Better Sign Shop Podcast

Learn how to build a better
sign and print shop from a few

crusty sign guys who've made more
mistakes than they care to admit.

Conversations and advice on
pricing, sales, marketing,

workflow, growth, and more.

Your listening to The Better Sign Shop
podcast with your hosts, Peter Unis,

Michael O'Reilly and Bryant Gillespie.

All right.

Welcome back to another episode
of the Better Sign Shop podcast.

This is part two in a series on
the 10 Sign Shop Commandments.

Yeah, we'll call it like a miniseries.

Call it like a mini series

two part episode.

As always the sign Chopta.

God man.

I still love that nickname like.

Five years later.

Four years later.

Yeah.

Yeah.

I appreciate you giving it to me.

It

stuck.

It stuck.

Yeah.

Do clients call you Yoda when
you're on coaching calls and Not

necessarily.

Not necessarily, but I do have it as
like one of the packages on my website.

So when you go to sign shop consulting
and you go to the pricing options, it

says like, meet the sign, shop Yoda.

And I'm like, oh.

That sounds pretty cool.

But I don't show up.

I don't show up in my Yoda ears anymore.

Uh, kind of, uh,

those a one and done.

Yeah,

I'm kind of, uh, letting my
kids play with them nowadays.

Yeah.

That's all right.

All of your kids now.

Congratulations again, by the way,
on the twins and the growing family.

Thank you, my man.

Thank you.

Yeah.

Uh, did you get that minivan?

Did, did you get that minivan
recommendation that I sent you?

I did get it.

Uh, I did I buy it?

No, I did not.

I did not buy it.

Um, I, but I have to tell you, I, I, I,
my wife is completely against mini vents.

Okay.

We recently just bought a Yukon
xl, an O, like an A used Yukon xl.

Yeah.

The third row, we put our
ki our boys in the back.

The girls get their own little
captain seats, and in theory,

the vehicle is big enough.

I say in theory because.

My fat ass can't get in the back to buckle
my kids into the, into the car seats.

I love it.

And I'm like, if this is the biggest
truck on the market right now with a

third row and a trunk, I'm screwed.

I am absolutely screwed because my, my
4-year-old and my 2-year-old sitting in

the back in their car seats and I'm like,
can you please buckle yourself in because

Daddy can't like reach over and do that?

Um.

So I'm struggling with it right now.

My wife loves this truck.

Iise, it, it does get a

little bit easier when they can buckle
themselves, but like until you get to

that point, yeah, it's miserable man.

I been there like they had we not had
the minivan would've been a struggle.

Honda Odyssey all the way, baby.

Just give up on your dignity.

Tell your wife to just
like, Hey, we're getting a.

You know, because my wife
is the same way, dude.

Like, she did not want to get a minivan.

Like, and she still doesn't necessarily
love to drive it because she's always

had cool cars and like, that's the
one area where she's like, ah, man,

I, I want to drive a nice, cool car.

Um, and you know, for all the things
that she does, she deserves that.

But there's no arguing with
the how amazing a minivan is.

You say amazing.

Like I'm actually, I, I didn't say I
didn't look at one, so I'm not saying

I didn't look at it and entertain
the idea, but the technology in

these things is just, oh my God.

Yeah.

Ridiculous.

I wish I had that, like a push button,
turn the seat around, push button,

like the windows and doors open.

I'm like, I have to
struggle with my Yukon xl.

I'm like, everything's manual.

Everything's like a lever.

You gotta pull, push whatever.

When you have your hands full, like I'm
holding two car seats like this and my

and my kids are jumping in and Oh yeah,
by the way, they gotta go in first, right?

Because they're in the back and
once you put the car seats in, it's

like you can't squeeze through.

You can't squeeze around.

So I'm kind of living in that world
right now where I wish I actually

did have a minivan and my wife is in
love with our truck and I despise it.

Um, it's like a rolling tank.

You'll get there one day you'll get there.

Yeah.

Let's, let's jump back
into this thing, man.

Uh, do we wanna recap the
first five really quickly?

Yeah, yeah, we could, we could, sure.

So this is part two of the 10
Sign Shop Commandments, right?

So we are, if you, if you haven't
listened to part one just yet, you

know, hit pause on this episode.

Go listen to part one.

We talked a lot about these Five
Commandments, the first five, so

we'll recap them right now, but.

Gross profit margin.

Gross profit margin.

Okay.

Should equal or exceed.

Hopefully you're exceeding it.

60% of your net sales, let's not
go be beneath that threshold, okay?

60%.

Let's look at that.

Okay?

Your direct labor, let's look at your
p and l here now guys, and let's take

a look at, you know, how much are
you paying your direct labor staff?

If you're not sure what the direct
labor staff is, go listen to episode

number one and we'll, we, where we
talked about it, we brought it up

and we spoke about it at length.

20, should not exceed 20%.

Of your net sales, direct
labor should not exceed 20%.

That's commandment number two.

Commandment Number three,
your materials, your parts.

You know, your cogs should not
exceed 17% of your net sales.

Okay?

Your business expenses commandment.

Number four, your overhead, your
business expenses, your operating

expenses, bam, or what, how,
whatever you wanna call them, okay?

Should not exceed 48%.

That's your cap.

48% of net sales.

Like let's, we have to break all
of that down and penny push to make

sure that that does not exceed 48%.

Yep.

