How To Run A Profitable Roofing Business In 6 Steps

By Cristina Maria

Posted On: Posted In: Sales

Profitable roofing business graphic cover for article with money bushes growing

Running a profitable business is often more challenging than you’d expect, but it’s not always for the reasons you’d think.

Whenever profits are down, many roofing business owners or managers can be tempted to point at the market or things outside their control and, fair enough, any company will have good times and bad times, but there are definitely steps you can take to minimize the latter and make the most out of the former. 

Want to download your KPI spreadsheet straightaway? Click here!

These 6 steps are essential to maximizing your potential of running a profitable roofing business. What’s more, they’re all under your control and don’t depend on anything as fickle as the market, or as random as luck. 

  1. Clean up your roofing business financials.
  2. Don’t keep all your eggs in one basket: diversify your roofing business customer base.
  3. How to calculate a fair price for your roofing services.
  4. Be your roofing business’ top salesman.
  5. Join the right review websites for your roofing business.
  6. Hire well by making sure your roofing techs have soft skills, too.

Let’s get started! 

1. Clean up your roofing business financials. 

Having a good bookkeeper is essential for running a profitable roofing business – or any other kind, for that matter! – and it’s hardly a department where you’d want to save money by doing it yourself. Unless you’re especially good at accounting, this is best left to the experts, not just because financials can quickly spiral out of control, but it’s even riskier when you’re also trying to do ten other things at the same time (which you probably are) and messing up can have expensive consequences. 

Even a part-time bookkeeper will be able to help out with the most important tasks, such as taxes, but you can lend them a hand by using dedicated accounting software like Quickbooks (which caters specifically to small and medium businesses) or Xero. These tools will also empower you and your managers to always be in the know about the overall financial situation of the business, without having to trawl through Excel spreadsheets or waste time on compiling data.

At the same time, always be aware of exactly how much money is coming in and what’s going out, down to the last paperclip. Brushing expenses under the rug is a great way to leak money until the whole ship goes down! 

Ruth King, a field service financial consultant, gave this advice to HVAC businesses that can be expanded to any other service company who’s looking to be profitable: Some business owners avoid financials because, more often than not, they’re anxious about finding out that they’re not doing as well as they thought – which is perfectly understandable. But at the same time, it’s better to know ASAP if something isn’t right because you’ll have more time to fix it.

The alternative is to keep going until one day you’re simply not able to pay vendors or payroll and by then, there’s little you can do to save the business without some truly drastic measures. 

Read the full article: Gross Margins Or Net Profit Per Hour? How to Make a Profit In 2021 with Ruth King

2. Don’t keep all your eggs in one basket: diversify your roofing business customer base. 

In 2020, the restaurant and hospitality industry was severely hit, with many businesses having to drastically cut costs or even fold. While the roofing business wasn’t directly affected as badly, with some states classifying roofing contractors as essential workers or placed fewer restrictions on their work, the companies that roofing businesses considered their prime customer base (restaurants, hotels, and such) meant they took a knock-on effect. After all, if your customers don’t have income, they can’t pay you to work, either. 

Generally speaking, it’s a good business practice to never rely on a single customer or industry for more than 20% of your revenue. Simply put: don’t keep all your eggs in one basket. 

Many roofing businesses lost profits when they started relying too heavily on new construction because it was easier to win contracts where they knew exactly what they needed to do and work was more immediate. The same situation occurred with those who relied too much on certain sectors of the commercial roofing opportunities.

Working with both commercial and residential customers may take more management effort, but it ensures that whatever fluctuations come and go within any particular market, you’re insulated from them because when one slows down, there’ll be other work to pick up the slack. 

Do you think it’s hard to keep track of all these different types of customers? Learn more about making it easier with a customer database [works for any industry, not just HVAC!]

3. How to calculate a fair price for your roofing services.

Without further ado, this is an easy formula you can use to see if you’re charging the right price for your roofing services: 

Yearly Living Expenses = (L)

Yearly Business Expenses = B

Total billable days/year = H

Total Taxes (%) = T

Your Day Rate = L/[H * (1 – T)] + B/H

Example: Let’s say you’re a one-man-band for now and need to make $36,000 per year to meet your living expenses. You expect your business expenses to be about $14,000 per year, your taxes are estimated at around 30%, and you plan to work 261 billable days per year.

Yearly living expenses = $36,000

Business Expenses = $14,000

Yearly Billable days = 261

Total Tax Rate = 30% = 0.30

Day Rate = $36,000/[261 *(1-0.3)] + $14,000/261

Day rate = $251 so $30/h if you’re working 8h/day

For a more in-depth look at the breakdown + 2 other methods, check out this guide! 

This being said, that’s not pricing for profit, that’s pricing for survival. It’s the minimum you have to charge in order to cover your expenses or your net cost/hour. If you want to run a profitable roofing business, you need to account for your net profit margin too, which comes down to your decision as a business owner or manager. Some people want to make $20/h in profit, others want to make $100 and both are equally right in their own context. Depending on the type of job, the number of hours required, and who the customer is. 

