I want to take my business to the next level


#1

I’m looking to take my small business to the next level for this up coming spring. I’ll give a bit of background information.

I share my business with 1 business partner. We have for the past 5 years been a “General Contracting” business, and did everything under the moon. We always found 60% of our work and profits were from roofing. Now it seems that it is all we want to do. It seems to have less of the “unforeseen” that remodeling does at least to my eyes.

I personally want to go 100% into roofing, mainly asphalt shingles. I don’t particularly want to get into single ply and flat roofing. Both before we started our company we had around 5 years of roofing experience before. It’s something we seem to get done quickly with quality as well.

Either way that’s enough rambling. What i’m asking is how do I take it to the next level. Right now as GC’s we were going for say 10-20 residential roofs a year. We want to take it to the level of 20-50 residential roofs a year. This would keep us plus two to four workers busy all work year. I don’t want to set my goals to high to have them fall apart in my face.

We started a bit of advertising this year and had great responses. The market we are in is not a very “strong” market. It is a lower than average income area, with home values that are low. I find that roofing is a good “stable” market in construction since it is a necessity. Personally I enjoy the work since it feels like I’ve earned my money.

I was thinking about hiring a roofing salesman that is 100% commission based, giving per say 10% commission to him per total contract. It’s no secret we are getting between $325-$360 per sq for walkable 1-2 layer tear offs. (30 yr iko/landmark + premium underlayments).

Have you ever hired a roofing salesman, if so what was the results? I figure for the 10% commission that could be great money for the right sales guru. For the 10% he/she would have to source all the leads.

Is that fair? Am I being unrealistic? Drastically over paying him/her?

Some insight would be great.

Right now we advertise just with YP online, have a website, and many happy customers. We are about 40% work is word of mouth, 60% cold. We have a close rate on roofing of almost 70% sometimes higher.


#2

When you let go of everything else but roofing you will lose 40% of your work if 60% is roofing. That doesn’t sound profitable to me. You are also losing some roofs that would have been referred to you off those jobs. Other types of work besides roofing helps keep guys busy on cold or rainy days and helps keep them working for your company instead of looking elsewhere.

You can do over 100 roofs a year but if they are not being done at a good margin what’s the use? It’s just more work and liability to achieve the same profit. When you try to grow by adding advertising expenses and employee/sales costs, etc. you will find that it takes a lot more production just to cover the extra expenses before you can turn any extra profit. When things get slow you can actually lose money for a while until things pick back up. Being in a lower income market just makes things a lot harder.

Over the years, I hired about a dozen different salesmen and one saleswoman. The most common result with exception of a couple of them was a lot of underbids and other things missed that should have been noted up front. All costing the company money. No one will care about your business the way you and your partner do.

It’s hard to turn a little roofing company into a big business quickly. The ones I see doing well are the one’s that have been in business for many many years with tons of referrals, repeat clients and a lot of name recognition in the area they serve. You and your partner should be able to sell enough work to do well by yourselves. At the highest point of my sales career, I was selling enough work by myself to keep 8 crews working daily but that was right after a big storm. However, one good salesman can keep a crew or two busy meaning you guys could keep 2-4 crews busy by yourselves.

My advice is to just be patient and grow every year a little at a time and don’t take any huge chances that would be devastating if they don’t work out well. Just keep a periodic check on everything and make smaller type improvements as you go along. The longer you stay in business, the larger your customer base will grow and the more referrals and repeat clients you will gain which is the core of the business.


#3

Pretty good overall advice from Chucky. Hiring good Salespeople is likely the toughest challenge you may face in business. Who is going to take the time to train them properly? You say you want 20 to 50 jobs in a lower income area. I assume then the roofs are $5000 to $8000. Take the extreme then, 50 roofs x $8000 x 10% and you get $40,000. You’re not likely to get much of a Salesperson for $40,000 per year.

Perhaps you could ramp up the advertising a bit but have you and your partner handle the selling to save the 10%. You think about it, 50 roofs per year is one per week. That should be reasonably easy to achieve without a lot of hard core selling effort.

By the way, IMHO, if you do end up hiring a Sales Rep, pay them based upon a profit split versus a straight commission.


#4

RPGC, after being in business for over 20 years, there aren’t many GET RICH QUICK methods! As LC said, stay the course and be efficient. Unfortunately you need to have a pulse on the business or Employees will run you into the ground and unlike flying a plane; there isn’t an ALARM that sounds when the ground is approaching fast!! I’ve found that learning the process before you can teach it to an employee is crucial.

