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Author – Steve Sutherland Copyright © 2012
Copyright © 2012 Steve Sutherland. All Rights reserved No part of this publication may be sold, copied, reproduced, stored in a retrieval system or transmitted in any form or by any means including electronic, mechanical, photocopying, recording, scanning, or otherwise without prior written permission from the author. All trademarks mentioned in this report are the property of their respective owners. The information contained in this guide represents the opinions of the author. The author has made all reasonable efforts to ensure that the information is correct and up to date. However, it cannot be guaranteed that this is the case and we make no representations or warranties with respect to the completeness or accuracy of the following information. By reading this guide users acknowledge that they cannot hold the author or publisher liable for any losses suffered as a consequence of their actions. This information is intended for educational purposes only and should be used at your own risk.
Introduction – Read This First
Roofing is a great business to be in and a surprisingly high number of roofers have gone on to make millions over the past decade. Roofing is one of the highest paying trades in the wider construction industry and it offers opportunities to earn exceptional profits in any season and in almost any economy. I did some research into this business in 2010 and 2011. I still haven't started a roofing business as I ended up going into another industry. I haven't given up on the idea totally though and I may still get into roofing seriously at some point in the future. While I researching roofing I did a lot of reading and I also talked to a lot of business owners. I have turned my notes and some of the details that I was able to uncover into a small report that you can find below. I'd also recommend that you check out www.StartingaRoofingBusiness.com as this site has some material that you can really put to work in a practical way.
Overview of the Roofing Business
Roofing is an incredible business to be in during building booms and many savvy roofing business owners have become millionaires over the past decade. Even when the economy is slow there is always steady demand for roofing repair and replacements. Roofing contractors earn more than most other players in the building industry making it a potentially lucrative business to be in. Start up Requirements Every state has different requirements for roofing contractors. It is likely that you will need a contractors license. This will set out exactly what construction related activities you are permitted to carry out. Some states also require roofing businesses to be bonded. What Roofing Services and Products to Specialize In? Residential roofing is by far the largest part of the market and many roofing contractors specialize in this area alone. The roofing requirements of buildings in other categories such as commercial or industrial do differ to a considerable extent but also provide profitable niches to contractors specializing in these areas. You should specialize in working with certain roofing materials. Asphalt shingles are the most common roofing material used on residential homes in the US. Other materials include clay tiles, shingles, wood, slate, metal sheets or roll roofing. Most successful roofers keep things simple by focusing on one or two popular roofing materials and becoming knowledgeable about them and experts in their installation. Becoming highly proficient with certain services and certain materials is your ticket to success. Being a 'jack of all trades' can often lead to poor quality work and disappointed customers. Some roofing companies also often additional roofing related services or services related to siding and guttering. Roof shoveling is one service that can be in exceptionally high demand during the winter months. Roofs also have to be cleaned from time to time and this is beyond the abilities of most home owners. Skills, Knowledge and Experience
Nobody can just go out there and install a roof without having some form of training or experience. There is a lot to learn and most roofers usually will already have some experience under there belt before they start a business. A good way to get the necessary experience is by doing an apprenticeship through a roofing union. Alternatively you can approach local roofing contractors and find out if they are hiring. Join a professional organization like the National Roofing Contractors Association. These organizations are great for networking and they can also help you to stay up to date with the latest developments in the industry. There is also an excellent roofing business start up kit that we recommend that tells newcomers exactly how to start a roofing business and the steps that they need to take to get set up and run it successfully. Equipment and Supplies It is important that you find a good supplier of roofing materials and equipment. The best approach is to look for the largest distributors in your area. By buying in volume you should be able to get prices down a fair bit as you expand. Keep in mind that you have to consider more than price though when choosing a supplier. They should be reliable, easy to communicate with and provide you with roofing materials of a consistent quality. You will also need a truck to haul materials and any workers that you might hire. This can be your own personal vehicle at first or you can buy or lease something suitable. Roofing equipment is extensive and depending on the services that you offer you will need everything from roofing guns, cutters and hammers through to ladders and hoisting equipment. You don't need to get everything right away and you can always look at leasing or purchasing second hand gear. Safety should be a top priority and you should buy only the best quality gear for your workers. Roofers need not only the standard safety equipment like hard hats, ear protection and allergy masks but they also need fall prevention equipment. A roofing job site must be compliant with OSHA standards. Insurance
