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.
I'm your host, Brian Gillespie, as always joined by sign Shop Yoda himself.
Peter Unis.
What's going on, Brian?
How you doing?
My man?
Hey.
Dude, this has been forever, since we have laid down any tracks
in our respective studio here.
How are you?
I've been busy.
We'll start out with, uh, my twin girls are here.
Uh, so, and, and enjoying every day of that being a girl.
Dad, I know that you are a girl, dad, and you have given me a lot
of pointers along the way, but.
It's been, it's been one hell of a ride.
You know, just kind of doing and experiencing everything that
you would normally do with a newborn twice at the same time.
Uh, so for those of you that are, that have twins that are out there,
uh, you know what I'm talking about.
I.
Because it's feed, double the feedings, double the baths, double
the diapers, double the crying, double the whining, double the everything.
And I already had two kids under, under four years old.
So we're, uh, my house is a little bit, uh, it's fun, it's exciting,
chaotic, and I often say surviving is the way that I feel survival on any,
on any given day, but in a good way.
In a good way.
Of course.
Uh, my wife does a really great job.
And, uh, shout out to her because I couldn't do what I do without her, uh,
her support and her being a great mom.
Um, as far professionally as professionally, you know, I've been in
very involved in the sign bus, in the sign field, in the sign shop owners field.
Uh, I've currently taken on a lot more clients across the country.
I'm now on the west coast with a couple of clients, uh, in Canada
with a client here on the East Coast and, uh, obviously Canada.
A Canada a yeah, and, and learning a lot more from.
From their perspectives as to what their struggles are.
And we're gonna get into some of that here today, I think.
Yeah.
Well, congrats on the twins.
Thanks man.
I see you.
You still have hair, so you're doing well there.
Yeah, I'm losing some right here.
I'm losing it like I've had to change hairstyles lately.
Uh, that's another thing that, that's gone that I've done.
This past few months is, uh, I went back to my twenties haircut, like the
haircut that I had in my twenties.
Uh, it just didn't look good on a man that's about to be
in his forties body style.
Um, I, I looked a lot thinner and leaner in my twenties for sure, where
that haircut was kind of amazing.
You know, the, the high and tight, if you will.
Uh, try.
Tried to hide away the fading hairline there, but went back
to my, uh, my forties hairstyle here about a couple of weeks ago.
Well, you, you saw my experiments with, with hair.
I did.
What's up with the braids man?
I think you enjoying the girl dad life too much.
Yeah.
So I call it a crime of opportunity.
We, uh, we did Disney.
Uh, couple, uh, it was last month and, uh, we went with a, another
couple that we're friends with.
They've, like, our daughters are best friends, so we've got five girls, two
couples at a resort down at Disney.
We actually went to, uh, it's the, the Hilton Signia down there.
It's not Disney property, but they have a shuttle.
If you're going to Disney, that's where I'd recommend, 'cause you could cash in
all the Hilton points if you've got 'em.
But aside from that, uh, we're walking down to the pool and
there's a, a braid station there.
And my buddy Mike, not the sign burrito Mike from the podcast, but
my buddy Mike is like, Hey, why don't you get your hair braided?
And I was like, that is a fabulous idea.
You know?
So I'm like king of.
Of making my wife aggravated, making her sweat a bit.
Uh, I sat there and got my hair braided.
Little did I know that she was planning on using the pictures from the next day
at Magic Kingdom on our Christmas card.
So I, uh, I was in hot water there for a bit.
You have absolute balls of steel.
I, I just couldn't do, I just couldn't do that.
I couldn't do that.
Wondering what my wife would think, wondering what my friends would think.
I mean, if a friend suggested I should get my hair braided,
I, I'd question our friendship.
Uh, like we, yeah, it, I, I think it's like when you're with your friends,
like you're instantly transported back to like 13 or 17 where you're just
like, especially on vacation, right?
You're like, oh, hey.
Eat that or like, so it was one of those trips, but you know, my wife ended up
liking it, um, you know, worked out well.
Uh, I actually got a lot of compliments from folks,
if you could believe it.
Okay.
I, I, I, I can't believe it, but I trust you.
I take your word for it, but that's pretty amazing stuff.
Yeah, man.
Uh, other than that same man, busy.
Uh, as you've now experienced like girl dad, life is, uh, a bit different.
Lots of, lots of emotions, lots of crying, lots of hair and makeup and all that
stuff you've got that to look forward to.
I can't wait to catch you on the podcast in a full makeover.
Yeah.
Blush and eyeshadow and lipstick.
Yeah.
We'll, we'll, uh, that, that will be the day mark this episode
down, that that will not happen.
And if you ever see that happening, um, that's when I've completely given up.
It's there that when you give up, that's when you get the minivan.
Oh, we're on our way to the minivan right now.
I think
it's the most practical choice.
Let's dive into some practical rules that, uh, that we're gonna talk
about for this episode and maybe another episode as well, don't you?
Uh, yeah.
Set us up here, Pete.
Yeah.
This is, this is something out of your consulting practice.
Yeah.
Absolute.
Absolutely.
So here we are at the time of filming this, uh, this episode here, it's,
it's quarter four of year 2024, and a lot of sign shop owners out there are.
Looking at their numbers, and maybe they're thrilled, maybe they're happy,
maybe they're not happy, maybe they start questioning, you know, how,
what's that push towards reaching our financial goal that we set
forth at the beginning of the year?
A lot of emotions can be running wild through your head right now,
uh, especially in quarter four.
When you start looking at, okay, where did the year go?
You know, and, and, and what though my numbers look like and where, where did
I go wrong throughout the year or where did we go right throughout the year?