And number five, and we spoke a lot
about number five, I can do a whole

episode on number five, maybe a whole
series of episodes on number five.

Your advertising budget
should not be zero.

Should not be zero, should
not be zero, but it does not

exceed 11% of your net sales.

Okay?

So if you're, we, I had a, I had
a, a really interesting question

come up from that episode.

I'd like to start here,
Brian, if that's okay.

I'm not gonna jump right into number
six and, and, and the rest of them.

Okay.

All alright.

We'll just, we had a
little bit of a comment.

Let's,

yeah,

we have a little bit of a comment
to make here on number five.

Okay.

And I promise it won't take long,
but the question was is you're

saying that your advertising budget
should not exceed 11% of net sales.

That's true.

That is what I said.

But how do you know
what the percentage is?

If you haven't realized
those sales yet, right?

So think about that question for a minute.

That's the, that's the,
uh, that's the comment.

The comment is, I have to advertise
in July to make revenue in July.

True, true.

You can also make revenue in, you
know, August, September, and, and,

and every other subsequent month.

But let's just take a look in, in
a month, which I think is where

this comment is coming from, is.

How do I know what 11% is if it
hasn't been realized in that month?

Yeah.

We spent a thousand bucks on those amazing
radio ads that are so effective these

days, and I, how do I tie that back?

How do you tie it back?

I.

I think that's a very interesting
comment, and while I don't wanna make

a very long response here, this is why
advertising is important because you have

to start at zero somewhere at some point.

If you look at your advertising dollars
and you spent $5,000, I'm just gonna

throw a number out there, an arbitrary
number out there, and it generated.

$50,000 for you, you're
operating at 10%, right?

So you start there and then what
does the next month look like?

Do you still have that $5,000 budget?

Are you expected to produce
another $50,000 or more?

I.

You start there and you analyze
and you make changes accordingly.

Your, your advertising budget
is not a set in stone budget.

I think that is what
people get confused about.

There's a lot of re there's
a lot of vendors out there.

I mentioned a couple on our last
episode, and they have monthly retainers.

Like that's just their cost, their cost
to manage it, the cost of the ad spend.

You put, you marry them together and
there's a, there's a fixed cost to this.

There's a budget.

And maybe you're not doing
just one of those things.

Maybe you're doing, maybe you're doing a
little bit of SEO, maybe you're doing pay

per click, maybe you're doing BNI, maybe
you're doing, you know, ride the wave,

whatever it is, social sponge, whatever.

You're adding all that up and
you're getting to a number, and that

number needs to produce revenue.

So your first 90 days is all about.

Experimenting with the budget,
experimenting with this ad spend and

the budget and the money that you're
spending and seeing what the results are.

So if you're not doing that,
you have to start there.

But at a certain point, we talked
about this again on episode

number one is forecasting revenue,
forecasting lead opportunities,

forecasting this, these data points.

I know that the shop owner that
does 4 million knows exactly a

range A, a pretty tight knit range.

Of how many opportunities
they're going to have in a month.

Okay.

Uh, not every shop is like that.

I mentioned last episode that one of
my $4 million clients doesn't have a

single advertising budget and lives
off of referrals, but it's consistent.

Okay?

But if you don't have an advertising
budget, you start one, you look at the

results, and you forecast opportunities
in revenue after the first 90 days.

Let's just say three months is
a good, uh, good measure to see

if something's working or not.

Yeah.

Uh, some people would say that's
not a long time to look at.

S-E-O-S-E-O is all farming
in a long-term play.

Uh, so I would, and once you start
it, you don't really wanna stop it.

Okay.

So I.

SEOs a kind of a different topic.

We'll, we'll, we'll jump off
that soapbox a little bit there.

Yeah.

Don't get me started on that one.

So the comment was very interesting,
uh, just how do you know what 11% is?

And I thought, yeah, well
that's, that is true.

How would you know if you,
you've never done it before,

but you gotta start somewhere.

So create a budget.

Say, I'm gonna spend this month, X amount
of dollars, and then we're gonna see

how much lead opportunity and revenue
it, it drives, and then go from there.

Uh, that, and then, but the, the
shop owners that are doing this are

looking at that pretty consistently
and saying, I'm on target.

I'm underneath that 11%.

Yeah.

Or not.

Alright, number six,

sign, shop, commandment.

Six.

Earlier in number two, we
talked about direct labor.

Now we're talking about total payroll
should not exceed 30% of net sales.

Woo.

That's a tough one.

That's a hard one for most people.

Okay.

Um, I'm gonna take a beat and
talk a little bit about this.

I feel like I owe it, I feel like I owe
it to the audience to explain this one.

I usually see this one expressed
in a different way of like,

revenue per employee, but.

Or sales per employee.

There's a lot of formulas
out there, Brian.

There's a lot of formulas out there.

Revenue per employee is
an, is an EOS metric, okay?

That was created outta the
book of traction, and I don't

disagree with that at all.

I, I fully support that metric.

But here's what's very
interesting about that metric.

That metric does not show up
on a profit and loss statement.

It does not.

Okay.

It does not.

It does not.

There's no chart of account
that says revenue per employee.

Uh, no.

Yep.

So when you look at your total
payroll, okay, what is total payroll?

You might have subcontractors
working for you.

You might have W2
employees working for you.

People that are commission only.

People that require workers'
comp, people that require

payroll taxes to be taken out.