For a roofing business you should look at getting two main forms of insurance coverage. Firstly you need liability insurance to cover you against damages that one of your customers may suffer on their property as a result of your activities. Secondly, if you hire employees then you will need workers compensation so that you are covered if they are injured while on the job. Business Management You’ll need to have an office of some sort to plan schedules, generate invoices, write estimates and bids and pay your bills. If you don’t have room in your house for an office and you’re on a tight budget, consider sharing an office. Office sharing is fairly new and becoming more popular. You can rent a desk in a suite with other people and share office equipment such as copiers, faxes, telephone lines and internet service. Hiring Employees When you are just starting out in roofing you will be involved in all aspects of the business, from management and marketing right through to actually doing roofing work yourself. Working alone is not really an option in roofing and you will need at least one or two other guys to assist you. As your business grows you can then step back and focus on your company's growth and development and hire employees to handle day to day operations. Many roofing contractors do well by hiring immigrant labor. This can be a great way to lower costs but it can be difficult to go about doing this in an ethical and legal manner. Some roofing contractors rave about the advantages of hiring workers from south of the border while others have had trouble with them. There are advantages to using independent contractors as opposed to hiring employees directly. They pay their own taxes, although you will probably still have to report their earnings to the IRS. It is also much easier to down size your crew if you have to during slow periods. Funding and Start up Costs One very important part of starting a roofing business is having some sort of financial cushion as you often won't receive full payment for your work until a job is complete. To get set up right you really need at least $20,000.
The best way to fund your business is through personal savings. You may be able to qualify for a line of credit from a bank or financial institution if you have good credentials and can show them a well thought through business plan. Marketing The best way to get roofing business is through referrals. If you do a good job for people then they will recommend your business to others. Build a brand with a reputation for quality and reliability and you will be rewarded. The first step in the branding process is to choose a strong Roofing Business Name. Most roofing businesses offer generous warranties for their workmanship and materials. A roofing installation or replacement is expensive so customers will want to know that you guarantee your work for a reasonable time period. Lengthy warranties are now an essential part of any roofing package. The next step in putting together a marketing strategy is to do some market research and develop a method for estimating prices. Having the lowest price will not always win bids and it won't make you profitable. On the other hand, roofing is a competitive business like any other and if you price too high you will lose jobs. Aside from referrals and brand reputation there are other ways to drum up business. Getting out in your neighborhood and offering free inspections and quotes for repairs or replacements is a common approach.
When you start a roofing business it is essential that you have a strong marketing plan in place. You must know exactly how to get customers right from the start. In the following article we set out some ideas on roofing business marketing. Leveraging your Brand to get Referrals Before people spend a large amount of money on an important renovation to their home such as a roofing project they want to know that they are dealing with a company that they trust. They will often ask around their friends and associates in the hopes that somebody will be able to refer them to a contractor that they have had first hand experience with. If you do a great job on a roof then people will talk about you and you will get referral business this way. Customer service is the key here. Customers want to deal with a contractor who is honest up front about the work that they are going to do and the price that they charge. They want a contractor who can explain to them in everyday terms what they are doing. They want to work with a company that listens to them and address any concerns that they have. And lastly they want to deal with people that they like and that they feel actually care about them and their property. If you get all of the above factors right then your business will grow exponentially with all the satisfied customers out there that are singing your praises. You also want to keep your business name fresh in their mind so stopping by for a friendly, free, inspection once a year or so can help 'word or mouth' to spread even more. Building a brand is about more than just your roofing business name and logo design. Branding is about meeting customer expectations and how you live up to your brand's promise. Sales and Packaging Once you have an inquiry from a customer it is important that you have somebody with strong sales skills to go out there and win these leads for your company. A roofing installation or replacement is a big investment for most people so you also have to be careful in how you present your products and services to prospects. Set out
all the details of your quote in an attractive file that sets out everything that they can expect from you including your workmanship, quality products and guarantee When you meet with clients take along a variety of product samples in various colors and pictures of what they look like on a completed job. Keep a portfolio with 'before' and 'after' photos of your jobs to show prospects. Pricing a Roofing Job The successful marketing of a roofing business also has to include a solid pricing strategy. You need to be quoting a decent price to win bids. However, to stand out against other quotes that may be barely profitable for other roofers you need to compete on much more than price. Having a strong warranty is one way to reassure customers that your business is the right choice. A ten year warranty for a roofing job is fairly standard these days and some roofing companies are going as far as offering 20 year guarantees. Networking Your business can really boom if you make connections with people who are able to send decent volumes of business in your