

The other group that’s awesome to go after in that market are commercial facility and maintenance managers, and those are people employed by your area’s largest employers, assisted living facilities, hospitals, universities, private schools, medical offices, you name it. Whenever you go and find those people, yes, you have to learn how to market and how to sell and how to retain those prospects and outbound marketing communication and with what I call major account selling. But once you get one, they’re very difficult to lose. They typically don’t price shock you. The transaction sizes ended up being larger overall, and you can build a stable of these types of clients.

So, Let’s Recap

New construction is bad. Okay? Don’t get into it in any variety. 99.9% of all buildings are out of the ground. Just go paint those. They’re safer and more profitable and there’s equity. And if you’re going to do residential, I really think that you should focus on upper-middle-class homes that are really easy to paint and that do not require large amounts of expertise and skill in your crews. And then finally, when it goes to commercial, make sure that those property managers, facility managers, and maintenance managers are actually in environments where they are managing healthy, profitable businesses and niches that make money and you’ll do just fine. And, you’ll have equity and recurring income, which is really what everybody’s after.