Four Numbers Every Painting Business Must Track To Grow Safely

⏱️ 7:18 🎤 Daniel Honan

AUDIO EPISODE

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Introduction to Key Metrics

Daniel Honan introduces the four essential numbers every painting business owner needs to track: gross profit, customer acquisition cost, GP to CAC ratio, and cash conversion.
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Gross Profit Explained

This segment defines gross profit as the money left after direct job costs (labor, materials) and emphasizes its importance for overall business health.
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Customer Acquisition Cost (CAC)

CAC is explained as the cost to acquire one new customer, with a rule of thumb that gross profit per job should be at least three times greater than CAC.
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GP to CAC Ratio

The GP to CAC ratio combines the previous two metrics to indicate whether business growth is beneficial or detrimental, with a 3:1 ratio being healthy.
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Cash Conversion

Cash conversion details how quickly money invested in a job is recovered, aiming for a 30-day or less cycle to fund marketing without debt.
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Real-World Cash Flow Example

A real-life example of a painter named Mike illustrates how adjusting deposit and payment structures can dramatically improve cash flow and enable customer-financed growth.
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Actionable Steps & Recap

Daniel provides action steps for each metric and recaps the importance of tracking these four numbers for business success.
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Next Steps: Cash Flow Plays

The episode concludes with an invitation to watch the next video, which will cover four cash flow plays for scaling painting businesses.

Speakers

Daniel Honan

Host — CPA

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Calculate your gross profit and gross profit percentage for your last 10 jobs to understand true profitability per project.

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Determine your customer acquisition cost (CAC) by dividing total sales and marketing spend by the number of new jobs booked.

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Calculate your GP to CAC ratio; aim for 3:1 or higher for healthy growth, and address pricing or marketing efficiency if it's below 3:1.

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Evaluate your cash conversion by ensuring deposits cover CAC and labor, and mid-job payments contribute significantly to project costs.

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Implement larger upfront deposits and clear mid-job payment structures to improve cash flow and reduce reliance on credit.

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Utilize supplier credit (e.g., Sherwin-Williams, Benjamin Moore) for materials to gain interest-free float and improve cash conversion time.

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