Whether be a lack of storms or consumer confidence going down and effecting sales, we can’t pretend there’s not something abrewing on the economic side of roofing.
- Maybe it’s time to look at making cuts.
- Don’t cut all marketing, but prioritize ‘money now’ marketing – remember “scared money don’t make money.”
- Be realistic and not dramatic about the 5-20% decrease in demand, check out this video now with a ton of real statistics:
Some demand and indicators are down 5-10% – don’t freak out
- Beacon Roofing Supply announced an 8% reduction in staff, signaling reduced demand and an effort to cut costs due to market slowdown.
- Residential housing starts declined by 7% year-over-year as of Q3 2024, affecting new construction roofing demand.
- Home improvement spending is projected to drop by 5.1% in the second half of 2024, reflecting reduced homeowner investment in major repairs like roofing.
- Existing home sales fell by 9% compared to 2023, leading to fewer roofing projects tied to real estate transactions.
- The Architectural Billings Index (a leading indicator for construction activity) saw a 6% decline in the second half of 2024, suggesting a broader contraction in building projects, including roofing.
Strategies to Stay Profitable During Downturns
The roofing industry is not immune to economic fluctuations. As we head into uncertain economic times, preparing your roofing business for a possible recession is crucial. History shows that companies that adapt early and manage resources efficiently come out stronger. Let’s dive into actionable strategies that can help you maintain profitability when homeowner demand dips.
The Economic Reality: Roofing and Recession
Understanding the economic indicators that signal a downturn can empower your decision-making. For instance, Beacon Roofing Supply recently announced layoffs affecting 8% of its workforce—a clear sign that the roofing market is feeling the pinch. When a giant like Beacon pulls back, it’s a wake-up call for smaller roofing businesses to get strategic.
Key Stats to Keep an Eye On:
- Housing starts are down, meaning fewer new construction projects and possibly fewer opportunities for roofing jobs.
- Home improvement spending has slowed by 3.6% in the first half of 2024.
- Roofing material costs are projected to increase another 5% year-over-year, squeezing margins.
- To survive and thrive, your business needs to be lean, adaptive, and ready for what’s coming.
Trim the Fat: Reevaluate Staffing and Overhead
When revenue dips, one of the first areas to look at is staffing. It’s tempting to maintain the same level of staff during slower times, but this can quickly drain your resources. Tony Flattum of Built Strong Exteriors suggests a proactive approach:
- Assess your staffing needs: If your revenue drops by 15%, can you reduce staff by 30%? This keeps expenses in line with income.
- Keep only top performers: Use slower times to identify underperforming employees. Letting go of those who aren’t meeting expectations can streamline your operations and free up resources for essential tasks.
Practical Steps
- Review headcount quarterly to ensure your team size aligns with current demand.
- Use KPIs like revenue-per-rep and conversion rates to identify who is adding value.
- Recession-Proof Your Marketing: Go Lean but Stay Visible
A natural reaction to a recession is to cut marketing spend, but this can be a fatal mistake. When the market shrinks, visibility becomes even more important. Instead of slashing your marketing budget, optimize it.
How to Make Every Marketing Dollar Count:
Focus on Local SEO and Google Maps: Roofers heavily rely on local customers, and being found online is critical. Invest in Local SEO and Google My Business listings to ensure your company appears when homeowners search for roofers near them.
- Target long-term keywords: Instead of chasing after “emergency roof repair” or “storm damage,” which may fluctuate, target terms like “roofing maintenance” and “roof inspection.” These keywords are recession-resistant because homeowners will always need maintenance.
- Shift to low-cost, high-reward tactics: Email marketing and retargeting ads offer great ROI. Reach out to past customers with seasonal checkup offers to keep them engaged and loyal.
Hook Agency’s SEO, PPC, and web design services can help roofing companies maintain a strong online presence, even when the economy dips. By focusing on high-converting, low-cost digital strategies, your business can stay top-of-mind without overspending.
Avoid Underbidding: Value Over Volume
When leads dry up, it’s tempting to start lowballing bids just to get work. But this strategy backfires in two ways: you erode your margins and set an unsustainable expectation for future jobs. Instead of competing on price, compete on value.
How to Win Without Sacrificing Profit:
Bundle services: Offer value-added services like gutter cleaning or roof maintenance packages. This increases the value perception without cutting your base price.
Educate your customers: Use content marketing to explain why cutting corners on roofing materials or labor is a bad idea in the long run. Homeowners value durability and peace of mind, especially in uncertain times.
Pro Tip:
Create a comparison chart on your website that highlights the long-term cost savings of quality roofing versus cheap fixes. This not only educates customers but builds trust in your expertise.
Diversify Your Revenue Streams
Relying solely on one type of roofing job, like storm restoration, is risky, especially when storms are few and far between. To buffer against economic downturns, diversify your offerings.
Ideas to Consider:
- Commercial roofing: If you’ve primarily been in residential, now is the time to explore commercial jobs. Commercial projects can offer more stable, long-term contracts.
Roof maintenance programs: Develop a subscription-based maintenance service. This provides recurring revenue and keeps your company top-of-mind with homeowners. - Energy-efficient roofing solutions: With the rising interest in sustainability, offering green roofing options like solar-ready roofs or cool roofing materials can attract a new type of customer.
Tighten Up Your Finances: Cash Flow is King
One of the biggest threats during a recession is a lack of cash flow. Even if you have jobs on the books, slow payments or unexpected expenses can create bottlenecks.
Tips to Keep Cash Flowing:
- Offer payment plans: Work with financing companies to provide homeowners with flexible payment options.
- Negotiate better terms with suppliers: If you have strong relationships with material suppliers, see if they’re willing to extend your payment terms to 60 or 90 days.
- Review your overhead: Take a hard look at expenses. Can you renegotiate your office lease or cut back on non-essential software?
The Mental Game: Stay Positive and Resilient
Running a roofing company in tough economic times can be stressful, but maintaining a positive mindset is crucial. As Tony mentioned in his interview, keeping calm and focused helps business owners make better decisions.
Ways to Stay Motivated:
- Network with other roofing business owners: Join industry groups or mastermind sessions to share strategies and offer support.
- Set smaller, achievable goals: If your revenue goal for the year needs to shift, adjust it and focus on achieving smaller wins to keep your team motivated.
Hook Agency: Your Partner for Growth During Tough Times
During a recession, roofing companies must adapt and optimize every aspect of their business—from staffing and marketing to cash flow management. If you’re ready to recession-proof your roofing company, Hook Agency can help. Our SEO, PPC, and web design services are designed to maximize visibility, convert more leads, and help you navigate any economic climate with confidence.
Let’s build a stronger future for your roofing company, together. Contact Hook Agency today to ensure your business stays profitable, no matter what the market throws your way.