So one of the things that has become abundantly clear with, uh, my cl, my
sign shop owner clients, uh, who I consult with on a, on a weekly basis is
that there's no true North star to the numbers that they should be looking at.
And I completely, and 100% have disagreed with that sentiment.
You know, some people would say, yeah, I think, uh, you know, like 30 or 40%
of, uh, you know, labor cost is okay.
It's just what we've always been doing.
And, and, uh, you know, I'd look at that and, and cringe and we
need to kind of take a deeper lot deeper look into what those, uh.
What those KPIs, what are those mastering of the financial
foundations of your sign shop?
What, what do you need to do to become better going into the latter
part of the year and obviously into the early part of the next year?
Because like anybody knows, the end of the year is, uh, is a strong push towards
the finish line, like, but the beginning of the next year, January and February
are notoriously slow for the industry.
Uh, it's a slow part of the industry and the, and the shops that are are
busy are typically the shops during, or that are busy at that time, that
are handling a lot of the overflow projects that were not completed
in the latter part of quarter four.
So in what I thought would be important as to, as a way to kind of
come back into this with a bang come back into this podcast with a bang,
is to do a two part episode here.
We're not gonna be able to get through all of these inside of one episode,
but we'll, uh, we'll certainly stick, you will definitely wanna stick
around to the part two of this, uh, of this podcast episode here that
we'll be dropping here next week.
So, uh, or in the upcoming weeks, I should say,
but down from the mountain calms Peter with.
The 10 Sign Shop Commandments.
Yes, that's right.
That's what I call them.
I call them the 10 Sign Shop Commandments.
Now, in order for you to master the financial foundation of your sign
shop, these 10 commandments are what's going to be your North Star.
Now, are we going to get a.
Like a, like a full accounting degree here.
Like what are, what are we talking about?
You're talking about financials.
I know that's usually like a, it, it's like a squishy subject for a
lot of owners that I've talked to.
It's like, it, it's important to know the numbers, but as you mentioned,
a lot of them may not know what numbers they're trying to hit or
what numbers they should be hitting.
Exactly.
And you know, I, I guess for, for starters, I'm speaking to
the sign shop owners that are, I.
Diligent with reporting on their numbers.
Not ones that are talking to their accountant once a year
and saying, you know, how did my business do at the end of the year?
Or, you know, let's, let, get me all my bank statements and let's start
reporting on all my financials, you know, towards the end of the year.
Or, you know, come tax season, I'm talking about that sign Shop owner that pays
attention to their profit and loss, pays attention to their balance sheet monthly,
if not bi month, uh, twice a month.
That's the type of sign shop owner that I choose to work with in my practice.
That's the type of sign shop owner that I feel like I can help the most.
Because when you're not in that world, when you're not in that world of knowing
your numbers, knowing the pulse of your finances, knowing the pulse of your
business, I mean, what are we really getting up every morning and doing?
You're, you're a type that I would say that you're the type of owner that's
involved too much in your business if you're not looking at your numbers.
You know, you're the one that's going out meeting the clients and you are
the one that's project managing.
You are the one that's coordinating installs and speaking to your vendors
and possibly maybe even the one in the truck installing signs or making
the signs or designing the signs.
And that's not I.
That's not my client.
My client's the one that knows that, you know, I can't be the
owner in working in the business.
I need to be on the business.
And, and working on the business means you need to know the numbers.
You need to know your finances, you need to know your percentage points,
and you need to hit some, you need to strive to hit those targets.
So let's, let's shoot right outta the bang here.
Uh, right outta the cannon.
Let, let, let's get, yeah, let's get right to it here.
Uh, we'll shoot right out of the cannon and we'll talk about gross profit margins.
Okay, now.
For those of you that don't know what your gross profit margins
are, that's your gross sales, minus your cost of goods sold.
Okay?
So your gross profit margin.
Now, I'm not necessarily gonna give you the first commandment here in
terms of dollars, but I am going to give it to you in a percentage,
'cause I'm a percentage kind of guy.
Brian, you know.
I would invest heavily in, in a business that was, you know, if you're doing $5
million and you're not hitting these market, your markets, your markers,
and you are netting 5%, I'd rather invest in the company that's doing
$500,000 and netting 20% or 10%, you know, so, makes a total sense.
I mean, we talked to a lot of guys that just want to grow and grow and grow,
but if you're not hitting the numbers.
What's the difference?
Like, hey, if I eke out just a, a penny in profit and doing 10 million in revenue?
Yeah.
I mean,
sometimes, sometimes people get caught up in like the, the accolades of
what your nets, your gross sales are.
Oh, I'm a $10 million shop.
I'm a $9 million shop,
and
just because you're doing 9
million, that's.
That's why all these are in percentages.
That's the,
that's why the most of these are in percentages.
Yes, because it's, it's for everyone.
So let's start with the first one.
Your gross profit margin should equal or exceed 60% of your sales.
So that means if you did a hundred dollars, you need to profit
$60 after the material cost.
That's, that's kind of where that is.
If I can break it down to a simple number.
If you sell something for a hundred, you know, you want your, you want your profit
before your office expenses and your overhead expenses to be $60 of that 100.
So you want about at least anywhere from zero to $40 being your
material cost on that project.
Okay?
So that's what I meant by when I say gross profit margin should equal or exceed.
60% of your net sales.
Any comments on that?
I, I like that number, but where did you, where did you pull this from?
Where did I pull this from?
That great question.
Where did these sign 10 Sign Shop Commandments come from?
Bryant.
I, I mean, I'm not gonna tell you that, I'm not gonna tell you that.
They, they, they come, they come from years and years of.
Profit and loss management, multiple different profitable sign shops.
Uh, it didn't come from Moses.
Is that, if that's what you're asking?
