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ColumnsLow Slope RoofingSteep Slope Roofing

Rags, to Hopes of Riches, to Stuck

Working hard in an unprofitable business and being in denial of that fact leads to an unhappy life

By Monroe Porter
roofing business struggles
May 2, 2016

People start contracting businesses for many reasons. Some because their side jobs outgrew their day job, others want to become rich and famous. Whatever the reason, almost all start with little money and hope for a better, more prosperous livelihood. Unfortunately, when you’re knee deep in alligators, you can forget you came to drain the swamp. Year after year of the same old, same old can lead to frustration and eventually burning out.

When you own a business, your business life and personal life can mesh into one giant ball of string.

It can be tough to tell where your business life begins and your personal life stops. If your business is messed up, your life is messed up and vice versa. Running a contracting business can be a tough and lonely job. Employees, family members, and other buddies don’t understand your challenges. I find people join our networking groups to make more money but they stay because there’s someone on their side who understands their day-to-day dilemmas. If it were easy to be an entrepreneur and own a business, then everyone would do it.

I’m amazed at the number of contractors who year after year do not improve their performance. Sometimes lack of success is driven by simple, good old-fashioned math. They don’t charge enough, inaccurately estimate too many jobs, or as their business grows, fail to raise prices to cover overhead. 

However, with further investigation, you’ll discover many contractors have a learning disability, health or personality issue that’s contributing to their poor performance. Unlike speaking, networking groups are personal. The participant comes back every year, so eventually what gets in the way of their success surfaces. Working with contractors in an intimate consulting role has uncovered numerous cases of sleep apnea that can create ADD like symptoms, depression, anxiety issues, addictive behaviors like alcoholism and numerous other health problems. It’s interesting that almost everyone has some type of issue but if you work on the assembly line at the local factory or at the post office you can probably hide these problems much easier than a business owner can. It’s also hard to tell which came first, the chicken or the egg. Did the contractor’s personality cause issues or did a poor business model break the contractor down over time? Regardless, if you don’t have your head screwed on right, you can’t expect to be successful. 

Fix You First

Figure it out. Many of the health issues above can be genetic. They are medical issues, not craziness. I’ve seen people lose their business because they were too prideful to wear a hearing aid. Others simply refuse to address their extreme anxiety issues and choose to live a life of panic. If you had diabetes, you would take insulin. Don’t let foolish pride get in the way of your success. 

Paint by the Numbers

Remember those number paintings you did as a kid? While not perfect or beautiful, you really couldn’t mess them up. Just learn to follow the numbers. Math is science, much like gravity. You can’t jump off a cliff and fly and you can’t do work you lose money on. For smaller contractors, you don’t need a fancy computer to do job costs. Simply compare your weekly payroll costs to the labor costs you estimated to do the job. 

Take time to figure out your overhead costs, and add it up with paper and a pencil. Then divide it by 12 and figure out how much gross profit you need to bring in each month to break even. Understand owner salary as part of overhead. Owners tell me, “I don’t want to take it out until I make it.” Well, if you never put it in, it won’t be there to take out. 

Suppose you wanted to make $75,000 a year and no longer work in the field. If you had five employees and they worked 40 hours a week, 50 weeks a year, you would have 2,000 billable hours per person. Multiple that by five and you have 10,000 production hours. Divide 10,000 hours into $75,000 and you come up with $7.50 an hour overhead just to pay you. It costs about $12,000 a year to operate a nice truck. So there’s another $6 per hour for the foreman’s vehicle. Yes, you can have a truck for less but when the time comes, you won’t have enough money to buy a new truck.

Get Organized

If you’re not organized, you have to accept that. Work hard to do something about it. Clean your desk, truck, shop and throw away everything you don’t need. Do paperwork each and every day. Don’t let it pile up. Try to hire a strong office or admin person who can help you get organized. The right person will tell you what needs to be done and direct you. Run a monthly profit and loss statement. Look at it and ask questions. Know where you are financially.

In closing, next year is going to be the same as this year unless you do something different. It’s not the economy, your employee’s or your customer’s fault if you’re not successful. Want to talk about it? Call me, I’ll even pay for the call.

KEYWORDS: business management health and health care

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Monroeporter
Monroe Porter is the president of PROOF Management Consultants. He can be reached at 804-267-1688.

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