If you're in one of those glorious
states in the, in the us uh, people

that take, you know, just everything.

If you're contributing to employee
benefits like in a 401k or retire

other retirement field, you know,
funnels and things like that,

this is all part of the equation.

When you look at your total payroll,
I am talking about every cent that

goes towards your labor force.

I am talking about paying Uncle Sam paying
into their retirement paying commissions.

Everything should not
exceed 30% of net sales.

So that means you sell a hundred dollars,
$30 of it is complete labor, where $20

of it was, was the people that were
relating to the the, the product sale.

Yep.

So that's the difference is that you have
a $10, or in this case a 10% increase

for all of the other fluff, for all of
the other items, for all of the other

people that you have on your staff.

And what that essentially means is.

Give it.

Let's put some real numbers behind this.

If you are doing $3 million in
revenue, your labor force should

not exceed your total payroll,
your labor, your hourly wages, your

commission, your salaried employees
yourself should not exceed $900,000.

If you're doing 3 million.

If you're doing 1 million, listen, I
think that're total payroll, that's

a, an eyeopening thing when
you sit down and stare at it.

Right?

Man, let tell you something about this.

When you're in the day-to-day
grind of a sign shop.

When you're in your, okay, so I'm
talking about Jason from Idaho.

Here we go.

Here, I'm, we're going back to
you, Jason, from last episode.

Jason, I don't know who you are, we've
never met, but I'm, I'm sure that you

are involved in your sign shop and you
have employees that ask for raises,

employees that are working overtime.

Perhaps, um, you might be asking
yourself, man, should I hire another?

Salesperson, should I
hire another installer?

Should I hire another INS fabricator
production, vinyl production specialist?

Man, should I hire an inbound CSRI?

In every single one of my weekly
coaching calls with my clients,

these questions are being asked.

And if they're not being asked of me
or asked to me, they're being asked

internally with that sign shop owner.

And I think I'm just trying
to lay, create a new workflow.

My designer should not be taking orders.

No, they shouldn't.

Does that mean you need to
hire a sale, an order taker?

Maybe, maybe not.

But these questions are asked hundreds
of millions of times around the

country multiple times a year, and
my advice on all of this is use this

sixth commandment as your measuring.

Stick

the North star as the,

yeah, use this as your guiding light.

You can look at last month's p and l
statement, year to date revenue, and

where you're at in payroll to determine
if that answer is even possible.

You know, if you have room in your,
much, in your budget, because your o

your total payroll is maybe sitting
at 24, 23, 20 4%, you have 7%.

Left in that budget, but with the
expectation of, and this is where your

comment can comes in, Brian, is how much
more revenue is this employee going to

help us make by hiring this employee?

So whether you have one employee
or a hundred, the number of 30%

doesn't change because in theory,
if you hire another designer.

That designer should be able to produce
more output, which means more revenue,

which means the revenue per employee is,
which you brought up earlier, is aligned.

Okay?

Sure.

If you're having a log jam and not
being able to produce as much work in

a week in a works week because you're.

Always, you know,
clogged with larger jobs.

And it's hard to get smaller jobs across
the finish line 'cause there's no time.

And you hire another production
guy, okay, how much more production

in a week can they produce?

And that's where that formula makes sense.

And I'm a huge believer in it.

But you can't operate that
way without knowing what the

total number is in payroll.

Because if you're over 30% and you have
these problems, which is very common, you

may not actually have the right people.

You may not have the right
people in the right seats.

You may not have them in the right role.

That's what basically what that means.

And you may not be getting the
most amount of output out of

a high performing employee.

Maybe a $40 an hour employee is
producing the same amount of work that

a $25 an hour employee can produce.

But he's been with you so long, you've
given him raises because he's a nice guy.

Well, the day in and age of doing
that is over because you now have

commandment number six, which is.

Your total payroll should
not exceed 30% of nest sales.

Is that a, was that a, was that a, did
I leave anything out that I think, I

think we kind of hit on all of those
points there, but I could be wrong.

Yeah.

I mean, to me, like this is
a, this is a great metric.

This is a probably of my,
of the 10 Commandments.

This is probably right up
there in my top two or three.

My, my absolute favorite is the
advertising one because I, I, I, I

go to bat with that all day long.

Uh, but yeah, you know,
labor is a, is number two.

It's probably number two for me for sure.

Um, you know, it's talking about
total payroll and not necessarily just

direct labor because it's so easy to
look at total payroll and say, okay,

but how much of that is directly
towards completing a project and.

That's why that there's two KPIs here.

That's why that there's two commandments
that you want to really just look at

individually because you might have a
great designer and he's putting out great

work and you know he is on a salary, okay?

And he's making those
direct labor numbers.

But maybe your total
payroll number is off.

Maybe it's higher than 30% and it
has, but it has, that's an easy way of

looking at this and saying, it's not
really related to my direct labor staff,

because that's, that's at or under 20%.

So it might be coming from maybe
you are taking too much money or

maybe your general manager's making
too much money, or maybe there's

something being spent more in the, uh,
support labor side that it shouldn't

be, and maybe you can cut back and
reallocate some dollars elsewhere.

Or we're not pricing high enough, or we're
not advertising or making enough sales.

Yeah, that's the other side of that
coin that really we just, damn, damn

it, damn it for bringing it up, Brian.

That damn it.

That'll

be, that'll be the next mini
series that we have to do.

Right?

Because when you're looking
at all of these commandments.