That's, that's, that's where most of the pricing comes from for the majority
of, of, oh, hey, what's the price?
That feels fair.
No.
Yeah.
It didn't come from thin air either.
It didn't come from thin air.
You know, we're talking about looking at.
Dozens, if not hundreds of profit and losses in my career for sign shop owners
across the country and coaching and, and learning from some of the best
franchise systems in the country on what they're looking for in terms of
their units and their unit economics.
60% is a really great, healthy number, but it could equal or exceed that.
So it can be better, uh, but you don't want it to go below 60%.
That's the key there.
So when you take a look at your, your first primary KPI,
it's, what did you do in sales?
What did we do in cost of goods and what is that percentage there?
And that is sign shop commandment number one.
One.
So when you mosey on down the profit and loss here, what's after cost of goods?
Typically, in most, uh, profit and loss architecture format, you're kind of
looking at next would be labor, right?
So now you, you have material and now you mosey on down past material.
And we're looking at, okay, how much did it cost in labor to produce?
So this is a very simple, uh, very simple one because.
We're talking about physical wages here.
We're talking about the designer, the sign maker, the installer.
We're not talking about in this particular KPI, we're not talking
about any type of support labor.
We're talking about direct labor, so KPI number two, at commandment number two.
We should have like some sort of like angel noise when Yeah.
Like
there you go.
I dig it.
Commandment number two, direct labor should not exceed 20% of your net sales.
Okay, so let's, let's go back.
What is direct labor?
What is direct labor we're talking about?
People in your business that are direct, that are directly connected to, to
the sale, to the, to, to the product.
Okay.
We're not talking about CSRs, we're not talking about project managers.
We're talking about people that are directly connected to the sale.
I'm all, some people would put salespeople in this category, and I
feel like there's about a 50 50 split.
Of, um, of people that would put salespeople like
territory sales, outside sales.
Mm-hmm.
Um.
Personally, I'm on the fence on this, but I would lean on not including
that in this percentage point.
I'm talking about your designers.
I'm talking about your production guys, your installers, your electrical guys,
you know your welders, your painters.
Yeah.
The resources that you are using to build the actual product that you sell.
Correct.
Now, we'll get into the rest of those people in, in a minute here, later,
uh, later on in, in, in, in part two.
But in part one here, commandment number two.
Direct labor should not exceed 20% of your net sales.
So if we go back up to that a hundred dollars, right?
We've got $40 or 40 bucks in cost of goods, labor should not
exceed $20 of that a hundred bucks
right?
Now, remember, remember, do not exceed because you can be 10% cost
of goods, 20% cost of goods, but you shouldn't be more than 40%.
Okay?
So that's what it's saying there, and you shouldn't.
Be exceeding 20%.
So your direct labor costs could be less than 20% too.
Uh, if you take a look at your p and ls everyone and see if that's what's
what you got going on, but it shouldn't be more than 20% of your net sales Now
com sign Shop commandment number three.
We're kind of moseying through this here.
I'm moseying through this year.
Let's go back to.
Commandment number one, we talked about gross profit margins should
equal or exceed 60% of net sales.
And we kind of referenced materials minus what that is.
That formula there is sales minus materials, but what
should materials really be?
So materials and parts.
Okay.
Uh uh.
Some people, if they're using shop box, they call it parts, uh,
materials in general can be anything in your shop that is used in.
Your business from transfer tape to banner tape, to grommets,
to substrates, inks, um,
electrical accessories
should not exceed 17% of your net sales.
Okay, so we're saying now that.
When you populate all of those expenses, you go to your supply
house, you're going to Grim Co.
You're going to your local supply house.
You're ordering materials every day, every week, whatever that looks like.
Vinyls, inks.
Yep.
Make sure that you're classifying those purchases correctly.
Because you can skew this number pretty easily.
I'll give you an example of one of my clients that has
skewed this pretty easily.
They would do a weekly order with their supplier.
I believe they use Grimm Co.
And they would order everything under the sun because of where they're located.
They only do Grimm Co.
Only does like a once a week delivery truck.
Yep, yep.
Been there.
So when they send, set out an order, they're ordering
substrates, they're ordering, um.
Supplies like exacto, knives, blades, cleaning, flu, uh, application
fluid adhesive remover, you name it.
Right?
They're, they're, they're ordering everything.
But what what's interesting here is that they're also ordering things that
like, uh, perhaps inventory in bulk.
Okay?
Uh, which is not a profit in loss item.
That should be a.
Balance sheet item.
We'll, we will talk about that in a later time.
But the proper accounting here, if you are purchasing materials in bulk,
it's not a purchase that goes on your p and l, it's a purchase that
actually goes on your balance sheet.
'cause it's not yet tied to a job.
So it's an asset for your business, not necessarily an expense.
Uh, another example of this would be mixing.
Materials with other items.
Like if you're going to Home Depot and you're buying things like, uh, screws and
hardware for a project, but you're also buying garbage bags and you know, cleaning
supplies for your office or toilet paper, paper towels, whatever it is, right?
And you're doing that on a consistent basis, well, those items
are not really cost of materials.
Those are office supplies, and that's an overhead expense and not.
A cost of materials expense.
So some of this might sound simple, but you can easily screw up if you just
look at the total number on an invoice that you paid at a Costco, a Lowe's, a
Home Depot, wherever you're buying your materials from and saying, oh, yeah,
I, I took $500 and I spent $500 here.
Well, maybe only $300 of those items were cost of goods.
So you have to actually look at the line item on the receipt.
Classify it correctly, and the shops that actually are doing this well are.
Understanding the accounting part, and they're breaking apart their orders
into, these are my material orders, these are my office supply orders, these are
my cleaning supply orders, and they're checking out with one vendor, but
they're processing the order separately.
