Profitable Painter Podcast
Profitable Painter Podcast is a rich resource for anyone interested in starting, running, and scaling a professional painting business, offering valuable insights, strategies, and interviews with industry leaders. Through case studies and in-depth discussions, we deliver a vivid picture of the painting industry, with a disclaimer that any financial or tax information is general and not a substitute for professional advice.
Profitable Painter Podcast
How Painting Owners Build A Million-Dollar Budget On Purpose
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We lay out a simple budget that starts with your income target and works backward to revenue, sales, production, and overhead. By pricing your roles and checking capacity, you learn exactly what $1M requires and what you should pay yourself for each hat you wear.
• owners earn discretionary earnings across roles
• set target income, then compute revenue from percentages
• benchmark pay for ownership, sales, leadership, production management
• sales capacity for one rep and CAC guardrails
• production capacity per crew and honest COGS
• gross profit split into sales and marketing, overhead, profit
• cap overhead so it does not outrun revenue
• identify next hire and fix margins, not just sales
Get a copy of Profitable Painter for free—normally $20 on Amazon—just cover shipping. There’s a link in the description if you want to dive deeper
This episode was originally recorded as a video for YouTube.
If you hear me say things like “in this video” or reference visuals, don’t worry —
the content still works perfectly in audio form.
And if you ever want to watch the video version, you can find it on the
Profitable Painter YouTube channel.
https://www.youtube.com/@BookkeepingForPainters
Most painting business owners think they have a budget. What they really have is a bank app and anxiety. Opening your bank balance and hoping there's money left is not a budget. That's a panic check. And here's the real problem most painters don't realize. You're playing four different roles in your business and you're barely getting paid for one, if that. In this video, I'm going to show you how to build a simple, intentional budget that lets you scale on purpose and shows you exactly how much you should earn for each role you play. We'll do it in four steps. First, set your profit goal. Second, build your sales budget. Then third, build your production budget. And then finally, cap your overhead. If you do this once, you'll stop asking, where did the money go? And start saying, here's exactly what this year will make me and why. Hey, I'm Daniel Honan. I'm a CPA and former painting business owner. For the last 10 years, I've helped over 500 painting businesses grow their company from startup to multi-million dollar operations. Here's the most important thing to understand before we start. Owners don't just earn profit. Owners earn discretionary earnings based on the roles they play. Real businesses plan like this: profit first, then revenue, then sales and production, then overhead. Most painters do the opposite. And then they wonder why they're exhausted, cash stressed, and underpaid. So grab a pen. And by the way, if you like learning this way, I wrote a book called Profitable Painter that walks through these same frameworks in more detail: budgeting, owner pay, cash flow, pricing, and you can get a copy for free. Normally it's 20 bucks on Amazon. All you gotta do is cover the shipping. There's a link in the description if you want to dive deeper. All right, let's get into the numbers. Step one, set your owner pay target. We always start from the end, not revenue, not jobs, not growth. We start with one simple question. How much do I want to make from this business this year? Not just salary, not just profit, total discretionary earnings. Let's use a clean example. Let's say your answer is$260,000 per year. That's the number you want to make from owning and operating the business. Now, here's the key idea. As a business owner, you don't just get paid for owning the business, you also get paid for the roles you personally play inside it. So your income target is made up of two parts. First, ownership return. In a healthy painting business, pure ownership return is about 15% of revenue. That's pay for taking the risk, not selling, not managing crews, not painting, just owning the business. Second, the roles you play. Most owners also work in the business. They sell, they lead, they manage. So you add pay for your roles you personally play. Here are common benchmarks. Sales is about 8% of what you personally close, executive leadership, about 3% of revenue, production management, about 7% if you manage production, painter labor, about 35% of job revenue if you're on the brush. Now, these aren't bonuses, they're real market-based pay for real work. So let's put this together. If you are the business owner, the salesperson, and the CEO, your discretionary earnings target is not 15%. It's 15% for ownership, 8% for sales, plus 3% for leadership. That's 26% in total. Now comes the most important step. We work backward. If you want to make$260,000 and your discretionary earnings target is 26%, you divide your income goal by your percentage target.