You're saying 30% of net sales or 60%
of net sales, whatever the KPI is, net

sales is an inval, uh, what's the word?

It's a variable.

Variable, okay.

It's the, it's a variable.

Meaning did you sell that project
for a thousand dollars or $1,200?

'cause if you have the same labor
and the same cost of materials

and the same marketing dollars.

That percentage changes based off of
what you sold that project for, right?

A hundred percent.

So the other way to look at all
of these commandments so far is to

also look at your pricing, which
we're not here to discuss pricing.

Okay.

We're here to discuss what are the KPIs
of your business, of your profit and loss.

Perhaps the way to fix it
all is to raise your pricing.

I'm not saying that it isn't.

Okay.

Perhaps I haven't looked at
your pa profit and loss to know,

which leads us into commandment.

Okay, number seven.

Good segue.

Good segue.

Love it.

Your average invoice.

Should equal or exceed $600.

So we're kind of getting into a little
bit of the pricing world here, right?

If you start looking at how
many orders you produced, you

know, and, and I gotta say.

This is still subjective here.

So I wanna say this with an asterisk.

This is put together for a
shop that also is a vinyl shop.

Okay?

So this is not a fa uh, we're not talking
about an exclusively like a fab shop.

Somebody that's like building channel
letters all day long, or awnings, or,

yeah,

vehicle wraps all day long.

You know, we're talking about.

Yeah, if you're at $600
there, you're, you're hurting.

Correct.

We're talking about your average run
in the middle shop that does both

vinyl and a little bit of fab and.

Ultimately, you know, you're not
turning, you're not turning down

DOT letters, you know, you're not
turning down those window graphics,

the door graphics or the neighborhood

sign shop.

Exactly, exactly.

So we're, we're really
speaking to that type of shop.

Your average invoice.

Should equal or exceed your $600 mark.

Now, what is an invoice?

I have to start there because there
seems to be some confusion of what?

Yep.

You get it?

Yep.

Yeah, because I'm not saying
quote, I'm not saying order.

I'm saying invoice.

Okay.

I didn't say your average quote.

I didn't say your average order
said your average invoice.

That means.

Done and paid.

Done.

Completed

and paid.

Okay?

Okay.

That's what an invoice is.

Your average completed job
should equal or exceed $600.

You know, so when you think about
like, a customer could walk in and

buy a banner or a couple of a-frame
signs, or maybe it's a real estate

office that's buying some lawn signs.

Our shop minimum is a hundred dollars.

Sure.

The shop minimums a hundred dollars.

Those, those types of conversations
need to go outside the, you know, throw,

toss that conversation out the window.

Okay.

We need to.

Focus on $600 or more in
order to be profitable.

Okay?

If our invoices and shop, Fox and
Corbridge, and every other basic

POS system will tell you this,
how many invoices have you done?

What's the total make the simple division,
and you have your total average invoice.

Here's a very interesting point to that.

I said it should equal or exceed $600.

Most shops are exceeding $600.

So I have to say that with a giant
asterisk, if you're in this world

of sign shops, you're, you're kind
of living in around the seven, $800

world for your average invoice.

So if you see your average invoice
in the five hundreds, maybe in the

six hundreds, you're not necessarily,
you're still in a critical mode.

You're still in an area of
which it is important for you

to, to increase that number.

Yeah.

The way to increase that number again,
Brian, take a look at your pricing.

Take a look at your material
costs, take a look at your markups,

take a look at your hourly rate.

Make sure that you're
charging the right amount.

'cause if you are, and your hourly, which
we'll get to here in just a minute, and

your hourly rate should be what it is.

Most projects don't take one hour and
most projects take a couple of hours.

So you should be seeing
your average invoice go up.

Yeah.

Alright.

It's

low hanging fruit.

Yeah, like if, if you are concerned
about raising the price, go watch.

Uh, forget the episode number.

It's with Paul Gardner of Sign Enterprise.

Dude came back after getting some
good advice, doubled his pricing.

Did not see any measurable
decrease in business, so I was

just gonna, we'll hang that there.

We'll move on

Now.

Earlier we talked about my favorite
KPIs and advertising being one,

total payroll being number two.

This is like two A.

Two A.

Okay.

This is like two A.

All right.

You want me to do that thing?

Should I?

Yeah, go ahead, please.

Yes, please.

Okay.

Let's talk about sign shop commandment.

Number eight, lead conversion.

Most people aren't even tracking
this, so this is, this might be

like, what does that even mean?

Lead conversion to a quote
should equal or exceed 80%.

Okay, let's start with square one here.

If you are not documenting your
leads, start doing it today.

They're in my inbox.

Pete, what are you talking about?

If you are getting an email with the
questions of how much can you, will you

or I need, that is a lead people, okay?

If you're getting a Facebook message,
and some of you do that, some of you

don't, I don't think I ever really did
that, but if you're getting a phone call.

If you're getting a walk-in customer,
some of you, some of you get walk-in

customers, some of you don't.

If you're getting a walk-in customer,
the moment they walk through your

threshold lead, there's a lead.

You paid for that person to walk
through your door in your rent

expense, so you better be freaking
reporting this information.

An email from a, from a
customer, a repeat customer.

It doesn't matter what it's, if
you are not documenting this start

today, how do you document it?

Well, it depends on how, what
you know, what you wanna do.

If you are using Shop box, take a look
at, take a look at the lead function.