So they're breaking it down into three separate invoices for easy reporting.
Yeah.
Uh, which you know, is just a couple of extra steps because when you're
in that type of sign shop that is.
Always on the rush, always on the move.
I gotta meet these deadlines and, you know, it's always that you're
always moving at a speed of a hundred.
It could be easily forgotten these particular steps.
Yeah.
You know, well
it, it's all about prep work as well, right.
That you've gotta have, you gotta have the, the foundation, you gotta have
all this stuff set up to, to codify it correctly, to make sure that like the you,
you can actually get to the point where these numbers are actionable for you.
Right.
So, uh.
Yeah, so I, I, I've seen a lot of QuickBooks over the years, uh, for
shop owners and, uh, I can tell you that like, no, like chart of
accounts is the same across the board.
Uh, but that is a very important step.
It's, uh, you know, you need to take the time to really sit down, go through
it with your accountant, or they, somebody who is, who is knowledgeable
about that, and figure out where you're gonna code these things at and, and
what those accounts are gonna be.
Yeah, for sure.
You know, as many of our audience members know, I come
from the franchise world, right?
So when you're in the franchise, the franchise supplies you with, this
is the franchise chart of accounts.
There is no deviating from it.
We've thought of everything and everything has got a little chart
of account number that can assign the little list things to it.
But when you're mixing, uh, when, when, when you don't have that value,
when you don't have that value of becoming a franchise and you don't
wanna be in going down that path and you have to do your own bookkeeping.
One of the best things for you to do is really to have a, a constant
communication with your bookkeeper about similar like expenses.
So if you're making material expenses on the regular, inform your bookkeeper,
like, no, this is a cost of goods.
Anything, anytime you see this vendor.
Charged on my debit card, charged on my Amex.
Anytime you see a check written out to this vendor, you know, that
is a typically going to be 98% of the time, a cost of goods expense.
However, when you do run into that situation where, okay, we just
spent $500, but a hundred dollars of that is an office supplies and
toilet paper for the bathrooms and you know, soap and hand towels, and.
Scented candles.
You know, just for the typical shop office, you have to notify that bookkeeper
of yours and say, Hey, look, I just made this $500 expense on November 15th.
And a hundred dollars of that is going into office supplies.
I just wanted to let you know, uh, here's the receipt and that's
how you should be communicating with your monthly bookkeeper.
And if you don't have a monthly bookkeeper, I personally
strongly advise you to get one.
Uh, because if you should, you should not be an owner, uh, without one.
You should not be in owning a sign shop without a monthly bookkeeper.
They're not expensive.
$200, $300.
You could do this remote.
You could do this with a, you know.
Someone in the Philippines, or even someone in your local market if you, if
you even want, but they're not expensive.
Uh, but it is important for you to have accurate numbers.
All right, so just to recap, 10% gross profit margins should
equal or exceed 60% of net sales.
That's number one.
Number two, direct labor should not exceed 20% of net sales.
Cool.
Got that Number three.
Materials and or parts should not exceed 17% of your net sales.
Okay?
We often get in this industry, I know I did for the explosive profit margins and
the materials and parts reason is one of those reasons why it's so amazing,
you know, uh, what, how much money you can make off of a $10 sheet of Carlas.
You tell me.
You know what I mean?
Like it's a, yeah, like the mark you got.
Some have always been
good.
You got some really great explosive profit margins here in the sign shop world.
Okay, number four, sign, shop commandment, number four.
Okay, so we're moseying on down that profit and loss.
Now we got sales, we got cost of goods, we got materials, we got labor.
Now we're gonna talk about.
Overhead with the the mosey thing.
Like, Hey, T, I'm thinking commandments.
I'm thinking Moses.
Oh no,
mosey on down.
It's kind like, just like perusing, like giving a walk
down, Jo, down the know I got it.
No, I got it.
All right.
Sign Shop commandment.
Number four.
Number four, operating expenses.
Now every shop here is very different.
Brian.
You know that there's big shops, there's small shops, there's two
man shops, there's 20 man shops.
Okay.
Every sign shop, no matter what, is going to have different expenses.
And this my friend, you and I know this very well.
This is the reason why pricing is off the charts different from one shop to another.
Okay?
When we talk about pricing and products and being priced out of the market, this
my friends, is why pricing is different from shop to shop operating expenses.
Sign, shop commandment.
Number four, your operating expenses should not exceed 48% of net sales.
Okay?
Should not exceed if you're doing okay.
If you're hovering 48%, maybe you're doing 49, 51 month, and then
you're at 44 some months, you're probably having some cashflow issues.
You gotta really look at your expenses here.
You gotta take a strong look at your overhead, your phone
bill, your utilities, your rent.
What are the bigger, what are the hammer?
The bigger hammers here is rent.
Okay.
Mm.
And, and surprisingly, one of the ones that I actually love the most, and I
know you know this, but there are a lot of shops investing a lot more money than
that they spend in rent in technology.
Okay.
Like RIP software, graphic design software.
Mm.
Yeah.
POS software, Zapier, they're, you know, field management software, company cam,
things like this that are just adding up, you know, you gotta look at all of that.
Yeah.
Uh, as some of your bigger, heavy hitters here.
If you have, um, if you part of a, that was
gonna be my question is like, if we back up like what, you know, you've
mentioned these things, but like what goes under operating expenses?
I.
So that's gonna be your typical people can, uh, call 'em overhead expenses.
People call 'em operating expenses.
Uh, people call 'em business expenses.
You know, your tip, everyday run of the mill expenses that you're
gonna have in your business.
So rent cam charges, perhaps you're paying taxes on the
building that you own or every,
everything that goes into keeping the light on whether
you make the first sign or not.
Yep.