From our experience dealing with hundreds of business owners, we’d hardly ever recommend setting prices according to the competition. You never know what kind of costs they have, whether they cut corners on quality or inspections, and, at the end of the day, you don’t want the sole reason for a customer hiring you to be the fact that you’re the cheapest around.

Keep in mind that even if you want to offer affordable services, that doesn’t have to mean cheap. After all, more often than not, the roof over a customer’s head isn’t something they’re looking to skimp on with work being done on the cheap: it nearly always means they’ll end up spending more in the long-run. A great price is reasonable, fair, and sets an expectation for quality that you’re far more likely to deliver on.

Want to learn how to price for profit? We’ve got just the thing for you! 

4. Be your roofing business’ top salesman. 

coin in piggy bank iconRemind yourself that you’re not just selling a roof, you’re providing a safer, warmer home or business to your customers. At the same time, you’re also not selling a product, but a service, with all the responsibilities that come with it; that is: if you want to be worth top dollar.

These are pretty basic sales and marketing strategies but many roofing contractors don’t pay enough attention. This can mean they either spend too much on expensive traditional ads (a single local radio or television ad can cost more than some roofing businesses spend in a whole year on other marketing) or simply expect customers to pour in of their own accord (which very often isn’t the case).

On one hand, digital advertising and social media in particular can be a lot cheaper and provide much better leads. For example, you can target homeowners in a certain area specifically, as opposed to paying for everyone who listens to the radio even if they might never be in a position to hire you. 

On the other hand, it’s also about the actual process of selling. Make sure to present the benefits of your service to the customer, rather than the actual how or individual products for which they probably have zero context or understanding. A homeowner will care a lot more about the ease of doing business with you (website booking portal, digital invoicing, etc.) and your online reviews than your rotating laser levels. Try using your quoting tools (like this Quoting and Estimating feature here!) when prospecting in order to show customers different options, following the Good, Better, Best-selling technique.

This way, no one will go for the cheapest option and you’ll be able to run a profitable roofing business. 

Want to see some great roofing software? Take a look at Digital.com’s list!

5. Join the right review websites for your roofing business. 

Like we mentioned above, the vast majority of customers (to the tune of 90%, according to Forbes) will check reviews before spending any money, while 84% will trust those reviews as much as they would trust a friend’s recommendation.

If that’s not enough to motivate you to create a profile on a few review websites, then think about the last time you went into a restaurant or watched a movie without reading anything about it. Exactly: it’s incredibly rare! 

Claiming your Google My Business listing will automatically give people the possibility of leaving reviews there, which is great. But since anyone can leave a review on Google, many customers (especially if they’re looking at a bigger project like re-roofing) will check speciality websites too. Angie’s List, HomeAdvisor, or, depending on where you live, even a local registry could be a great idea.

Keep in mind that while having a listing on some of these websites is free of charge, some do come with a fee and what that fee generally pays for is a set amount of leads each month. However, these are not guaranteed customers so spread out a little at first, try a couple of review websites, then see which one gets you the most customers before you commit long-term and damage your chances of running a Profitable roofing business. 

6. Hire well by making sure your roofing techs have soft skills, too. 

people iconMany roofing business owners complain about having a hard time finding good employees and it can certainly be challenging. Recruitment and retainment is a big topic amongst every branch of the field service industry and every manager and owner has seen the applicant pool dwindle with time. Some service companies have started working from the ground up by sponsoring young people to study the trades and offering apprenticeships but not every roofing business can afford a program like that and, in the end, the return-on-investment isn’t guaranteed. 

One strategy we’ve seen successfully implemented by a wide range of businesses has been to hire for soft skills, as opposed to simply for their experience. You need skilled contractors, that’s true, and no one is saying you have to recruit someone who’s never seen a shingle before, but the idea is to find a balance. Keep in mind that you’ll be able to teach anything to someone who likes to learn, but love of knowledge, curiosity, team spirit – you can’t teach these, even to someone who knows everything about the roofing industry, if they’re not open to it. 

When you’re working for a roofing business, you have to be at ease with a variety of challenges. There’s always a problem-solving aspect to jobs and a willingness to learn new things is vital. Otherwise, how are you going to get better?

This is why, when recruiting as a manager, you should pay close attention to how curious the candidate is, what questions they’re asking you, and if they have a track-record of self-improvement initiatives (e.g. they attended courses, personal projects, team sports, etc.). Additionally, asking them the right questions can also reveal a lot about their personality. 

Not sure what to ask during an interview for a field technician or contractor job? Start out with this list of most common questions! 

The takeaway on running a profitable roofing business

All in all, these are some of the steps you could take in order to run a more profitable roofing business and they’re all within your full control! If you’re not quite sure where to start, setting up some goals is the general go-to. 

Key performance indicators can help you decide on what to prioritize and how to get it done. Click below to download your free field service KPI spreadsheet and take your business to the next level!

free download spreadsheet to calculate KPI
 

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