Add.

Add a lead.

Simple.

You know, if you're using
corbridge, do the same.

Yeah, do the same thing.

If you're not using any of
those and you're like one of

those shops that are using like.

QuickBooks and spreadsheets and whatever.

Then you need some form
of like intake form.

You need to be able to quantify
how many people asked you these?

How much can you, I need questions.

Okay.

Or statements, I guess
I need is a statement.

Throw it on a Trello board at the
very least, like whatever, like

find some way to like track this.

I mean, obviously like it, there's CRM
solutions that are like, handle this.

And that's like for a different day.

Obviously we've got like the, the
shop spotlight series going on right

now through the end of the year.

Um.

God.

It's like, yeah, I, I'm with you.

Like, if, if you're not tracking the
incoming leads, what are you doing?

What are

you, what

are you

doing?

What are you doing?

You know, you're just quick to say
a hundred dollars for that banner.

Like, no.

Where is the consultative nature in this?

Where is the outreach?

Where's the emails?

If you are not getting that
name, email address, phone

number loaded into some CRM.

You are so far off from doing what
you need to be doing, and I'm sorry

to say it like that, but start.

Start today, okay?

You are not actually succeeding as
an owner if you are not doing that.

Now, many of you are,
I'm not talking to you.

To those that are quantifying your leads
is an incredibly valuable tool that

you need to start doing as a business
owner, as a sign shop business owner.

So you get, let's just assume
that you are, how many of those

leads are turning into quotes?

That's what that means.

Lead conversion to a quote.

Should equal or exceed 80%.

So let me kind of back up here and
just go, if a customer asks you a

simple question, gimme one, give rattle
one off here, Brian, let me, let's,

let's role play here a little bit.

I need a birthday banner for my wife.

She's turning 40.

Cool.

How much is that gonna be?

It, let's just assume
that that's an email.

Lemme make it really, really simple here.

Yeah.

Let's say you sent, you say,
Hey, you came highly recommended.

I have my, what'd you say?

Mother's 40th birthday coming up?

No, no.

Grandmother's, whatever.

My, my wife.

Your wife's Forti birthday.

I don't hear.

Yeah, that would be pretty possible.

Hey, come on.

This is West Virginia, but Lou, come on.

We have standards here,

bro.

Come on.

Okay.

Your wife's, uh, your wife's birthday
coming up and you need a, okay.

So I respond in that email
and I say, absolutely.

Happy birthday to your wife.

What size banner are you looking for?

And what would you like it to say?

Then it goes dark, then it goes dark.

You hear nothing but crickets.

You send a follow up email.

Hey Bryant, this is Peter again.

Did you get my last email?

I sent you a couple of questions
and I would need to know, uh,

before I can give you a price,

go start.

Nothing, nothing, nothing.

That is a, that is a lead that did
not make its way to a conversion.

Okay.

To a quote, conversion to a quote.

I think that's to a quote conversion.

When I first read this one.

We, we will talk about the
other conversion metric in Yeah.

Down the pipe, but down the pipe.

This is like, hey, lead comes
in, does this make it to a

quote that we can then track?

Correct.

So you would get somebody to ask you.

You, you would think that like that.

Bryant's a great customer, you know,
but by, you know, he might be like,

I don't know what I want to say.

I don't actually know how big, so I
need time to actually think about that,

measure my ceiling in my living room,
whatever, and figure out a sign size.

But at the end of the day, Bryant might
also go on Vistaprint and order it

himself, go to Staples and get it himself.

Or maybe, you know what?

I actually just walked into a random
sign shop and they were able to give me

a price, and I just pulled the trigger.

So that could be a lost lead.

So the goal here is to quote 80% or
more of the leads that you get in.

You want to, you want to
have something trackable.

You wanna be able to say, here's
your quote, and then be able to

have something to follow up on.

Right?

So eight out of every 10 is what
I'm trying to say, is the minimum

you're going, if you're quoting
six outta 10, you are screwed here.

Okay.

You're not doing yourself
any good, any good service.

So eight or better if you're,
I have shops that are going

10 for 10, a hundred percent.

Every lead is getting
a quote comes through

the door quoting.

Nice.

Yeah.

This is, that's a gold standard.

And now like the, I, I think like the
questions that I have here, and I love

that this is on here because it's, to
me, it's indicative of, it could be

indicative of a couple of like problems
that you've either got like in your

sales funnel or your communication or
you know, just a lack of systems, but.

Um, like lead conversion to quotes.

This one, I, I don't know, like if shop
box is tracking this for you, or some of

these other systems are tracking mm-hmm.

Like.

Ah, man.

Like this is a, this is a good one.

I lost my train of thought
there for a second, so it's all

right.

That's all right.

We're gonna get to the nick.

We're gonna get into the, the
nitty gritty here in just a minute,

but the goal here, track your
leads to quotes, conversion rate.

Okay.

If you're not doing anything, like
shop box, whatever, do a Google form.

It's free and.

Google keep track of how you know
how many and how many you converted.

Very simple stuff.

80% or better.

Number nine.

Getting there.

We're getting there
towards the finish line.

So let me preface number, uh, sign
shop commandment number nine here By

saying this, most of you are starting
to figure out what this number is.

You're not naive anymore.

You're not green to it.

You're not making up numbers
outta nowhere anymore.

We have talked a lot about this.

We have done shop classes,
mastermind classes on this.