Credit card fee, merchant fees.
Um.
Let's see.
Let me think of a couple.
Your phone bill, your electric bill, you know all of your utilities.
If you have a lease, a printer, lease payment or insurance that you're paying.
Car insurance, gas, uh, you're gonna look at all of these expenses and
classify them as an operating expense.
Now, we talked a little bit about this, okay?
Just a little bit, but.
You're gonna also, you're what a problem that I also see here is that
for the support labor items, uh, okay.
You're clairvoyant.
That was, that was my next question is like, does labor go in here?
Not
correct.
You know, there's a lot of people that mess up their p and l statement.
You know, when they look at their p and l statement, they're putting labor in.
Operating expenses, your designer salary and, and things like that.
And, and, and the reality is, is that you should not, okay.
If you're not, if you're not classifying direct labor, then the
next type of, there's only two other types of labor categories that should
be listed on your p and l support.
Labor is the first, that's gonna be everyone else that's
not related to the project.
Or a signed sale, you know, maybe if you have a bookkeeper or a
controller or a CSR, your sales staff.
Okay.
Maybe you have an inbound sales person.
Uh, maybe you have a, maybe you have like, um, operations manager.
Yeah, like a foreman or, yeah, an operations manager or, or I was gonna
say like a general manager here.
I'm trying to think of some others just in case that somebody has somebody here.
Uh, field supervisor would be another.
If you have any of these types of people that necess their ru, their job is to
make sure that the job gets done, but they're not necessarily swinging a hammer.
They're just more upper management or, you know, maybe even in, in, in a sense
of running your business or just running a department that's gonna be support labor.
Bookkeepers, if you have an, if you have a train, we, we've had some people
on this podcast that had trainers on their full-time staff, right?
So these are all support labor line items.
And then the second one, or in this case the third one.
'cause you have direct labor as well.
I.
Would be, you know, owner salaries.
Where, where is your salary in this and, and is that gonna go under support labor?
I don't recommend it because you are, some days you're paying yourself,
some days you're not, some days you're taking a bonus, a significant bonus.
Some day, some months you're not.
So you should absolutely be breaking yourself down.
Uh.
Outta that labor as well.
So owner salaries maybe that you have partners.
So you gotta really kind of break down like, this is my salary, this
is this owner salary, et cetera.
Um, so definitely break that down to direct labor, support,
labor, and then owner salaries.
I.
So now the first, I think where you were going with that is should any of
this be considered an operating expense?
And, you know, some shops, some shops can put that support labor in that category.
Okay.
Um, personally, I'm not, I'm not all for that.
I'll, I'm always breaking down labor separately.
Okay.
I, I'm looking at operating expenses as.
Things that you need to make that business run, whether you're operating or not.
You know, you have these expenses every month no matter what.
Uh, so like I said, those should not exceed 48% of net sales.
Now, getting to the last one here.
Sign shop commandment number five.
Okay.
I think we could talk, I think I left it number five for a reason, because
I feel like almost every single person I talk to about this has.
No clue what their percentage is.
Um, it is the one that we talk about a lot in my, in our coaching sessions.
It's the one that fluctuates the most.
I.
Uh, it can be expensive then it could be zero.
Zero the next month.
Yep.
Yeah.
So it's the hardest one to keep track of because I'm not gonna lie to you
here, Brian, and maybe our audience won't like this, but a a, a large chunk
of sign shop owners out there are lazy.
Are lazy, or this is
a mic dropping there.
Bam.
Yeah.
Well, uh, I'm able to say it because I used to be one.
Yep.
Okay.
And so I can acknowledge the fact that as a sign shop owner,
I did not fully understand this fifth sign shop commandment.
Um, I knew that I needed it.
I knew that we needed to, uh, have it.
I didn't know how much I needed to spend.
I thought it was, uh, fluid.
I could just guess and take a stab at it.
Boy.
Oh boy.
Years have gone by.
I've learned from some.
From some of the best.
So, sign, shop, commandment number five here.
Your advertising budget.
Okay.
You're also known as your marketing budget, okay?
Yeah.
Should not exceed 11% of net sales on any given month.
Okay.
So advertising, sign shops, advertising, like marketing, what?
Yeah, yeah, yeah.
I have, um, at this current time, I have seven sign shop clients.
I actually can't take on anymore.
Uh, not yet, at least not until the new year.
I did a, I had a feeling we would talk about this coming into this
episode and I won't name them.
I won't name who they are.
Okay.
But I will give you the number out of those seven, four of
them do not advertise a dollar.
Yes.
Okay.
Four of them do not advertise their business.
They know who they are.
That's what percentage
to that
they know who they are.
It's
57%.
57% of my clients, which is, you know, just in a vacuum.
In a silo here, okay?
There's thousands and thousands of sign shop owners out there, but out
of my seven who are very good, you know, I have from 500,000 to 5 million
is are what my sign shop owners do.
My clients do.
So they, I, I have some heavy hitters and I have some, you know, guys that
are just getting started out here.
Z four out of the seven, right?
I said four.
Four out of the seven.
Yes.
Do not spend a dollar on advertising.
And I will also say.
That the one person that does 4 million is one of them and doesn't
spend a single dollar on advertising.
So I'm just gonna throw that little carrot out there.
Now I am in the, I hope I'm in the majority here.
I hope I'm in the majority because I believe that in order
for your business to succeed.
You need to advertise, okay?
Yep.
You need to forecast revenue.
You need to be able to forecast the amount of opportunities that you're going to
have in any given month throughout the year by looking at history, by looking at
budgets, by looking at dollars and cents and percentage points, you should be able
to forecast how many opportunities your business will get in any given month.
But most sign shop owners, Bryant, they, they don't care.
