Growth Through Diversification

Paula Hubbs Cohen

Growth Through DiversificationWe recently asked several industry experts to offer their advice regarding how pro painters can grow their business through diversification, including how to determine what services to add to their services menu, how to staff for new services without hurting their company’s core business, and how to integrate new services into current marketing efforts. Most importantly, we also asked their expert advice on how to evaluate the success—or failure—of add-on services.

They offered a wealth of down-to-earth, been-there/done that examples, experience and suggestions. Read what they had to say.

Our panel of experts includes:
LINNEA J. BLAIR, business coach and consultant; president of Advisors On Target, LLC, San Diego, CA
JERRY FANCHER, owner, Fresh Coat Eden Prairie (a franchise of a national brand), Eden Prairie, MN
TOMMY JOHNSON, owner, Johnson Home Construction, Wilmington, NC
BOB MERIAM, owner, Meriam Painting, Summerville, SC
DAVE MOURA, president, ProGroup Contracting (CertaPro Painters licensee), Fairhaven, MA
BRIAN PHILLIPS, president, Philpaint Inc., Houston, TX
WILL SHEILS, founder and partner, Blue Star Paint and Property Services, LLC, Annapolis, MD
PAUL WILLEMS, owner, Paint and Hammer, Winnipeg, Manitoba, Canada

Q How can pro painters determine what services are best to add to their service menu?

Moura: Look at the needs of your target customers. If they frequently require services that go hand in hand with a paint job (i.e., drywall repair or power-washing), consider offering those services, even if it means that you contract the job out. Your customers will come to rely on you more and more as a one-stop shop for painting and beyond. Some services are easy add-ons to your current business model. For example, offering customers free touch-ups on paint jobs throughout the year is a great way to maintain an ongoing relationship with them and isn’t very costly to you. However, offering maintenance outside of your core business can be cumbersome.

Fancher: The easiest way is to ask yourself what the additional work is going to do for your profitability and/ or if it will increase your referrals and business growth. If you are trying to add a service but do not have the talent or equipment to do it correctly, it could cost you money short term (higher costs than expected) as well as long term (incorrectly done or shoddy job).

Sheils: Look for an opportunity that utilizes your company’s current workforce, skills and equipment. Also, be aware of the market: is there a company in your area that offers your new service? Is there a company that just went out of business and left their customers in need of a particular service? Are there services that your existing customer base has shown to need? Are there services that overlap with your company’s current resources? For example, if a painting company will power-wash for exterior prep in order to paint, then it’s logical to add power-washing as a stand-alone service.

Blair: Evaluate your assets. What equipment and personnel skills do you have? If you already have trucks, ladders and laborers, ask yourself what other services can you provide without adding a lot of infrastructure.

Meriam: Painters can best add services to their services menu when it complements what they already offer. Be careful not to detract from what you specialize in and be sure that your extra skills fit in with painting. Services that can be offered and done well are a great addition to your business as long as you can do them professionally. Trying your hand at doing something without the needed skill set will cost you in the long run.

Phillips: Look at your core competencies. What skill sets do you have that can be applied to new services? It is usually much easier and less expensive to apply an existing skill to a new service, rather than learn an entirely new skill.

• Evaluate your assets, core competencies, and skill sets.
• Analyze complementary market opportunities.
• Consider the needs of current customers.

Q How can a pro painter best integrate add-ons into their overall marketing strategy?

Blair: If you are selling new services to your existing target market of customers and prospects, you can likely use the same channels to market your new service that you are using to market your core services. You can add marketing content promoting the new service through your web site, social media, client newsletters, direct mail, online and print advertising, and whatever other marketing media you currently use. You may want to do some extra promotions and/or specials to introduce your new service to existing customers.

However, if your new service has a different target market from your core services, create a new marketing strategy that will most effectively reach the new market. For example, if your new market is commercial property managers, a networking and relationship-based strategy might work better than the mail campaign you use for residential customers. If the new service is different enough from your core business that you want to market it separately to specific market segments, consider setting up a new division of your company, but keep a consistent look and feel to your brands.