Every single one of my coaching clients
starts by filling out this tool.

You need to know what your hourly
billable production rate is.

Dun, dun, dun.

And most of you are finally catching up.

All right, so if there is a significant
improvement in the industry that I

have seen is that there are a lot
more of you that are understanding the

importance of this and are starting
to pick up the fact that this is

actually a game of selling hours.

We're not selling signs here, people.

I know how silly that sounds 'cause
you are selling signs, but are

you selling your signs profitably
with the correct amount of hours?

Are you selling what?

Give it to me dude, you're teasing me.

Like let's, okay, so here it is your
hourly billable production rate.

Again, we preface this by saying what
type of shop are we talking about here?

Okay, so this is, again, you're a run
of the mill neighborhood sign shop,

vinyl shop that does some fabrication.

Less than 2000 square
feet around that number.

You know, half a dozen employees,
whatever your billable production

rate should meet or exceed.

1 25 per hour.

Yeah.

Some people might be looking
at their like hourly rate and

saying, I'm charging one 50.

Good for you.

I still don't know if it's right.

We still don't know if it's accurate.

I.

You might be charging a hundred
dollars an hour and you might be

like, wow, okay, I want, I need
to just simply raise that to 1 25.

No, just don't do that right away.

Look at your real data.

If you're not sure what your
data is, ask me, email me.

I'll give you a hourly rate
calculator and you could use it.

And figure out what your true
to the penny hourly rate is.

Because let me tell you something here.

There's a lot of people out there
with some fake ass formulas, okay?

Total hours divided by total employees.

Boom, hourly rate, wrong, not even close.

What is your billable production rate?

Is the correct term, how many hours
are you actually able to sell?

Not every employee is
working full-time here, guys.

You guys know that 40 hours a
week is not what you're, you're

paying somebody 40 hours.

They're not working 40 hours, okay?

So you have to take into a, into account
certain factors of downtime and things

that you just simply cannot charge a
customer for hourly billable production

rate should meet or exceed 1 25 an hour.

It.

I wanna just take a minute on this.

I, I, i, I won't go too long
'cause I know we only have about

10 or 15 minutes left here.

For those listeners out there that are
really dialed into their hourly production

rate, like they know what it is, I'm
going to challenge you here because you

should be fluctuating that rate based
off of the capacity of your schedule.

Okay, let me, let me
explain what that means.

Whoa.

Okay.

I see where you're going.

If you are at one 20, let's
just say you're a shop.

You're at 1 25 an hour and you're busy.

Okay.

Busy ish means like, I'm busy,
everybody's working, I'm still

taking orders, et cetera.

How much rope do you have left
before you're at maximum capacity?

How many more jobs can you take
on before you can, you gotta

say, I can't take anymore.

And I know that's an
interesting problem to have.

'cause almost none of you
out there are saying no.

And if you're not saying
no, man, start trying.

Start trying to say no.

That's my biggest piece of advice here.

Because not every job is worth taking.

Every a a vinyl job can disrupt a very
large production channel editor job.

The banner that a window perf sign that
comes in off the street can disrupt your

workflow If you're not realizing that.

Get to realize that.

Talk

to ton of shop owners
that that's the case.

Yeah.

Like, Hey, these little
jobs are eating us up.

Yep.

But there is a point where
if you want to say yes.

How are you saying?

Yes.

Okay, so lemme, let's just
say you're at 80% capacity,

but in order to really fill in the, the,
the 10 or or 15% more that you have on

your rope, I'm raising that hourly rate.

I'm raising that not to, not,
not keeping it at 1 25, I'm gonna

raise it because I'm gonna be near
danger zone on my production rate.

I'm gonna be tearing
my hair outta my head.

My team is gonna be.

You know at it on its wits end.

Yeah.

Plea, you know, crying
wolf, whatever it is.

And I need to charge more for that
because I am needing to be profitable,

at least if I'm gonna go into critical
mode and put and overwork my staff.

Yeah, makes sense.

But there's an opposite side to that.

There's an opposite side to that.

And what if you're at one 50 an hour
or $200 an hour and you're slow and

you have more on your plate, you know,
your, your, your advertising budget is

not converting leads the way it should.

Well, now I'm gonna drop
my, my, my rate a bit.

I'm not saying to, to a certain
dollar amount, but you know, within

reason to account for more capacity.

So your hourly rate.

This is where people get
the hourly rates wrong.

I'm so happy that we're catching
up to this because we are talking

about like real numbers now.

We're no longer in the world of
like my hourly rate's, $65 an hour.

Like that's just, that
was like seven years ago.

We're in the 1 25 now.

Range inflation, cost of goods,
the cost of living is increased.

You.

Rent is going up, wages
are have increased.

You know, you have to, you have to, at
this point, your marketing dollars have

gone up, cost of materials have gone up.

You have to be in this area 125 or more.

But even those shop owners that are
dead set in their like number, that

they're confident that that is accurate.

Are not looking at their hourly rate
in this, like, floating scale ca way.

Well, it's like they're not looking
at it from a week by week basis.

Yeah.

I, I love that view because it's, you
know, when you think of it, like, we

talked about this in the pricing course,
like we're not selling rubber docks

that are the same every single time.

You, you estimate how much it's gonna
cost you in time and materials, right?

So we have to know what
to charge for that time.