And this is in my personal opinion, and I think you and I have had a lot of offline
conversations about this in my personal opinion, this is where companies like
Corbridge and Shop Box, and I know you're going through your POS school right now
and kind of going through all of this.
Mm-hmm.
But.
This is where I feel like most of these shops, uh, pieces of
technology have dropped the ball.
They have completely and utterly forgotten about marketing.
They just say when the job, when the, when the lead comes in,
well, where'd the lead come from?
How did you get the lead?
Yeah.
When the lead comes in, enter it into your workflow.
Great.
That should be awesome.
Where are the leads?
Where do they come from?
Do they just magically appear?
Do they just come into the pipeline?
They, they just,
you just manually put them in there.
Oh, oh, I know.
They just fall out of the sky.
No, I, I agree with you.
Oh, I
know.
Oh, I know.
They shop box guarantees you X amount of leads when they,
when you buy their software.
Right?
And that's, that's how it works.
Like No, no, it doesn't work that way.
So like, how do you operate a business not knowing one who your customer is?
I feel like that's a part of this process that we need to also discuss.
But how do you not spend a dollar now I'm gonna.
Say that those four shops that aren't spending a dollar,
I'm not singling them out.
'cause I really feel like there is a lot of you out there.
No, that do not.
There's
a hundred percent, there's the majority.
Like if you looked at the p and l, let's say a hundred sign shops right now, like
marketing and advertising would probably be like one of the more minimal expenses
correct.
On
there.
And what do you think, what do you think is the first thing that
they cut when cash flow is tight?
I.
The marketing budget because hey, we don't, we don't need it.
Or the, the work is coming in.
Right?
But yep.
The, the laws a pipeline dictate like, Hey, hey, the, the stuff that
you're bringing in now took time to develop and time to bake, and time
for somebody to say, oh, hey, I, I've seen this sign shop a thousand times.
Oh, I actually need this thing now.
Right.
Cutting off the marketing budget.
What are you doing?
You're chopping your arm
off, cutting the head off the snake, right?
Cutting the head off the snake.
But you know, to your point, when that huge job that you're working on gets
done and you get paid, what's next?
Where's the next, where's the next one coming from?
You know, it's when I explain marketing, when I explain
advertising, there is a, a lot of.
I don't need, I don't need customers.
I don't need customers.
Um, we stay
busy enough.
We've got plenty of work.
Yeah.
My, my word of mouth.
Word of mouth.
Mm-hmm.
Word of mouth.
I've been here for 30 years and everybody knows who I am.
I don't need to advertise.
That's typically the rhetoric.
And if you're one of those shops that are lucky enough to say that, great.
I'm, I'm not really talking to you.
What I am talking about is just having a marketing budget, because
most of your businesses, if not all of you guys out there.
Wanna grow your business, you wanna scale your business, you want to,
you might be stuck in the mud, you might be doing 2 million and
saying, how do I get to 5 million?
Or how do I get to 4 million?
Or how do I get to two and a half million?
Or you might be a $500,000 a year shop and you have a marketing budget and
you might be saying, well, my marketing was just an expense 'cause I only did
$700,000 this year instead of 500,000.
You know where you are in.
Sign shop lifespan.
This conversation is different for everyone.
Okay?
Sure.
However, we'll go back to your, uh, well, my original observation, if
you make a hundred dollars Oh, what I am simply saying is that $11, no
more than $11 should not exceed.
$11 need to go into paying for that $100 that you got.
Okay?
So if you're spending $5, $6, $1, whatever.
It just can't be over 11, 11% of net sales.
So let's put an extra zero to that.
If you did a thousand dollars, 110 bucks to make that a thousand dollars
is what you can't spend more than, okay?
And that could be really looked at with a magnifying glass.
We can look at that in a week.
We can look at that in a month.
We can look at that in a day and say, what did we spend?
And how many leads did we generate?
Yeah, I I, I like the way that you've structured these and like, should
not exceed because like, you know, I, the things that I've heard over
the years and seen is usually like a, hey, you should be spending a
percentage, this percentage of sales.
Uh, but I, I like this format because, you know, I could always
spend X percentage of sales.
To, to, to get a new lead, right?
Whether that you say that's 4%, 5%, whatever it is, obviously, like you,
you always want to decrease this number as a percentage of net sales.
But there you do have to be spending some money to, to have that percentage,
which is an interesting segue, uh, into.
Uh, I, we'll, we'll, we'll pause here 'cause we have another five to go.
And we're gonna, we're gonna save that for part two of this podcast.
But before we go, before we go, I have, uh, is it, I'm gonna, I know
you like to go into the mailbag, but I actually have a mailbag question.
I.
Okay.
That, that, that came in just the other day and I thought relative to stopping
on, on sign shop commandment number five around the marketing and advertising
expense, that this was a really great mailbag question to start with.
Okay.
So I have a, I have a question here.
Okay.
Hold on one second.
Let pull it up.
Lemme pull it up.
All right.
This is a good way to cap this one off.
So I have a, I have a, uh.
I have a question here from Jason in Idaho.
Idaho.
I have a client and I have a sign shop client in Idaho.
So this is, this is actually really good and it's not, this
is not my client, by the way.
My client is not named Jason, and he says, what are some marketing
vendors out there that are working for the sign shop industry?
And as a part two to this question, he writes.
Will they work in Idaho.
Okay.
Um, I don't know much.
They work in Idaho.
Yeah.
So this is an interesting, I have a couple of answers to this, is that,
can we do the second part first?
Is that like a, like will they physically work in Idaho or like
does their technology or their platform or whatever work in Idaho.
I'm sorry, Jason.
Sorry.
So Jason, I feel your pain.
I am gonna answer part two of your question first.
Uh, I have a little bit of a horse in this race.