direction. Try to build relationships with other businesses in the construction and home renovation businesses. Getting to know the right people, such as property developers or roofing consultants could secure the success of your roofing start up for many years to come. Always carry a stack of business cards that you can hand out to people that you meet. Roofing Business Leads There are numerous companies online that sell roofing leads and these can usually be purchased for between $20 and $50 for an installation or replacement lead. Roofers have reported mixed results here so proceed cautiously. Find out if you are getting the leads exclusively or if they are being given out to numerous contractors. Direct Marketing One common way of getting roofing business is to go out and identify prospective clients and then target them directly with flyers, phone calls or a personal visit. If you operate within local ordinances then this kind of cold calling can work well. Look for homes that might need your services and then speak to the home owner and offer
them a free inspection and quote. Advertising Roofing is predominantly a local business so you need advertising methods that will reach local people. Big budget options like television or radio are usually not appropriate. One very cost effective way of advertising is to have vehicle wraps or magnetic signage fitted onto your business vehicle or fleet. It is estimated that the average vehicle wrap is viewed by hundreds of thousands of people each year. When done correctly, this form of advertising can generate a lot of local leads. Make sure that you have at least a small presence in important local business directories such as The Yellow Pages. Find out how to make the most of the ad space that you purchase to maximize response rates. If you are just starting a new roofing business then find out about submission deadlines well in advance so that you don’t miss out. Once you have a website up there are many ways of advertising a roofing business online. One of the most common is pay-per-click advertising through programs like Google’s Adwords. You can set up advertising campaigns that display only when people search for a roofing business in your area. Tracking is important when it comes to managing multiple advertising campaigns. You must collect data on each one of your advertising methods so that you know if it is producing results or not. Over time you will develop an understanding of which methods work well in your roofing market and which methods are not cost effective for roofers in your area. You can get some ideas right away by looking at how some of your more successful competitors are doing their advertising. Your success in business will depend to some extent on your ability to attract customers. Put some time into learning about roofing business marketing methods and position your company for success with a great marketing plan.
Choosing a Name for your Business
Branding is all about the reputation that your business has in the eyes of customers and the general public. It is the perceptions and expectations that the market will have about your business. You should view your roofing business name as the foundation of your brand and therefore your livelihood. If you would like some guidance on choosing roofing business names for your new venture then read on and we may be able to inspire you with a few of our ideas. Don't Let a Name Limit Future Plans Going with a business name that includes your own is sometimes a good way to go, especially if you already have a strong reputation in the roofing industry. However this approach can be limiting in the long term if you expand or want to sell the business. Don't have a name that may become irrelevant if you change the area that you operate in or change the products and services that you offer. Go with an option that will serve you well in the long term no matter which direction your business goes. Consider Seeking Professional Help You have to realize that you, as the business owner may not be the best person to come up with a great name for your business. Other people may be better suited to this job due to their objectivity or creativity. If you can afford it you could consider hiring a naming consultant for this important job or assigning it to someone that you think would be good at it. Simple and Memorable Make sure that you go with a name that is simple, memorable and easy to pronounce. Once you have selected a shortlist of names you should run them by your friends and family and see which ones they can recall and pronounce correctly a few days later. Stand Out in the Market Your final choice should be distinct and original. Try not to draw your inspiration from the names of the existing roofing businesses in your area. The last thing that you want is for customers to be confused. You need something that will allow you to stand out
from other market players. A Name You Can Truly Call Your Own Do a thorough search online and in The Yellow Pages to make sure that no other businesses in your area or in the roofing industry have the name that you are after. Search the names database at your county clerk’s office to make sure that your name has not already been used by another business. Other Considerations Some naming consultants recommend going with a name that starts with an ‘A’, as this will secure you better listings in directories that are set out alphabetically. Don’t let this factor influence your decision too much though. Most importantly, you should go for a name that you love. You will undoubtedly be hearing and seeing it a lot and you don't want to get sick of it. Your name should inspire you and drive you to work hard and achieve your goals. It is imperative that you get the naming decision right first time around. If a name change becomes necessary after you have already opened for business you will be facing numerous expenses. The costs are not just related to redesign and reprinting but also come in the form of loss of the brand value that you have built up over time. In the worst case scenario a name change can lead to customer confusion and a loss of trust. You need a great name to get your roofing business off to a good start. A good selection will help your business to get off the ground, grow and to eventually become successful. Give the naming decision the time and the energy that it deserves.
