Tuesday, June 25, 2024
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Lessons on Expansion

The do’s and don’ts of adding new service lines to your painting operation

By Diane Walsh, VP of Market & Channel Development for Shurtape Technologies, LLC, makers of FrogTape® brand Painter’s Tape

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When considering adding any new service line to your operation, arm yourself with as much information as possible to help guide your strategy.

The goal of any business is growth. In the painting industry, growth often means increased volume and higher profit margins. But diversifying your business by adding new service offerings can offer even more growth potential in untapped markets. Anything from specialized painting to power washing to drywall installation can provide a valuable add-on service for both you and your customer base.

But missteps in the process of adding a new line of service to your operation can lead to more significant problems down the line. Launching too quickly or without enough planning can leave you open to financial struggles, staff burnout, culture problems or legal liabilities. 

Here are six best practices to consider when starting a new service line. 

Go with what you know

For starters, when you launch an additional line of service, it should be compatible with and complementary to your existing primary service offering. If production painting is your focus, expand to kitchen cabinets. If you offer power washing, deck refinishing is a natural extension. Drywall work and other light carpentry is a natural complement to painting work in general.

Parker Smith operates Smith & Company Painting, a business that his father founded in McMinnville, OR, in 1960 as a residential painting operation. The business built its name on quality work and superior customer service.

 “That kind of reputation builds exposure,” says Smith, “and helps us achieve repeat business.”

But the company also eventually grew by expanding into related service lines beyond painting—concrete floor coating, masonry sealing and waterproofing, high adhesive coatings for fiberglass and PVC and more. These additional services brought Smith & Company success with a broader customer base in corners of the market where painting alone may not suffice, like industrial warehouses, medical centers and kennel facilities.

Adding a new line of work that’s similar to or related to existing work can help ensure there won’t be mission drift from your core business. It will also enable you to beta test new offerings with minimal investments of existing equipment and labor and without having to fully commit to a new service line.

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Cabinet refinishing provides a complementary service offering to interior and exterior painting work.

Understand your market

Don’t attempt to sell customers on a service they don’t need. Take time to do some market research and learn what needs aren’t being served (or are being served poorly) in your locality and respond to the market. Find out how much competition you have—and what the quality of that competition is. Social media will give you a general idea, as will Google and Yelp reviews. But drill down even further with searches on home repair sites that link homeowners up with tradespeople—there are many, but Angie’s List, HomeAdvisor and Houzz are a few of the more popular sites. And if you eventually choose to use those sites to market your own services, you’ll have insight into what your customers’ contractor search experiences are like.

Assess your needs, consider your risks

Once you’ve landed on a service line that makes sense for your business and market, it’s time to ask yourself some tough questions, some for which you might not yet have answers. Those could include:

  • What kind of budgetary resources will be required to launch the new service? 
  • Do you possess those resources, or will you need to seek outside funding for it?
  • Do you currently have enough staff to cover the potential increase in workload? 
  • Do you have the right staff for the new kind of work?
  • Will skills training be required, and where can you find it?
  • Will the new service require your business to obtain any necessary licensing or certification from your state or municipality?
  • How will you market the new service, and what are the costs associated with it?
  • What are the ramifications if the new service fails?

Answering these questions honestly and as completely as possible will give you better understanding of the potential success of a new service offering and whether it’s worth pursuing.

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Gauge the potential and risk of any new service line by asking tough business questions and answering honestly.

Proceed methodically 

Business owners are entrepreneurial by nature. And entrepreneurs have a tendency to pursue new ideas quickly and with lofty goals. In the painting world, however, budgets and staff often run lean and fluctuate seasonally, so going too big too quickly can kill a new idea before it has a chance to really get off the ground or even negatively impact your core business. 

It’s best to add new service lines strategically, one at a time, to avoid stretching your staff and your capital resources too quickly in pursuit of new profits. 

“When you break it down to its core component, growth is about hitting revenue goals,” says Kevin Nolan, owner of Nolan Painting, a Philadelphia area contractor who has been in business since 1979. “But strong revenue is more a byproduct of investing in your people than looking at your bottom line all the time—empower your people who can then empower your business.” 

When growing into new services, it’s best to test out them out with existing staff and current customers before fully committing to those services. This will keep the pace manageable for your employees, offer an early indication of the strengths and weaknesses in the idea and give you an opportunity to make budgetary adjustments and invest in staff training, if needed.

Resolve pricing

Determining a fair market price for a service that’s also profitable and propagates new demand is one of the most challenging aspects of running a small business. The expenses of a service are often more subjective than those of a product, and if your service is specialized enough, you may not have any local pricing for reference or comparison. When determining the cost of your new service, your basic formula should take into account the following:

  • Direct costs (materials and labor for this specific service) 
  • Indirect costs (investments in new equipment, upkeep of gear, insurance, licensing and marketing)
  • Competitor pricing 
  • General perceived value of the service in your region
  • Your target profit margin

Also, to help spur new business early, you might consider offering a special or lower introductory rate for customers willing to take a risk on you. And a special price offer has marketing benefits: Because consumers pay more attention to advertisements with discounts, a special rate will give your initial marketing efforts an extra pop. 

Market, market, market

Some of the most unfortunate missteps in the world of small business stem simply from a lack of customer awareness. Because small business capital is predominantly allocated to staffing and operations, there’s often little left over for marketing initiatives. That’s just as true of the painting industry as it is for any industry populated by many small businesses. But the path to new customers begins with awareness, so it’s critical to dedicate some resources to getting word out about your new service—especially because the service is too new for you to rely on word-of-mouth recommendations from existing customers.

That said, marketing costs don’t have to be exorbitant. On the digital front, you can get a lot of bang for your buck out of Facebook for Business ads and targeted Google ads. Additionally, advertise your new service by investing in signage for lawns and your work vehicles, as well as door hangers for neighborhoods where you’re already working. However you choose to do it, make sure you take some steps to raise awareness and generate new leads. Your new service line could greatly benefit customers in your area, but it’s useless to them if they don’t know it exists.

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Get lawn and vehicle signage to market your new services, especially for exterior jobs where you crew is highly visible.

The path to sustained success 

Your painting business may already be a successful operation. But over time, you’ll likely need to add to or modify the services you offer to keep yourself relevant and competitive in your market. Adding a new service line is a great way to retain existing customers and attract new ones. Proceeding with a few best practices in mind will keep your business moving along a smart, long-term growth trajectory.

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