Okay.
So I have a sign shop client in Idaho.
Okay?
Not in a major city of Idaho, either, uh, like Boise or
Meridian or anything like that.
Like, no.
Uh, so if you are in Boise or Meridian, I think that this answer.
Is different.
Idaho is a very interesting state in the us.
Like this is how interesting it actually is.
I have come to learn that Amazon only makes like once a week
deliveries to certain parts of Idaho.
Yeah.
Oh, okay.
That deliveries are actually really hard to get in Idaho, that
even companies like Grimm Co.
They like, no, we're gonna ship it to you.
We we're not, we're not making that drive.
We don't make that drive at all.
Uh, we don't send a truck out, uh, this way.
So I've actually, uh, heard from my, my client in Idaho that like,
yeah, it's, it's, it's challenging.
We have to order like once every, once for two weeks out.
Just to have enough inventory and geez materials and, you know, to
get that, to get that here in time, we actually have to order in bulk.
So I feel your pain being in Idaho, um, not necessarily encouraging you
to move to another state, but, uh, I do understand why you're asking the
question of will it work in Idaho?
All right, so part one to that question is what are some.
Marketing vendors that I could use.
And what has anybody basically had success with?
Um, Bryant?
Now I know you and I are are keen in this area.
I actually have a couple of new sign shop vendors in the marketing world that
I, they they have no, they have not.
Uh, I will mention them, but they have not, um.
Paid to be on this podcast.
They have not, uh, sponsored this episode or any way or not, it's just, I think
we've had a lot of success with a couple of these, uh, marketing companies here.
So I'm gonna mention them.
And, um, if you're watching this podcast on like YouTube or, or anywhere, we'll
probably put the links for these, uh, these vendors here in the, in
the, in the, uh, description below.
So Jason.
I feel your pain, but maybe some of these sign, uh, sign shop
marketing vendors can help you.
We'll start with one that I am so in love with.
Okay.
The name of the company is called Ride the Wave Info.
Right.
And I The wave info, correct?
Yes.
Um, so some of you may not realize this, but I'm a huge twi, uh,
X user Twitter, Twitter user.
Uh, I have a, I'm on it actively, and I came across an individual, um, named
Brian, and he is in his thirties and started this company called Ride the Wave.
And I was like, all right, lemme check this out.
And old.
And, and, and to tell you the truth, I didn't believe
that it would work at first.
Um, I've, I've had no, a number of meetings with him.
I've referred him to a lot, a couple of my clients who've had some successes here.
Ride the Wave has a, I think they've cracked the code on communal networking.
Okay.
What does that mean?
Uh, so we're all in the sign shop industry.
Right.
And to be a part in the, to be a, uh, a sign shop owner in the industry.
You have to let me go back.
You have to advertise your business.
You have to network your business.
There is no world where you're trying to grow your business and scale
your business, and you don't have it figured out in terms of, you know,
like, I'm gonna advertise here.
Okay.
But I've also mentioned that sign shop owners are lazy.
I used to be lazy.
One of the biggest fears that I had was that I had to like stand
up and talk in front of people, like at a networking event or a
Chamber of Commerce or A BNI group.
But these are the ways that most people are aware of how they can be involved
in their community sponsorships and new and trade events and community events,
and being like a mayor of the community.
Yeah.
One of the best ways to grow.
Yeah.
We've heard that time and time.
Time and time again.
I, I don't disagree.
I think it's one of the best ways to grow your business.
So there's a, another tip if you have, if you're not doing that, you should
definitely be doing these things.
What if that's not you though, right?
What if you're, well, what if that's
not you?
Like me, like me?
Uh, and I, and I tell my clients this.
So audience, I'm gonna tell you this about me as well.
Um, COVID has made me an introvert.
I used to be an extrovert.
One of the best, one of the biggest ones.
I would be the one the, the, the, the party starter.
The crowd pleaser.
The guy that's gonna, this is what I do and you know, I'm shouting it from the
rooftops, covid and staying home and I.
Away from everybody has completely changed my personality, my, my mindset on this.
And I'm now as nervous as the next guy to get up in front of
people and talk in front of a room of five people, let alone 50.
Okay.
Yeah.
So when I go to my, when I, but I still go, I still go to two BNI meetings a week.
One on Tuesday morning, one on Thursday night.
Okay.
And I'm networking my businesses.
If you're, if you're not doing that, I strongly advise you to do it.
But for those that are you, that have, that are introverts like me, and you're
fearful and you're, you're just, you feel like you've gotta spend the money,
but you can't commit because you're always listening to your inner voice.
And your inner voice is saying like, this is not working.
Or, you know, I'm scared.
Let's just not do it.
It's easier to just say, no, this guy ride, this guy Brian over at uh, ride the
Wave has been able to figure out a way to.
I think he cracked the code on communal networking, and he's using Facebook,
in particularly Facebook groups.
Okay.
To network your business, but in a different way, in a, in a
way that I was so proud to see.
Okay.
So let me give you like the high level of this vendor, and I know
there's a second one coming.
The, this guy has been able to say, give me access to your social account.
I get it.
You might not.
You might be like absolutely not right, right from the get go.
But hear me out.
If your business is struggling and you're not a big user on social media anyway
and you got nothing, the hu give this guy access to your social media account.
What he will do is he will join seven groups a day that allow business postings.
Not every Facebook group will allow you to advertise your business, but when you
think about the, the hundreds of thousands of groups that are in your community,
car groups, school groups, craft groups.
Moms groups.
PTA groups.
I'm into a PTA group.
Now I can't, I can't listen to these, these scha moms anymore.
Okay?
It's like when something bad happens in the community,
everybody knows within seconds.
Okay?
