Questions on expanding


#1

I am in the process of expanding my business, I am going to buy a industrial condo unit with a office and some warehouse space. I understand It will add to my overhead but I know its needed because my business is growing. I am a one man show I basically do everything but install, but I do all the repairs. I am currently turning down business because I can not get there to even do the estimate and I am tired of over booking without keeping my promise when I start even though I tell everyday we don’t work because of weather its a day were pushed back. I am going to hire a salesman in the spring and get another crew right now I do about 140 roofs a year and right around 25 siding jobs and that doesn’t include gutters and repairs. My main question is how do you go about paying your salesman and is it really worth growing a bigger company or should I stay the size I am now. My reputation is really good and I am not worried it will change with expansion but I am trying to take more of a backseat to the running around and focus on the everyday business stuff and selling as well. Thoughts will help! thanks in advanced


#2

You should really consider your overhead before you expand. Getting a salesman when you can’t handle the work you have is a waste of money. As you noticed, reputation is everything. More work sounds good but often it ends up not making more money. Perhaps adding more gutter business with a machine would make the work you already do more profitable. This business is all about more profit not necessarily more volume.
I’m curious, what do you mean when you say you do everything but install? Meaning you, personally, don’t work on the roof anymore or you sub out the install?


#3

Thanks for the response, my overhead is not all that low but I spend at decent amount on rent for a storage for materials and such ( i get a big discount on pallet quantities and big kick back at the end of the year) so buying a place wouldn’t change much maybe 400 dollars more a month but its an investment with return. As far as the salesman I have a few really good subs that are always looking to sub for me because of my reputation of paying on time and paying well for good work. I work on the roof I do all the repairs and will help out on jobs if I have down time, I also own a gutter machine and sell gutters on almost every roof I do. Problem is I am wondering if I should stay the same size or should I hire a few salesman or maybe one to do some selling and running the jobs they sell. I turn down a ton of work because me running 3 crews at the same time doesn’t work out and I hate running around to 3 jobs and if I had a salesman it would be less with him selling and helping out


#4

If you can buy in bulk and turn the material, that is a great reason to buy/lease a bigger warehouse. On the other hand, I know you can’t store and load material cheaper than most of the large distributors.
Hiring a salesman to be your runner isn’t a good idea. The salesman has one main job…go out and sell. Most salesmen/saleswomen work on a salary and percentage of profit or sales. If you take them away from sales you hurt their pocket book. Rather, hire a foreman to run the crews. When I say crews, I assume you pay them a wage not sub out the work. I’ve been in this business a long time and have seen many small, profitable companies grow quickly and just as quickly go out of business. Work up a financial model and project the cost/benefit of getting bigger before you jump into growth. Be accurate in your projections.


#5

I am with Don, I would think about hireing a foreman who can go to the repairs and oversee jobs for you before a salesman might be a better bet. If you look at paying yourself commission on every job vs. Paying it to someone else it’s more profitable for you to do it yourself.

If you are doing the sales you are also control what jobs you are selling. Sales guys are good at one thing, selling jobs. It all comes down to money, when a sales guy is slow they are liable to sell low or less desirable jobs just to get a paycheck, cutting into your profits. In my experience When sales are good and they have plenty of leads, they chace the new business and neglect overseeing the jobs currently in progress that they already got paid for.

Just my experience but most sales guys are horrible project managers, espically overseeing subs. It takes a good roofer to be able to pick up on shoddy work, corner cutting, and identifying future problems.


#6

Jumping in here to agree with MPA and donl. It seems to me that what you really need is a foreman or project manager. If you already have more work than you can accommodate, you really need more boots on the roof as opposed to more shoes at the door.

It seems your final goal of building a profitable roofing business may require you to do a bit of a paradigm shift concerning how your business is run. When you first started you likely had to wear all the hats connected to “being in business.” Now may be the time to bring in, train, and grow some excellent middle managers so you can pass on a hat or two, and get on with the task of really running and scaling the business. And, I whole heartedly agree that the real name of the game is profit.