Business Plan Template
Is it worth writing a lengthy business plan for your roofing start up? Business plan preparation can be time consuming and many entrepreneurs are tempted to go ahead without one unless they really need it to prove the viability of ideas to partners or investors. Your roofing business won't be a huge, complicated business for a few years anyway so why bother? Well, while I would not suggest that you spend months writing a 100 page report, it could be useful for you to have a 10 to 20 page document on your PC that can be your company blueprint for success. You can make changes to it as you slowly learn more about the business. It will be the key document that sets out exactly how your business is run. If done properly you should basically be able to hand this document over to somebody when they buy your business and they can take over with very little of your time needed to explain things to them. Here is a brief business roofing business plan template to give you some ideas on how to put your own together. Contents Page and Executive Summary This should be a summary of your entire roofing business plan. If you will be presenting the plan to interested parties then let them know the contents. Include a basic summary of your plans to start a roofing business. Outline the opportunities that you see in the market and what you plan to do in order to capture a piece of the pie for yourself. Background in the Roofing Business Prove to yourself or others why you are cut out to go into this business. List details on your education and any relevant experience that you have had in the roofing industry or in business in general. Outline your reasons for wanting to start a roofing business. Mission Statement Set out your company mission or philosophy in a few words or a short phrase. Try to
think about what you want to achieve with your business apart from profits. You should be driven by a desire to deliver a quality service to people in way that satisfies them and provides great value for them while still allowing you to meet your goals. What kind of products and services do you want to deliver? How will you be different from all the other roofing companies? Business Goals Set out the goals that you have for your business in its first few years. Set realistic targets that you know are attainable so that you won't be discouraged if you don't meet them. Success can be measured by a number of metrics such as the total number of roofing jobs completed per month, the percentage of leads that become new customers or the productivity of your employees for example. Start up Requirements List down all of the products and services that your company will offer and then set out a list of equipment and inventory that you will need to get started. If you need to buy a truck then you will be looking at minimum start up costs of around $20,000. Start up requirements will also include compliance costs. Depending on what state you are operating out of you may need a contractors license, insurance, bonding or to comply with a number of other relevant regulations. Don't forget that as well as purchasing all of the necessary roofing equipment you will also have to purchase materials for your first job. Clients will typically pay a large chunk of your total invoice upon completion of the job so you will have to foot the bill until you get reimbursed when they pay their invoice in full. Structure, Ownership and Management There are four basic options to consider for your business structure and they include sole proprietorship, partnership, corporation or limited liability corporation (LLC). Outline how your business will be owned and make a note of the various parties that may have an ownership stake. Set out a management structure so that there is no confusion among those involved with the business as to who is responsible for managing each part of the business.
Marketing Plan Identify your target market both by location as well as other demographic factors and describe the kind of people or properties that make up your target market. Include the results of any market research that you do or local industry statistics that you are able to gather. Set out a detailed plan for your roofing business marketing. This should include how you plan on getting inquiries, converting them into new accounts and maintaining them over the long term. It should also include brand development, pricing, advertising, a sales approach and other marketing methods. Competitive Analysis Write up profiles of your main local competitors and try to understand how they run their businesses. Borrow and adapt characteristics of their business that work and look for weaknesses in their business models that you may be able to capitalize on. Figure out how you will differentiate your brand from theirs in a way that allows you to stand out in the market. Operations Include details of the day to day operations of the proposed roofing business. Make a note of your office location, business administration and record keeping systems, plans to hire employees and procedures regarding roofing installations or repairs. Financial Analysis Outline some of the methods that you could use to obtain financing for your new venture. Create a spreadsheet that shows anticipated cash flow forecasts over the first few years of business for a variety of scenarios. You can then determine how profitable you think the business will be in a number of different economic climates. You will be able to find many free business plan examples online but it can be harder to find a specific sample of a roofing business plan. There are some business planning software programs that you can buy but they are usually just generic business plans
that have been adapted anyway. Unless you can persuade other roofing business owners to share their plan with you then you really have to look at templates from other industries and model your roofing business plan on them.