You got hobby groups, you got business groups, you got consultant
groups, you got everything.
You got sign shop groups out there, okay?
They're gonna join groups that are in your community for you, and then.
They're going to post about you in these groups.
Now, I said that very specifically, they do not advertise your business.
They advertise you, which I think is the best way to do it.
They humanize the element of.
Okay.
My name is Peter.
I've been living in the community for 20 years.
I'm a graphic designer.
I'm married.
My wife is involved in the business.
My kids are involved in the business.
We've been doing this for.
10 years we we're trying to grow our business and we really wanna get
involved in the community and we feel like this is the best way to do it.
If you or anybody know of any signage needs, you know,
please contact me directly.
Here's my cell, here's my email, whatever.
And then they take that and they post pictures of like you and your
family working in the business.
You know, here's my son designing the project.
Here's my.
Wife talking to a customer and then there's like a, just a, a
family photo and it humanizes you.
It's, it's a way for people to say, yeah, I wanna support that guy.
I wanna support that business.
And I was actually, I was actually quite surprised with the results.
I was pleased to see it a little bit of a different angle, a little bit different.
Not, you're not doing paper click ads, we're not doing like social
media ads or anything like that.
This is just like.
Getting into the community.
People know you, people see you.
This farming.
Yeah.
It's a, I love that you said farming.
Love that.
Love the word farming.
Do some farming in your advertising budget.
People.
That's a little tip.
Alright.
So ride the wave.
That's what they do.
Okay.
And I believe that they will work in Idaho.
Okay.
I don't know.
I, I, you'd have to call them.
I, I, I wouldn't know, but I would think.
If you're in Boise or in a popular city, or if you have a community that's
pretty large, it would work for you.
Uh, if you don't have a community that's pretty large, I actually think that
that's an advantage because you become the sign shop owner of the community
though, you know, like the baker, the sign shop owner, the the postman.
So just because you're not in a major city doesn't mean that you can't
develop that persona for your business.
Uh, we, we've seen that time and time again on the podcast, like,
you know,
it doesn't have to be a major city to be successful.
The, uh, the second vendor that I have used and, and, and Brian, I'm not sure
if you've heard of them or not, or used them or not, but social sponge.
Social sponge, okay.
Yeah.
These are all social sponge
new to me.
Oh.
Uh, I have seen this one.
You have seen this one?
Okay, good.
Yeah.
And not many people have heard of them.
Um, I personally was like, I.
Surprised by this because I, I'm gonna tell you the quick story here,
Jason, and I hope you're listening.
I was in the shower one morning and yes, that's true.
I was in the shower and I had my phone in the shower and I'm scrolling through
my Instagram feed and some of you might be like, what the hell are you doing
on your Instagram feed in the shower?
That's none of your business.
I was on my Instagram, so it's my, I told you at the beginning of this,
I have four kids under four now, so this is my only moment of peace.
Um, so I happen to have a waterproof phone and I'm scrolling through
my Instagram feed and I get.
Tagged with this ad and says, are you a sign shop owner?
And you make commercial signs?
And I'm like, wow, that's very interesting.
I've never seen that.
I've never seen somebody talk to me so directly, you know, in, in such a field.
Usually you see this in like other areas like real estate or um, you know,
it, or AI apps and things like that.
I or sales, I'm seeing this guy talk to me, just a random fellow.
I ended up meeting him.
Super nice guy, and he's like, I can grow.
I'm gonna guarantee I'm gonna grow your commercial sign shop.
And I'm like.
Whoa.
That is quite a message
guaranteed.
Okay.
Yeah.
And there's a guarantee behind it.
And you know, there's like, uh, if we don't, I don't exactly know what
their motto is, but if we don't like it, let's just say double your profits
or increase your profit margins.
Like we, it's, it's like we'll give you your money back or something like that.
Mm-hmm.
Um, social sponge has married social ads, particularly those of like.
Facebook reels, Instagram shorts and TikTok reels and things like
that, and married it with an AI component, a a lead qualifier.
So you fill out, you, you click on the ad, you fill out, answer a
couple of questions, and then this thing is like running you through.
What are you looking for?
How much do you do?
You know, it's kind of asking you all these.
Industry specific questions that you and I know how to ask, but like
you train an AI bot to ask them, that's pretty freaking miraculous.
Yeah.
Um, and then it qualifies that person as a lead or not.
If it's a lead, great, they send it to you.
If it's not, they kind of just like send it off into your like
landing page for more information.
But it's an amazing angle because here is something that you all need to know.
Okay.
And I know we're, we're a little short on time here, but here's
something you all need to know.
Your customers are on these platforms.
If you don't think that they are, think again.
Your customers are shopping the same way you are.
Okay?
Lemme say that again.
If you are like me and in the shower, scrolling through your Instagram feed,
so is your customer and it's that simple.
So if you're not doing anything in this space, shame on you.
So sign chop commandments.
Let's just do a quick recap.
Yep.
And then we'll call it.
Yep.
Gross profit margin should not exceed, I'm sorry, should equal
or exceed 60% of net sales.
Gross profit margins should equal or exceed 60% of net sales direct labor.
Your designers, your fabricators, your your production guys should
not exceed 20% of net sales
materials, parts, cost of goods, items should not exceed 17% of net sales.
Your overhead expenses, your operating expenses, your business expenses.
Should not exceed 48% of net sales.
And finally, number five of our 10 sign Shop Commandments.
Start advertising.
Start advertising your advertising expense.
Yes, should not exceed 11%.
11% people.
That's not a big advertising budget.
That's not a big marketing budget.
Get on but should not be
zero either.
It should not be zero.
Love it, man.
Love it.
Alright, so we'll be back with part two.
Make sure you stay tuned for that episode.
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