Sheils: This is tricky, as it’s important not to dilute core offerings, while conveying new offerings. For example, we found that our property service section acts as its own business, and in less than two years it began originating new business outside of the painting section. We opted to start marketing the services separately, essentially as two different companies.

Johnson: I would first consult a marketing professional—every business should be investing a portion of their profits back into an advertising budget. Tell them what you want to do and get advice from a pro.

Phillips: This is certainly easier when the new service is closely aligned with existing services. Customers will see the connection and have greater trust that the company has the required skills. They can see the connection if a painting contractor starts offering deck restoration services; but they will probably be confused if he starts offering foundation repairs.

• Don’t dilute your core offerings.
• Consult marketing professionals.
• Assess different strategies if targeting a different market.

Q How can pro painters best staff for add-ons without hurting their core business?

Phillips: This depends on the particular skills required for the new service. Ideally, our staff already has the requisite skills. My second option is to train my existing staff. Product manufacturers are very good at providing training materials, and we utilize them whenever possible. I’m usually hesitant to hire someone specifically for the new service.

Johnson: This can be difficult if you don’t have enough workload to justify bringing in staff. It is entirely possible to find qualified subcontractors who would be thrilled to take on new work—you can mark up their services until you build a customer base and decide to hire staff to handle the workload.

Willems: I recently hired a woman with a masters of architecture and am now offering design work. However, I cannot afford to hire this position unto itself so she is also my lead painter, project manager and media person. I am offering new services because she has a skill set and personality that I feel can move my business in a new direction. In addition, I have part-time people that have specific skill sets and only do specific projects. I also have my full-time staff that can float and fill in where needed, but these other individuals take care of specific jobs and act as leads when other staff is needed.

Moura: Begin by contracting jobs out to local providers, but ensure you manage them as if they are an extension of your own company, and then be sure that they represent your brand when dealing with the customer. Watch how the demand for that service grows and consider pulling it in-house if it is doing well.

Fancher: I recommend having staffing ready before contemplating any service add-on. If you do not have a crew capable of the work, just back off and let someone else do the work. You are committing business suicide by guessing that you can do jobs correctly.

Blair: Assuming that you want your core business to continue to at least be stable and/or grow, most likely you will want to hire additional people to increase your team in order to handle the new services. Consider whether your overhead staff can handle the increase in business or whether you need to hire additional administrative or sales support. If the new service is seasonal, you may be able to hire and cross-train team members so they are able to perform both your core service and the new service, thus giving you more flexibility. You could also consider subbing out the new service if you can make a profit on it with minimal effort, and if the experience is seamless to the customer.

• Investigate using contractors/subs.
• Cross-train current staff.
• Back off if you can’t do the job well.

Q How do you evaluate the success (or failure) of additional business lines?

Willems: Be on top of the first jobs yourself and oversee all details. Personally, I wouldn’t trust a launch of a new service to staff. Rather, I would evaluate and see it through so I can determine where the tweaks need to happen. After the first few jobs, I would meet with my staff and we would talk about what went well and what could be improved. Customer feedback would also be important in this evaluation. Just realize that it generally takes a long time to fully integrate a new service.

Blair: Set targets for the amount of sales you need to generate with the new service over a defined period. Make sure you are able to track the profit margins for the new service through whatever accounting software you use. Evaluate customer happiness with the new service and, finally, look at your team and your business. Is the new service a good fit? Are you and your team happy or is the new service putting too much of a strain on the business? If the results are mostly positive, what changes can you make to improve them? If you evaluate all the factors and they don’t add up to a good result, you have the information you need to make a decision to pull the plug on something that’s not working for you before it significantly impacts your profits.

Moura: If your customers return requesting your add-on services, even when they don’t require a paint job, it’s a good sign that things are going well. However, if your customers are asking you for drywall repair and hiring someone else for painting, you know you’ve gone down a bad road.

Johnson: Profits are what motivate me to get out of bed in the morning. Keep very good books so you know what your margins are on new services.

• Set and track your profit margins carefully.
• Survey customer satisfaction and listen to feedback.
• Personally oversee the launch of a new service.

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