How to Price a Roofing Job
One of the most important parts of your roofing business marketing strategy is knowing how to price a roofing job. Roofing has traditionally been one of the top paying jobs in the construction industry and therefore you will most likely have the ability to command good prices for your work and materials. In this article we look at a roofing business pricing method and we also offer some tips on estimating roofing prices that are accurate and profitable. Estimating a Roofing Job - Our Method You have to do some research into your local roofing business before you can get an accurate idea of market prices. Once you have a fair idea what other roofing contractors are charging then you will have a fair idea of what people are prepared to pay for your services. Talk to some of your competitors on the phone and call some out to bid if you have a suitable roof for them to inspect. Once you get a lead, a good way to start is to sit down with a prospective client and really listen to what they want. Try to get an idea of their budget and any specific requests that they may have. Get a feel for what the customer is prepared to pay. You might decide to go for lower pricing for a family in a working class neighborhood but push the price a little higher for a professional couple in an upper class suburb. Pricing by the square is the method used by most roofers. Under this system one square equals 100 square feet. Start out by taking accurate measurements to get an understanding of the basic size of the roofing job and the volume of materials that will be required. Then you can make adjustments for how difficult the job will be for you and your crew. Take into account the pitch of the roof, height above ground level, the number of obstacles such as chimneys or skylights and any other difficulties associated with the job. Contact your supplier and get an updated price on the shingles and other materials that you will be using. Then you can calculate the total cost of materials. Next, estimate your total labor cost in terms of the man hours that you estimate will be necessary to complete the job. Don't forget to allow for your own time if you will be
working on the job yourself. Then you can add an allowance onto each job to take into account the fixed costs that your business has such as depreciation on equipment, vehicle costs, insurance, workers compensation and other expenses. If your company is working on an average of four roofing jobs a month then you would add a quarter of your total monthly expenses or overheads to the price for each roofing installation job. Finally you can add on a suitable amount of profit, make some final adjustments to bring your price a little closer to market rates if need be and finally take the price estimate to the client. Some roofers have a standard markup that they set as a percentage added on top of the total costs and others set profit levels on a case by case basis. Tips and Ideas Roofing has its low-ballers, or those that try to compete by offering insanely low prices, like any industry does. When you quote a price to a new client they will often respond by mentioning some of the other cheaper bids that they have received. Be ready to counter their argument by letting them know that there is no way that you would be able to do the job for that price and still ensure a quality replacement or installation. Don't criticize your competitors too much in front of a prospect but make it clear that with workers compensation, OSHA requirements, your liability insurance and expenses it would not be possible to do the job professionally and legally for a lower price. Smart customers will also get satisfaction by knowing that your business is a professional company that will be around for the next ten years or so to honor their warranty if need be. Those that charge cut throat prices are usually cowboys that often don't last long in business. Avoid pricing too low. You will be doing damage to your local roofing industry and be resented by other market players. There are many other ways that you can be unique and competitive without focusing on having the lowest price. Pricing too high can also be a mistake unless you can back this up with a solid brand reputation built over many years or first class salesmanship. Your customers will always get multiple bids and if yours is way higher than the others you have to be ready to justify this.
The right price point is that one that makes you the highest profit at the end of the day so don't be scared to try pricing at different levels until you find the one that works for you. Don't be tricky with your customers. Contractors in some industries have a reputation for being sharks who are out to gouge as much money from clients as possible. This strategy is only beneficial in the short term and won't win you the referrals that are necessary to build a business in the long term. Set a clear price for the client right from the beginning and resist adding on additional charges. If you do find work that is necessary but not quoted for, such as replacing a rotting timber board on the roof deck, then let the client know beforehand. You can also collect evidence such as photos and receipts to prove to them that you came across necessary repair work and went ahead with it without asking them. Many of your clients will expect a discount or want to negotiate for a lower price. A roofing package is a major purchase and you will leave them with a good feeling if they are under the impression that they got a good deal. Set your prices in a way that will allow you to drop them by five percent if the situation calls for it.
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