Now, that's not to say that, Hey, we,
we shouldn't be trying to always get

more, even if it's the same job, like
it, obviously clients have, uh, different

values associated to maybe the same sign,
but like this number is the basis for.

For estimating and your
pricing is, is critical.

Uh, but it like having it flexible.

Even more critical.

Uh, yeah, you have to look at your, you
have to look at your production schedule.

Like if you're not having the, I love
this term, by the way, I, I picked this

up from my Canadian client, your JSM
meetings, your job status meetings.

I love that.

I, I've never heard of that before,
but your production meetings or

your JSM meetings, I love that js.

Okay.

If you're not having those meetings
where you could say like, okay, this

is what we're working on this week.

You probably need to start there where
you can understand, like if I'm mapping

this out on a schedule, like think about
like, um, think about like bar owners,

restaurant owners that are creating a
shift schedule for their staff, right?

Yeah.

They could see every time slot
for every individual who's working

and who's working When, I mean,
we've lived in that world forever.

That's not going away, but when
you're in the sign industry, you can.

Look at your jobs in the same light.

Like this is what we're printing.

This is when it's printing, this
is when we're fabricating it.

This is when time for sales.

This is the next

available slot to do this job,

right?

You could visually see how much
capacity you have, and if you say,

wow, we can, you know, what is
this guy working on on Thursday?

You have more capacity.

You have.

Additional capacity.

So what does that mean?

Okay.

We need to, we know what our
break even number is on the hourly

rate, so we can't go beneath that.

I'm gonna lower some of that desired
profit margin on that hourly rate to

accommodate for additional capacity to
give some more aggressive competitive

pricing to get more orders in that
are still profitable, but to bring

on, uh, additional work due to the
capacity of our production schedule.

So if you're not looking at
your hourly rate in that way.

You should, you should be.

Um, this was one of the reasons why I
did like so many hourly rate calculations

with Chatbox back in the day because I was
always like, busy, super busy, super slow.

You know, what, what's the
lowest that we can go down here?

Then you, you also give
your, like your sales reps.

They autonomy there is like, hey.

We can knock the price off if we can
get this order committed and into

production because we've got, uh, you
know, we've got a free slot, we've got

four hours to fill on Tuesday, et cetera.

Whatever.

Yeah, yeah.

Uh, as part of my shop policy, I would,
I always had like a dry erase board,

and I would always write in the top
right corner of the dry erase board.

Like this is this week's hourly rate.

Like it would go down, it would go
down $5, $10, $20, whatever it was.

But it would always change.

So people were conditioned to look at
that hourly rate and always say like,

okay, now I know kinda like how many hours
to charge for at that rate based off of

where we are in the schedule and who has
closed and who has sold something and been

added to the production schedule or not.

So very interesting dynamic if
you're not looking at it that way.

I'm not necessarily saying
that you should or you have to.

Uh, but just staying in the
black and white world of, no,

my, my hourly rate is one 50.

And, and leaving it alone is
probably not such a good idea.

Probably not such a good idea.

And then finally here guys, look,
side shop commandment number 10.

Finally here

we gotta talk about your conversion rates.

Okay?

Now we, earlier we talked about
lead to quote, this is the next

one, down that path, quote to
order, quote to sales order.

Okay?

Conversion rate for quote conversion.

To sales order should equal or exceed 65%.

What that actually means is, is
this, you quoted 10 of them, 6.5

of them have said yes, that's it.

Why is

this number so low?

Pete?

That's me.

Why is the

number so low?

That's me playing devil's advocate.

If, for, for the listeners who
can't see my face right now,

well, I actually don't think
that this has anything to do

with the sign shop's behavior.

Okay.

Pricing, I think this is, has everything
to do with the buyer's mentality.

Okay.

If you are a shop, and when you send out
a quote, I hate to tell you this, but

you are not selling 100% of your quotes.

If you are, call me.

I wanna be a partner.

Oh,

that's simple.

That's not really disagree with you, man.

I wanna invest in your business.

If you are quoting and
selling 100% of your quotes.

If you need an investor, you call me.

That's a, that's a
symptom to me, my friend.

No, if you,

if you are earning, if you're
selling a hundred percent like you

convert, you send a quote, converts
over at a hundred percent rate.

Pricing too low.

A hundred percent.

Oh, oh, oh, oh.

I didn't know where the heck
you were going with that.

I'm like, wait a second, here

you are pricing too low.

And that's, that's why I love this number.

It used to come up all the time, uh,
because this was one of the ones that's

on that Shox dashboard and it, the
dashboard of all the other like softwares

and CRMs, you could see, okay, how
many, how many did we win out of this?

What was the percentages?

Yeah.

So let's, let's, let's back up a minute.

Okay?

Yep.

Alright, let's back up a minute.

Assuming that this is the first time
that you've heard about all of these

10 Sign Shop Commandments, most shops
are not performing well in all of them.

They have some, they have rooms
for improvement to be made here.

Um, maybe their average invoice is
under $600, which is to your point.

Why their conversion rate would be
so high, but if their hourly billable

production rate is at 1 25 or more,
maybe there is something to that.

But if it's not and you're converting
at a higher rate than 65 or.

If you're closer to a hundred, you are
probably underpricing your jobs and you're

not selling them at a profitable level.

Because if you are closing
at a hundred percent, why are

you listening to this podcast?

If you are making 30%, 40%
profit and you're selling every

job, why are you listening?

'cause you're not doing that because
you're not close to doing that.

