A lot has changed during my 40 years as a business consultant; yet much remains the same. Here are a few examples of the more common mistakes roofing contractors make:
Poor Admin Help
There was an old adage that says that if you don’t have a secretary, you are one. The term secretary seems outdated but the value of admin help is greater than ever. Computers and technology allow strong admins to get more done and play a semi-management role. No longer are administrators buried in a keyboard typing letters. Today they can spend much of their managing tasks and keeping operations running smoothly. Just like any other employee, a strong admin is much more valuable than a weak one. In most markets this person is going to cost you $20-$25 an hour or roughly the same amount you would pay a good field employee. The right admin will simply take over and get things done.
Unrealistic Hiring Expectations
This is an area where employee hiring has dramatically changed and far too many contractors are behind the times. No longer can you just run a want ad that says, “roofers wanted”. You must sell your company and when candidates do appear, you must react and grab the good ones quickly. Field applicants should be treated like hot sales leads. You must have an easy to use website application and the ability to upload a resume. When applications arrive, someone specific must react swiftly and get the person in for an interview. You must also be realistic about wages, particularly for helpers and trainees. Failure to pay above the minimum “living” wage in your area will attract weak candidates and losers. Minimum wage is not what the government dictates but rather the amount per hour it takes to get a sober person with a driver’s license who shows up every day. Contractors should have an onboarding process where they bring new employees along quickly and make it easy for them to succeed. Hire work ethic and have a process to help people get up and going quickly.
Too Much New Construction
The new construction market is hot and too many roofing contractors are taking the easy way out by simply bidding in a hot market. New construction has always been cyclical. It goes along well and then the market slows down with too many bidders and not enough work. It is important to not just take the easy way. Contractors need to have a balance of new and existing roofs because scheduling all new work is a nightmare. You can tarp, patch and postpone existing roofs but when the GC wants the roof on the building, they want the roof on the building now as it is part of the critical path. It is impossible to manage a totally new construction schedule as jobs rarely meet their targeted schedule.
Taking Jobs You Shouldn’t Take
Even my smartest customers make this mistake. By nature, roofing contractors are risk takers. They risk the weather, difficult customers, schedule demands, getting paid, etc. Sometimes you need to control your entrepreneurial enthusiasm. One of our most cautious customers took it on the chin on a recent job. Many of the risk factors were high and everyone failed to identify the risk. The job was out of town, a type of work the company did not do a lot of, assigned to a new project manager and no one double checked the estimate. Here are some questions to ask when taking on risky jobs:
- Have you worked with this customer before?
- Do you do a lot of this type of work and is it your bread and butter work profile?
- Is the job close by?
- Has the supervisor and PM assigned to run the job done this type of work before?
- Is the schedule demanding?
- Is it an unusually large job?
Remember, you never lose money on a job you didn’t take.
Unsustainable Partnerships and Family Management
Even under the best of conditions, partnerships are hard to make work. What worked as a successful partnership when the two partners were 25 years old, may not work when they are 50 years old. Personal lifestyles and goals change as we age. It is important that both partners bring value to the business. One partner can’t be the president and drive sales and the other partner be a glorified superintendent. Even if both partners contribute substantially to the business, if the business is extremely profitable, you can probably hire someone much cheaper than what you pay the other partner.
Family participation is also complicated. I totally get that as a parent or brother of someone, you want to provide for family. However, this is a case where fair is not equal. Family members should be paid a salary in proportion to their contribution to the business. Profit then can be split according to ownership. Be forewarned, if you want your kids not to speak to one another, force one of your children to pay large amounts of money to family members who do not contribute significantly to the business’s success. Your daughters and sons may surely love each other but their life relationships and goals will change when they marry and have children.
IRE Session WE05
Avoiding 19 of the Most Common Business Mistakes Roofing Companies Make
Speaker: Monroe Porter, president, PROOF Management Consultants
Date: Wednesday, Feb. 13, 7:45 a.m. to 9:15 a.m.