$260,000 divided by 26%, that gives you a$1 million revenue target. Now that we have clarity, our income goal is$260,000. Discretionary earnings target is 26%. Revenue target is$1 million. Everything else in the budget has to fit inside that reality. And here's the line I want you to remember. If you're playing multiple roles and not paying yourself for them, the business isn't broken, but your margins are. Now that we know what the business needs to produce, let's build the rest of the budget so that the numbers actually happen. Step two, build your sales budget and check sales capacity. Now that we know the revenue target, everything else becomes simpler. Your revenue target is$1 million per year. That's about$83,000 per month. Here's the first capacity check most owners skip. Can your current sales setup actually close that much work? As a rule of thumb, in a painting business, a full-time salesperson can usually close between one and two million dollars in annual revenue. So at$1 million, you're comfortably within capacity for one salesperson. That salesperson might be you or it might be someone you hire. Either way, you don't need a huge sales team to hit this number. Now, let's price sales correctly. If you're the salesperson, you should earn about 8% of what you personally close. On$1 million in revenue, that's about$80,000 per year. That compensation is either paid to you or paid to the salesperson you hire. Now, sales is not overhead, sales is how revenue exists. Now let's add marketing. In many healthy painting businesses, sales plus marketing combined lands around 15% of revenue. And this is often called customer acquisition cost or CAC. On$1 million, that's about$150,000 per year. Here's the rule that keeps you safe. Your customer acquisition cost should be one-third or less of your gross profit. If that math works, you can scale confidently. If it doesn't, growth just creates more stress. Step three, build your production budget and check production capacity. Now comes the most dangerous question in painting. Even if you sell the work, can you actually produce it? Let's start with crew capacity. As a simple benchmark, one two-person painting crew can typically produce about$200,000 per year. That's roughly$1,000 per working day. So at$1 million in revenue, you need four to five two-person crews producing consistently. Not on your best month, but every month. And this is why production is usually the real bottleneck. Now let's look at margins. Most healthy painting businesses land around 40 to 60% of cost of goods sold, which means 40 to 60% gross profit. Let's assume 55% cost of goods sold. So on$1 million in revenue, that's about$550,000 allocated to crew labor, payroll taxes, workers comp, subcontractors, painting materials. All right. So now let's talk management capacity. One production manager can typically manage between one and$2.5 million in annual revenue. So at$1 million, you'll likely need a full-time production manager. Now, that role might still be you, but and this matters, you still need to budget for it. If you manage production, your role is worth about 7% of revenue. On$1 million, that's about$70,000 per year. Again, either paid to you or paid to your future hire. And if you're still painting, your pay comes out of cost of goods sold, not profit. If you're on the brush and not paying yourself fairly, your margins are lying to you. Step four, cap your overhead. Now let's zoom out and simplify this. Once cost of goods sold is paid, everything else comes out of gross profit. In a healthy painting business, gross profit usually gets split into three buckets. Bucket one, sales and marketing. Bucket two, overhead. Bucket three, profit. When gross profit is around 45%, these buckets are often similar in size, not perfectly equal, but close. So let's put real numbers to it. On$1 million in revenue, 45% gross profit is about$450,000. That gross profit often gets allocated roughly like this:$150,000 to sales and marketing, about$150,000 to overhead, and about$150,000 to profit. And this is why the earlier numbers work. Sales plus marketing at 15%, overhead around 15%, and owner profit around 15%. Now let's define overhead clearly. Overhead includes things like production management, office admin, office expenses, general liability insurance, accounting and legal, software. This is the bucket most businesses lose control of. Here's the key line. If your overhead keeps growing faster than your revenue, the business doesn't need more sales. It needs discipline. Let's bring this all together. You didn't start with revenue, you started with how much you want to make$260,000. From there, you worked backward. At 26% discretionary earnings target, that gave you a$1 million revenue goal. Now you know what the business actually needs to do. At$1 million in revenue, a healthy budget looks like this. About$550,000 in cost of goods sold. That leaves about$450,000 in gross profit. And that gross profit gets intentionally split into three different buckets. About$150,000 for sales and marketing, about$150,000 for overhead, and about$150,000 for owner profit. Inside those numbers, you've paid for sales work, production management, painter labor, and ownership return. Now you know what each role should earn. Whether you're underpaid or understaffed, what you can afford to hire next, and what the business can realistically support. Most painters build their budget by accident. You just learned how to build a budget on purpose, starting with income, not your bank balance. If this budgeting framework made sense, the next step is knowing the few numbers that actually drive everything. In the next video, I break down four numbers every painting business needs to know. If you don't know these numbers, budgeting becomes guesswork. Click the video on the screen now to watch four numbers every painting business owner needs to know. Get the numbers right, and the rest of the business starts to make sense.