So the average shop will take eight
out of 10 leads and quote them.

And then out of those eight, they are
selling 65% of them, and it's due to

a, in large amount of the con of the
buyer's behavior and the relationship

that the buyer has with the company and
the person that they're talking with.

The reason why it's also 65% is, is
to also account for those sign shops

out there that are transactional
with their pricing and not.

Mm-hmm.

Consultative with their pricing, you're,
if you are black and white, you know,

I have a client, I have a client, I, I
won't mention him by name, but I have a

client who is extremely transactional.

I mean his, to a flaw.

His biggest flaw in his sign shop is I.

I don't have the bental capacity
to be consultative or even

bandwidth to be consultative.

So it's just order taking.

It's just nothing but
order taking the door.

Yeah,

get it in, get it out, get it in
as quickly as you can and follow

up with them, uh, on it later on.

Like, can you price me for a
three foot by six foot max metal

sign on installed on posts?

Man, if you are not consultative
with that, you are screwing yourself.

But if you are in a world where it's
like, sure, three by six, enter it

into my formula, single sided, two
wood posts, $750, and the customer

says, yeah, the price is too high.

You just lost the lead.

You just lost a sale because
you were not constant.

You didn't ask questions.

You don't, you didn't develop the
relationship a hundred percent.

So there is a, you have to take into
account a couple of factors here.

65% is because of transactional
behavior of the sign shop owner, but

it's also about a buyer potentially
saying, okay, I got a price.

Let me go shop that around.

Lemme go see if I could get a
better price or validate the

price that I was just given.

So you're not selling yes to everything.

And if you are, that's
why I made that comment.

If you are, I wanna be your
partner because, uh, assuming that

you're doing all of these items,
these 10 commandments correctly.

You're closing that much man.

You got yourself an
operation that is cooking.

I wanna be a part of it.

Okay.

All right.

And I wanna be part of it.

Ill that.

But if you are not cooking in any of these
particular KPIs, uh, well this is, um,

you know, look, I I would also say this.

I've bought sign shops in the past.

I built sign shops in the past.

I've sold sign shop to
sign shops in the past.

These are also the, the 10 things
that I look for when evaluating

a purchase or an acquisition.

I'm looking at these
particular 10 items and saying.

How well is your shop performing?

And if I is a

healthy shop, like Yeah,

if it's a healthy shop or not.

Uh, I don't the, let me say it like this.

When you're putting together
a profit and loss statement,

where does your eye go, Brian?

Like when you finally get it
from your accountant, your

bookkeeper, where do you go?

Straight to the bottom baby.

How much money did I make?

Yeah.

And honestly, you have to de train
yourself to do that as a sign shop owner.

I recently did a financial audit with
one of my clients in Miami, Florida,

and he was like, here's my, here's
my year to date p and l spread, you

know, every month, you know, he put it
into my spreadsheet and I'm like, bro.

Are you realizing that your shop is
like performing a hell of a lot better

than how you're presenting it right now?

And he was like, how do you
figure I'm only profiting?

I forget what the number was.

It was like 9%.

He was netting 9%.

I'm like, your shop is
actually netting 21%.

And here's why I'm able to pinpoint
all of these areas of which like

inaccurate accounting or, you know,
if these are owner discretionary

expenses that you're referring to here.

And you start eliminating things and
getting to the, the meat and potatoes

of, of what these 10 KPIs are.

Man, this guy's shop was like,
dude, your shop's performing

like at a 21% net profit margin.

Your cost of goods percentage is
slightly high, but you're on pace

to be doing X amount of dollars.

Which if that happens in the
end of the year, you're going to

see this, you know, get to that
market level of, you know, under.

Whatever it was, 17%, 16%,
whatever his cost of goods weren't.

Sure.

So, you know, you could look at a profit
and loss very differently, but we are

trained to look at it from a professional
and account and a bookkeeper and think

that it's the gospel, but it's not.

I've teach, I've taught you
some things here on how to look

at your numbers differently.

A closer attentions to the
per to the percentages and.

Little tip, ask your bookkeeper, ask your,
uh, accountant that when they do give you

that, uh, profit in loss statement, to
also add the column percentage of income

so that you can look at those percentages
and not so much the dollar amount.

Okay?

And do the manual calculations
yourself, because if you're looking

at this month by month, you're gonna
see this up and down, up and down.

If you look at it once a
year, you're already too late.

You can't make any improvements,
you can't make any, you can't do

anything with the profit and loss.

So look at it monthly.

Pay close attention to these 10 Sign
Shop Commandments because if you

are, you're a healthy sign shop.

If you're performing really well
in all of these areas, you're a

sign shop that has value, you're
a sign shop that can be sellable.

You're a sign shop that can be profitable,
and you're probably a sign shop owner.

Sitting on Tahiti somewhere,
sipping some margaritas, thanking

me for saying, yep, that's the
validation that I was looking for.

Now I can, uh, you know.

Gear myself towards getting,
getting on another margarita

or going on another vacation.

So I hope you've enjoyed the
10 Sign Shop Commandments here.

Whether you're aiming to increase
profitability or achieve sustainable

growth, these commandments, these laws,
these KPIs, whatever you wanna call

them, they are essential rules for
your sign shop's financial success.

Boom.

Mic drop.

Pete's out.

Pete's out.

What do you think?

Like it?

Cool.

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Thanks for listening.