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Diversifying Your Painting Business

Diversifying Your Painting Business. PDCC Annual Convention January 28, 2011 Berkeley, CA. Overview. Why diversify Ways to diversify How to think about diversifying Business Model Planning tools Ideas for diversification for Painting Contractors. What is Diversification.

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Diversifying Your Painting Business

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  1. Diversifying Your Painting Business PDCC Annual Convention January 28, 2011 Berkeley, CA

  2. Overview • Why diversify • Ways to diversify • How to think about diversifying • Business Model Planning tools • Ideas for diversification for Painting Contractors

  3. What is Diversification • Increasing profitability through greater sales volume obtained from new products and new markets • Typically – to expand into a new segment of an industry that the business is already in

  4. Ways to Diversify • New Services to Existing Customers • Current Services to New Customers • New Services to New Customers

  5. Defensive Spreading risk Forced contraction of current market No opportunities for growth with current products/services Offensive Getting market share from competitors Taking opportunities that might be more profitable than core service Putting retained cash to work Why Diversify?

  6. Why Not? (Risks) • Lack of experience with new skills and techniques • Potential needs for additional personnel or financial resources • May detract focus & commitment from core products and services

  7. How to Diversify: Understand Your Business Model Source: Alexander Osterwalder, Business Model Generation

  8. 9 Building Blocks Source: Alexander Osterwalder, Business Model Generation

  9. Customer Segments • Defines the people you want to serve • Most Important (Ideal) Customers • Target Markets • Segments can include: • Mass Markets • Niche Markets • Others Source: Alexander Osterwalder, Business Model Generation

  10. Value Propositions • Describes the products and services that create value for a customer segment • Elements can include: • Newness • Performance • Customization • Getting the job done • Design • Brand/status • Price • Cost reduction • Risk reduction • Accessibility • Convenience/usability Source: Alexander Osterwalder, Business Model Generation

  11. Channels • How you communicate your value proposition to your customer segment • Channel Types • Direct • Indirect • Channel Phases • Awareness • Evaluation • Purchase • Delivery • Post sale Source: Alexander Osterwalder, Business Model Generation

  12. Customer Relationships • Describes the types of relationships you establish with customers • Personal • Self Service • Automated • Communities • Co-creation Source: Alexander Osterwalder, Business Model Generation

  13. Revenue Streams • Revenue (Gross Profit) generated from each customer segment • Asset (product/service) sales • Usage fees • Subscription fees • Leasing/renting • Licensing • Brokerage fees • Advertising Source: Alexander Osterwalder, Business Model Generation

  14. Key Resources • Assets required to make the business model work • Resources can be: • Physical • Intellectual • Human • Financial Source: Alexander Osterwalder, Business Model Generation

  15. Key Activities • Describes the most important things a company must do to make its business model work • Key activities include: • Production • Problem solving • Platforms • Networks Source: Alexander Osterwalder, Business Model Generation

  16. Key Partners • Describes the network of suppliers and partners that make the business model work • Types of partnerships: • Strategic alliances • Coopetition (partnerships with competitors) • Joint Ventures • Buyer-supplier Source: Alexander Osterwalder, Business Model Generation

  17. Cost Structure • Describes the costs incurred to operate the business model • Types of models: • Cost driven • Value driven • Charactesrics: • Fixed costs • Variable costs • Economies of scale • Economies of scope Source: Alexander Osterwalder, Business Model Generation

  18. Business Model Map – A Painter’s Canvas Source: Alexander Osterwalder, Business Model Generation

  19. Source: Alexander Osterwalder, Business Model Generation

  20. Source: Alexander Osterwalder, Business Model Generation

  21. Where to start… • Value Propositions • Customer Relationships • Key Resources

  22. Source: Alexander Osterwalder, Business Model Generation

  23. How to Decide • Review Financial Analysis – Can I make money? • Analyze Potential Job Profitability – Is this profitable work for me? • Know your numbers - What is my Break Even point? • Review Marketing Strategy – How will I reach my target market?

  24. Diversification Ideas for Painting Businesses

  25. Customer Segments – New Markets for Existing Services • Commercial Property Owners • Leasehold Improvements • Condo Associations • Home Owners Associations • Property Managers • Municipalities • Churches/Nonprofits

  26. Key Partners – New Partners to promote Existing Services • Designers • Architects • Real Estate Agents • Insurance Agents • Vendors

  27. Key Resources – Add Value with services that use resources you already have • Equipment • Gutter Cleaning • Christmas Lights • Power Washing • Personnel Skills • Carpentry • Intellectual Property • Estimating Systems • Training Programs

  28. Customer Relationships - Add Value with Related Home Services • Carpentry • Handyman Services • Wallpaper • Drywall or plaster repair • Driveway sealing • Window Washing • Maintenance Contracts

  29. Customer Relationships and Key Partners - Other Home Services • Chimney Sweep • Plumbing • Electrical • Carpentry • Wallpaper • Faux or Decorative Painting

  30. Value Proposition - New Products or Services that require an investment • Roof Product Coatings • Garage Floorings

  31. Key Resources - Add Value with Facilities - Shop Services • Services • Cabinet doors • Lawn Furniture • Manufactured parts • Markets • Other contractors without shops • Existing customers • Commercial companies or manufacturers

  32. Channels – New Channels for Existing Services • Home Shows • Bridal Shows • Business Expos

  33. Brand New Markets • Products/Services • Instructional Videos • How-To Guides • Systems you’ve developed • Markets • DIY Homeowners • Other Painting Contractors

  34. Diversification is not a silver bullet • Start with a solid foundation • Rarely is anything is without some cost • Evaluate potential risks and rewards • Use the Business Model Canvas tool • Enjoy greater rewards (or avoid costly mistakes!) as a result of good planning

  35. What’s Next? Get Handouts (and other free tools) at AdvisorsOnTarget.com Click on “Member Portal” Click on “Free Resources” under “Community” Sign up as a free member – then log in to access

  36. Contact us to get your business On Target for success in 2011! Advisors On Target – Business Coaching & Consulting Linnea Blair Office: 619.291.3700 Email: Lblair@AdvisorsOnTarget.com Web: AdvisorsOnTarget.com Twitter: AdvisorOnTarget Facebook:facebook.com/AdvisorsOnTarget LinkedIn:linkedin.com/in/linneablair

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