Twenty years ago, I took some painting contractors we worked with and did group consulting with them. That quickly grew into a networking group and 15 years ago we started a networking group for roofing contractors. I wish I could tell you I had this ingenious idea, but truthfully it all started with the concept of bringing the customers to me and cutting down on my road time. Little did I know what a powerful format I had created. It all started with a simple concept of getting contractors away from their business for three days, treating them professionally and pounding away on what they needed to fix in their business. The PROOF© is in the pudding: 73.21 percent of our roofing customers experienced a sales increase from 2010 to 2011. More importantly, 80 percent experienced a profit increase. Why?
Accountability and Outside Insight
Our peer groups are not admiration societies. We have numbers for everyone’s business and goals are established. Our annual meetings are an opportunity for you to stop, get away from your business and focus on the basics. Business changes are debated. Ideas are shared but, unlike a convention, implementation is planned and public.
Running a business is a lonely endeavor. Your neighbors, former high school buddies and others just do not understand. Accountants and bankers can act as advisors but they do not run small businesses. Seek advice and interaction from other businesses but be honest. Don’t play the blame game. You run your business and when you get up each morning and look in the mirror, you see the person who is ultimately responsible. While some business owners are complaining about the government, employees and material prices, others are busy running profitable businesses. Look internally to what you can fix and manage, and stop focusing on the external factors you cannot control.
Make some public goals and stick to them. When making goals, make sure they follow a SMART process. The acronym stands for Specific, Measurable, Accurate, Realistic and Time/date projected. Set a target and lay out a specific action plan to get there.
Follow the Basics
I talked to a roofing contractor this week who complained that other good contractors were 10 percent to 15 percent cheaper. All of our contractors face cheaper competition. Many of those competitors are 20 percent to 30 percent cheaper. However, professional roofing contractors must have the ability to communicate value and outperform mediocre competitors. Practice these basic business skills.
• Financial:Know what you need to charge to break even. Cost each job. Don’t quote some imaginary per square price your competitors quote. I have been doing this for over 30 years and have noticed a curious phenomenon. When contractors know their costs and raise prices to what they need to charge to make a living, their sales actually increase. Most contractors do not want to overcharge people and believe in their craft abilities; they just don’t believe in their price because they never took time to figure it out. Suppose you charge $200, $300 or $400 per square. How much of that price is material, labor, overhead and profit? That per square price should be a mini-estimate and budget, not a guess.
• Sales and marketing:Know how to sell. It is not your customer’s responsibility to figure the difference between you and your competition. Learn how to connect with customers, identify their issues and communicate solutions to their problems. So what if someone else is 15 percent lower on a $10,000 roof? Over 20 years that $1,500 only equals $75 a year. You mean to tell me that you are not able to communicate $75 a year of value for providing a secure roof over someone’s head?
Practice good point of sale advertising. Make sure job signs, truck signage and other point of sale branding influences are in place. Word of mouth is still the best way to find customers. Have a professional Web presence. The first thing most customers do today is look to see if you have a website. Make sure you buy wisely and don’t fall prey to scams where folks are trying to charge you thousands a month for Web optimization. Find a good professional to do it for you. It changes constantly, so you need a pro, but it need not cost a fortune.
• Production:Utilize simple but effective productive systems. Know your installation costs and monitor them. If you use subs, take photos and put quality procedures in place. Don’t merely hire a production person who rides around in a truck and babysits crews. Too many small contractors waste money with superintendents who may not be cost effective. If it costs you $60,000 a year to put a general supervisor in a truck and if you have three crews, that is $20,000 per crew. Maybe if you had better foremen and subs, you would not need a babysitter.
• Business structure:Make sure your business structure is efficient. As businesses grow and owner demands increase, too many roofing contractors merely start to add overhead to make it all work. Start with a strong administrator who can qualify calls, set appointments, job cost and help order material other details. If you want to make $100,000 a year, that is $40 an hour based on a 50-hour work week. Once your business starts to grow, it may no longer make sense for you to change the oil in your own trucks, set your own appointments, or do many of the other tasks you currently do. If you bury yourself doing tasks work only $10 to $15 an hour, you will have to work yourself to death to make that $100,000.
When we first start to work with a business owner, it never ceases to amaze us how hard he or she is working with so little return. For the most part, it is a matter of just tweaking things. It is amazing how fast it can all turn around, but only if you know where to make the turns. Isolation can be deadly to contractors. Don’t let your pride get in the way of your seeking assistance and turning your business and life around.