Decision making in a vacuum may lead to dangerous choices. We all know that emotions can impact decision making, but for business owners the daily toll of entrepreneurial stress cannot be ignored. People make poor choices for a lot of reasons, but mental fatigue can play a large role in the process. Business owners are particularly susceptible to decision weariness due to information overload, constant decision making and general stress.
Use mornings and other high-energy periods throughout the day to ponder major decisions. Write your thoughts down and review them several times. In my presentation at IRE, I will review some of the more common problem areas roofing contractors should consider such as:
IRE 2022 Seminar Session
Title: Avoid Common Financial Pitfalls and Business Structure Mistakes
Speaker: Monroe Porter, president, PROOF Management Consultants
Date: Tuesday, Feb. 1, 7:45 a.m. to 9 a.m.
Too Many Eggs
Too many eggs in one business can threaten your financial stability. Owning your own building can be a logical investment, but remember rent is still dependent on your business. If you invest in a company facility, make sure it’s suitable for other businesses. A little extra thought and investment upfront can tremendously increase your property’s long-term value. Limited zoning, parking, handicap and appropriate bathrooms and a declining location can all limit your investment. Remember, real estate is based on location, location and location.
Contribute the Max to an IRA
I know some folks are frightened by the stock market but, if you are under 50 you have a long time to recover. Plus buying stock monthly allows you to income average your investment by buying when the market is both high and low. Better yet, hire a good financial advisor who’s an expert in this area.
Many a business owner dreams of having his or her children work in and take over the business. Sometimes the best of dreams must face the reality that the math cannot work. Family business succession is a situation where fair is not always fair. If one sibling is the alpha dog and runs the business, another is office manager and another is foreman, paying them equally is likely going to cause dissention. This is another reason not to tie up all your money in the business. You can always leave personal wealth to children who do work or have a management role in the business. You might consider having a business consultant or other objective advisor help you sort through the process.
Embezzlement and Theft
It’s real, and it must be monitored. Over 15% of my customers have had some sort of internal theft where less than 1% of them have been impacted by a natural disaster such as a flood or tornado. Many of the embezzlers where stable, long-term employees who meant to pay the money back, but it became addictive. It’s not uncommon to have a grandmotherly or long-term accountant be the culprit. Gambling addictions, drugs, felonious children and other life calamities can make good employees go bad. Put financial protections and safeguards in place.
Locks are put on doors so as not to tempt honest people to steal. Consider embezzlement insurance but know what’s covered and that fees vary greatly from place to place. Underestimating the Labor Shortage in the Trades Not understanding the current labor shortage in this country, and not planning accordingly, is foolish. Too many people blame COVID-19, excessive unemployment insurance, politics, etc. While these things were a catalyst, the real issue is birth rates and population statistics.
According to labor statistic reports, the number of people in the workforce over age 55 has doubled in the last 30 years while the number of people ages 18-25 in the workforce has dropped 29% in that time. In 2020, the national birth rate in the United States declined for the sixth straight year.
It’s estimated in 12 years that the number of people in the U.S. over 65 will outnumber children. Add the fact that most young people don’t see the trades as a career opportunity, and you have an even greater problem. Roofers have gravitated to using immigrant labor but that too can bring complications, and no one knows what will ultimately happen with immigration.
Not having established repairs and roof maintenance systems is also a common roofing contractor issue. If a customer calls you for a repair and you tell them no, it is doubtful that customer will call you back for a roof replacement. Establish policies, pricing and strategy. Also, see if your commission structure is conducive to selling repairs. Common sense tells us commissioned salespeople are more excited about a $15,000 reroof than a $1,500 repair.