ADVERTISING is such key that many simply don’t give enough effort to!! It doesnt have to be costly! WORD OF MOUTH is one of the biggest things the people over look! Actively ask you happy customer for friends, family that might need your services! If you are unhappy with the customer; don’t ask because they tent to refer you to like customer; Bird of a feather flock together! Statistics show it is 6 time harder to get a NEW CUSTOMER than it is to keep an existing or get a referral.

The other things is the INTERNET; IT IS A MUST THESE DAYS! If you don’t have a website just go turn in your keys right now! Sure you can have a business without a website but you can also take a canoe trip up Niagra Falls as well, but WHY WOULD YOU? Traditional marketing is only about as valuable as the paper it is printed on. Honestly in many cases it is worth more as Toilet paper than for the Advertising Value.

Finding a good company you can trust is the key when it comes to Internet. Basically the internet is a virtual world and many simply don’t understand what they are getting since they can’t see the physical product. We all know exactly what we are getting when we go to Home Depot and buy a hammer or saw; but when it comes to a website and all the complication like LSI, PR Rank, Ranking report and more; it is simply overwhelming!

You have to remember with the internet; your website is 100% the determining factor how a customer feels when they decided if they want to pick up the phone. There is a tremendous amount of research that goes into Web Design these days and topics like “Social Proof” and “Buyers Confidence” are key topics you have to consider or you won’t be effective.

I know there has be alot of horrible companies out there that have giving internet a bad name; but you have to find a good company that you can rely on! It is crucial.

Ashley


#5

Thanks for the responses.

Here is more statistics of our area that might help more in this discussion.

When I say a lower income area, I would say the average house price is 80k. The nicer areas the average house price is 200k. A wage of $50,000 a year pre tax would give a good living in this area for the most part.

I would say to LC, the issue with the other 40% of jobs (bathrooms etc) are we don’t get them done quick enough since the local municipals have imposed so many restrictions on inspections, architectural drawings, asbestos testing they have pushed the profits so low to what people can afford. Who is really going to pay $10,000 for a bathroom on a house with 80k? Not too many.

It often feels like the bathrooms we do and decks etc are not really worth the time put in to them and all the “hassles” of it. Really the local government kills it. Also all the tools and stuff that we need to retain to do such jobs becomes a problem as well. I would rather not be a “do it all” anymore, and specialize.

Hour for hour, we make our best money roofing which is no secret for most construction companies.

Our average roof is on the low end $7,000-$9,000. Most of them seem to run around 10-12k. This area usually requires 3 layers to come off, and the average job is about 24-30 sq. We also are paying 97.95/sq for landmarks + 8% tax.

Basically… our typical bathroom install (full demo to finished) reaps in the whopping profits of $2,000-$3,000. It will take 4-7 days with subs doing electric, plumbing with all inspections. Equating to around $400 a day profit. It’s like a loss leader when I look at it to roofing.

Our typical roof at 24 sq. will yield a profit of $4,800-$5,000 for 1 day-2 days of work.

In my mind I would be just as happy ditching all the bathrooms and other things that seem to be more hassle than worth and replacing 4 weeks of bathroom work with 2 walkable ranches. I’m sure we could do more than 2 walkable ranches in 4 weeks of bathrooms.

I don’t want to be a “huge” company at all. We have grown about 15-20% each year, but the way we have done this is roofing.

I guess at the end of the day during the winter months I would rather get a temp job and enjoy roofing the rest of the year.

Just as we get busier and busier, I would rather be on the work site working with the guys than out doing sales. I can’t just hand the ropes over and expect things to go smooth… it never works out that way it seems.


#6

Nothing wrong with wanting to be strictly a roofer. I made that decision myself 28 years ago and that’s all I’ve ever done since.

Just keep in mind that in today’s world a roofing business needs to either be really small or really big to do well. The mid size businesses don’t usually fare well. That’s what makes it so hard to grow into the large business. You have to survive mid sized first. The only other way is stay small.

Also, keep in mind that what you said about your crew " I can’t just hand the ropes over and expect things to go smooth… it never works out that way it seems." will also apply to your sales and office people.


#7

RPGC, I agree on your stats issues, we focus on cities with our websites that are in specific cities with specific criteria! We have a VERY STRICT research process that is used to research cities to target and if the house price and income level is not a certain level we don’t select it.

With the internet you have to having a VERY SPECIFIC GOALS and that is the key! Seek out people needing a very specific service like a bathroom remodel and you get into the GRAVY! It might be that you need to change your selection criteria and market the right service to the right consumer! My Recommendation is choose the right type of customers and you don’t have to have a “HUGE” company!

