We say yes. Sure, we all have sharper pencils today than we did 5 or 7 years ago. Alot of the (would be) competition has become pretty adroit – or sloppy -at figuring out where to compromise product and process to make lower numbers work. Some will even tell you that they make more money on lower prices now than they did on less competitive numbers in the past. And that may well be true.
But…what can you cut? Go to lower grade materials and you will likely pay for it on the labor end as well as the risk in quality variation. That’s not a chance I’m prepared to take. The whole material argument is a bit silly, as we all know that materials are typically at most 15% of the cost of our projects. I have always felt that if trimming a couple of bucks off a gallon of paint was critical to my ability to land work, then I would be better served to market better and learn to sell at a higher price. Of course, you have to build a good company and be able to deliver your service time after time to pull it all together.
So, it’s the other 85% where gains are made. The biggest chunk of that 85% would be labor, in most cases. We are in a labor intensive business. If you are thinking about hiring lower paid workers, that is not the answer. You will pay for it in the babysitting service you have to launch. The other big chunk in there would be your overhead and operating costs. Alot of that is out of our control. And it can be a diminishing return to try and chase down cost cuts in those areas.
The gaping hole, as I hear it from most contractors, is in field labor and operational efficiency. This is one big tangled web, because it ties into hiring the right people, training them, supervising them and creating a culture of accountability within your business. It means creating a company where people know that if they work hard and do good work, it will be recognized, rewarded, and that there will be opportunity for advancement. No one wants to be your helper. The good news is that this part of our business is completely within our control. It just takes time and energy to build.
On the business side, estimating has to be accurate. Fortunately, many of us who are still growing businesses have avoided the race to the bottom of the barrel that is square foot pricing. It never made much sense, and makes even less these days.
In my business, this year has been all about dismantling our existing systems, keeping what works in product and process, and bringing in new technologies and training to obliterate our previous production rates in areas we felt time sucking. It is scary to do this, and there is a bit of a transition involved. The results are undeniable, and the numbers in the end reflect it and encourage us to do more with it. As above, a scrubdown involves all aspects of the business. It should be carefully thought and executed. We started on smaller projects with system tweaking and gradually implemented change into larger projects with the goal of 3-6 month full integration of new and modified systems, particularly directed at our custom interior program.
We are heading into the fourth quarter of 2011. It’s “go time” for bringing in the strongest finish possible to the year, while looking ahead at next year. For many of us, this is the tail end of peak season, which is the perfect time for a strong finish.
I know you have all been terribly busy this year, keeping all the gears turning. So, please take a moment to throw down a comment. Whats new?
19 thoughts on “Is Quality Still Possible in This Economy?”
Scott, you and I were obviously thinking along the same lines today. Perfect compliment to my article. I will be sharing this for sure.
That doesn’t surprise me, and it does please me, when more and more of us are looking at the half full glass the same way. I read your link after posting mine and had the same thought. Cheers!
Great post, every time I hear complaints about increases in materials, I wonder the same things! Why don’t we spend more time analyzing our labor processes?!
Because it is easier to blame forces out of our control than to take an honest and objective look at the internal matters that are 100% in our control. Counterintuitive, hey?
Great article Scott (i’ll be reading yours next Heidi!).
I too have found that improving systems was the best place to cut costs. Finding faster (rather, more efficient) ways to accomplish tasks, shedding unnecessary overhead expenses, and in some cases increasing my material costs (better materials) to shave labor costs (better materials = saved time).
Of the very few good things that have come out of the last few years, being forced to streamline processes and improve efficiency to remain competitive has certainly been one of them. And it will be a major competitive advantage when things turn around in the future!
Thanks, Alec. Btw, I am really glad you are involved in this blog site. On the topic at hand, yes, I wish more paint contractors looked at it objectively and improved on things they have control of, rather than complaining about things out of their control. It becomes a self defeating, self fulfilling prophecy. Its a shame that some in our industry take a “poor me” attitude. We all have the same opportunities. And those include taking advantage of all available resources, like blogging and social media. Remarkable that so many aren’t getting these concepts and making connections to improve.
Wow, I didn’t even know about this blog,can I join?
Hey Scott you are right, we don’t want to give license to those that want to find excuses for not being a success in business. We need to think every day what we can do differently, Maybe thinking out side of the box just might be what we need, maybe not, but we need to think about it.
Couldnt agree more, John! And as far as this site goes, some chick in Utah is the admin. 🙂
Hey John, it’s Chris (RCP)! Love to have you on board, check the Submit an Article page and contact me!
I have been bidding them as always, and running super lean for over four years now. That means I am working a lot more hours than I like, and making sure when my full time, and part time guys are there they are producing without any holdups.
I will say I have more work now than I have had in years at the rates I need to be charging. Just have to be as efficient as possible when your guys are on the clock.
Nice read Scott.
I think quality is a must in this economy. My last two customer introductions were homeowners that bought a house 5 – 7 years ago. They did not know each other, yet both had the same thing to say which was something along the lines of having been so excited to have a new place prior to the housing bubble, they never bothered to notice the details from the painter until they were settled in. It seems to me now more than ever customers are looking for quality if they could only find someone to care enough to provide it. Whether it be painting, auto detailing, landscaping, going to a restaurant. Quality in service will be a defining element of endurance. So, yes, it is not only possible but, like your article mentioned, if quality and systems management is not given focus in every aspect of a company lack of quality will be the reason a valuable potential customer is now looking elsewhere.
Absolutely John, and painting contractors who focus on efficient ways to deliver that quality and build a viable business will be around for years to come, hopefully soon we will outnumber the “lowest price fly by nighters!”
Well put, John. I like the term “defining element of endurance”.
You can absolutely use sq ft pricing for any and all painting. Just so long as its your production rates it will and does work. Len Fife gave many a good seminar about using sq ft /production rate estimating.
As for quality work in this economy, we give the customer what they are paying us for.
We do not give a Cadillac paint job for a Volkswagen price. No matter what kind of painting we do we always make sure its neat, professional and branded by THINKPAINTING.
i agree that times are certainly different for this industry. I will not go to a lower grade paint to cut costs, absolutely not. I need a good quality paint so my work stands up for many years to come. I take great pride doing an excellent paint job for clients, something to be proud of.
Something to be proud of indeed.