Growing a roofing business means that there’s never a dull moment. At each stage, new opportunities open up and new challenges emerge. That’s what we at HOVER discovered after countless conversations with roofing contractors and other home improvement pros across the nation — from fledgling family businesses to nationwide players.
If you know what to expect at each stage of growth, then you know where to focus your energy and attention. You also know which challenges tend to come up again and again as businesses grow, and can anticipate them.
With that, here are the opportunities and challenges to expect as your business expands.
Stage 1: Starting Out
At this stage, you probably have between one and five employees and perhaps up to 20 subcontractors.
You’re taking on about five jobs each week, or, in peak season, up to three jobs per day.
As the owner of a small business, you wear a lot of hats, whether you’re out on the jobsite with your tool belt or up at night crunching numbers. This is all normal as you’re building your new business.
Your number one priority right now is growth, and the question that keeps you up at night might be something like, “Can I find enough leads to stay in business?” At this point, the threat of failure is real, and you can sense how everything hinges on your ability to find new customers.
You’re also anxious about finding the right labor — as is everyone else. You also worry about the production and installation quality in your labor force. That’s because at this point, each new customer you get represents a minor victory, so you want to be sure they’re happy with the results of their project and will generate positive word-of-mouth.
Finally, there’s that nagging cash flow concern: Will you have enough to pay your people and cover your expenses this month? That’s a very common worry at this stage.
To overcome these challenges, you’re focused on finding the right labor and using your limited time and capital in the best possible way. That means setting up systems that will help you grow, from technology to marketing.
On the technology front, you’re implementing business-critical applications like Quickbooks and seeking out tech that helps you engage customers and maintain your production and installation quality. This is a great time to adopt tech that can help you grow: you’re small, you’re nimble, and you can easily integrate it into your workflow.
In terms of marketing, referrals are your lifeline. You focus on doing excellent work for each and every customer because your success hinges on the good (or not-so-good) word-of-mouth they’ll pass on to neighbors and friends. You also supplement referrals with self-generated leads and simple marketing strategies like placing yard signs.
Stage 2: Established and Growing
By now, you’ve built up a steady stream of business. You’re comfortably generating a few million in annual revenues and taking on five to 10 jobs per day in peak season. You’ve expanded your workforce and now employ anywhere from six to 50 people and a roster of 20 to 80 subcontractors. You also have middle managers and business-critical departments like sales and operations.
That’s great news: you’ve made it out of the difficult and unstable first stage of growth, and have created a viable business. Yes, you still worry about installation and production quality, though it’s no longer as big a concern because you have solid insurance policies and managers who oversee production. You also have access to lines of credit and can circumvent the cash flow problem that plagues small contractors.
But now there’s a new challenge to solve: how to scale. At this point, you fear regressing and want to make sure you have the infrastructure in place to maintain and grow your operations. You’re focused on finding labor and ensuring the right people are there to support your growth. You’re improving and innovating on existing business structures, implementing more sophisticated technology, and expanding your marketing.
In terms of technology, you now depend on good CRM and system management software and have incorporated selling and engagement platforms to really set yourself apart. You know that at this level, you’re either growing or you’re shrinking — and that the right technology gives you a competitive advantage.
You’ve also grown your marketing efforts. Word-of-mouth is still vital, but you now have the budget for digital marketing and other channels. You’re maintaining and growing your reputation by investing in Yelp, Angie’s List, and Home Advisor. You may have even expanded to TV and radio commercials, billboards, and social media marketing.
Stage 3: Maintaining Market Share
At this stage, you know what you’re doing — and you’re doing it very well. You are running 10 to 15 jobs per day in peak season. Your workforce has grown to over 50 employees and maybe over 80 subcontractors.
You have layers of senior management like VPs and have invested in marketing, tech roles, call centers, and HR functions. You may even have multiple offices in secondary markets.
At this stage, it’s all about maintaining market share and stability. You’re asking yourself, “Can I keep up with industry innovations?”
There’s a very real fear of missing out on innovations that could give you a meaningful competitive advantage. Because you’re so much bigger now, even incremental improvements in technology can translate into massive time and cost savings. Because the barrier to entry is so low in this industry, you also worry about new entrants that could shake things up and capture a share of your hard-won market.
At this level, you’re looking ahead and focusing on having the right structures in place to sustain your success. You’re establishing a solid management team, bringing in department heads, and building out your operational side. Your priority (as always) is finding the right labor, but also streamlining business systems and wisely delegating your business processes.
In terms of technology, you are using enterprise-level software and upgrading to the highest-quality project management and sales tools. But you’re also slower to adopt new technology because the opportunity costs are now higher: you’re not as small and nimble as you once were, and any new tech you adopt has to be integrated by multiple departments and people, which can disrupt your existing processes, so choose wisely.
Your marketing has matured to include paid digital ads, including search and retargeting. You’re still spending a healthy portion of your budget on TV and radio spots, as well as social media marketing, billboard ads, and branded collateral like truck signage.
Which stage of growth are you currently in, and what’s next for your business? Although it can seem like the future is a question mark, the truth is, there’s a very predictable pattern of growth that most businesses experience as they evolve. Look ahead with clear eyes, learning from the opportunities and challenges that businesses just like yours have encountered along the way.
What’s up ahead for you?
And what can you do now to prepare for it?