I will agree with you that many of our customers like Roofing strictly because it can be quick and easy turnover, in and out in a day or so and you have your $5-15K. No taping, lots of cleanup and most of the time the home owners stay in the house as opposed to doing a bathroom remodel and you are in the middle of their bedroom and the customer is in and out all day!

That being said, there is still lots of money to be made inside the home as well… Upgrades in Bathrooms and Kitchens are the majority of the value in a home’s price and often times in real estate; buyers are encourage to upgrade those items to increase the sale value of a home! We have been getting into Remodeling websites as well for about a year now and they defiantly aren’t something to ignore!

Ash


#8

LuckyChucky,

Thanks.
I understand the mid size business being tough to hold onto that is a very true statement.

I guess I would like to be around 40-60 residential roofs a year with just 2-4 employees and the 2 business owners. We’ve gone up and down on employee amounts, but I would like to just keep it at 2-3 Roofers, 1 garbage laborer and the two owners. I want to stay small, bigger means bigger problems and hassles. We have so so weather here, so I’d really be happy around that amount for the profits we find on jobs it would land me with a yearly salary that is generous enough to put a smile on my face.

A hint about myself I’m 26 years old, so I’m still young and stupid willing to work 10 hours + a day roofing since my back and knees don’t hurt. I enjoy the work I’m not looking to just play boss, I’ve done it with subs and its so boring I end up picking up trash or something to occupy myself. I wouldn’t say I would want to be “swinging the hammer” at 50, but I would be willing to do it for another 10 years or so. I’d eventually like to not be stripping roof, but just installing the shingles. But it’s tough to find fast grunts to rip them off as fast as we can (since we care about time, where employees care about taking more time).

Also… good point on the sales person and office people. I figure with two business owners one can watch the sales people/office work/books and one can watch over the crew more. I personally hate paperwork, people, and bidding. I’d rather just roof.

If I could bring it to 500 roofs a year that would be great, but the stress would kill me eventually. I can’t just leave a foreman to a job, I’ve got little or no trust left in society anymore. Id rather stay always small, than get big pop and have to go small to scratch around until I work at walmart finally.

[quote=“LuckyChucky”]Nothing wrong with wanting to be strictly a roofer. I made that decision myself 28 years ago and that’s all I’ve ever done since.

Just keep in mind that in today’s world a roofing business needs to either be really small or really big to do well. The mid size businesses don’t usually fare well. That’s what makes it so hard to grow into the large business. You have to survive mid sized first. The only other way is stay small.

Also, keep in mind that what you said about your crew " I can’t just hand the ropes over and expect things to go smooth… it never works out that way it seems." will also apply to your sales and office people.[/quote]


#9

RPGC,

In my opinion, staying diversified is extremely important. I am new to this forum, but that is a common message from others in the “industry”. Since roofing business opportunities spike during severe weather seasons, there is a lot of down time. Having a salesman is OK if you comb older neighborhoods where home owners might be many years into their roof, but remember that without that insurance carrot, owners can be reluctant to have work done. Like anything, most people wait until things start leaking, or shingles get blasted by hail/wind and their home is aesthetically compromised. Having a diversified portfolio of offerings is always smarter. I would make a strong effort to inform customers of what else you can help them with if you perform any damage repair/replacement after a severe weather event. I get a lot of repeat business from that effort.

All the best.
J


#10

HEy,
Thanks for starting thread.
I am 5 seasons into my personal registered owner/operator residential re roofing business
30.
Accounting and payroll degree, 12 years experience roofing.

This is my best summer, and a, at the point of deciding to expand or partners up, and figure out my seasonal posotion.

Lots of,great advice on the forum.

I will continue following up and maybe we can communicate , if you are still active in the roofing community.

Callanan Roofing Contracting
St.John’s NL Canada


#11

Well I can tell you this once you start doing alot allot of shingle work ,once you do a few flat roofs you will never want to see a shingle again,


#12

Don’t get me wrong if your going to up your game ,doing just shingles is gonna make you a ton of money ,just as in any business do one thing and do it better than anyone else ,I was roofing doing just shingles when I started ,that is I went from doing remodels and all that type of stuff to just shingles and it was great, then I got into commercial flat roofs and the jump from doing residential homes with shingles to commercial flat roofs was just huge for me it was alot easier also being on in a huge flat roof commercial job for weeks to not have to deal with residential customers every day plus the money is just incredible, but again if your gonna do just shingles and have the man power then your gonna make it big,


#13

Buy quality roof leads and they jobs will come to you as many as you need!