Roofing

Why Roofing Companies Fail (According to 11 Roofers + Consultants)

Jordan Desbien shares in the video below what he learned from stress and pain of business failure, what happened, and what he is doing now. In preparation, I also asked folks this…

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Jordan Desbien shares in the video below what he learned from stress and pain of business failure, what happened, and what he is doing now.

In preparation, I also asked folks this weekend why they believe roofing companies fail… and the top 3 reasons according to 100+ people were:

#1 Finances + Cash Flow – don’t understand their numbers / accounting, taxes, lack of profit/not charging enough or greed & indiscretion.

#2 Leadership & management – selfish CEO, lack of humility, or problems with mindset,

#3 Systems & Processes – don’t create duplicatable systems, over-dependence on a high-performing owner, think that sales alone will be enough. Don’t know how to hire or train sales reps.

Do you agree that these are the top 3? What else would you add?

YouTube video

Biggest reasons: lack of business leadership skills and financial acumen

Jim Johnson of Contractor Coach Pro puts it this way, “After coaching 1000’s of company’s the two main reasons…

1.a – Lack of Business Leadership Skills

1.b – Lack of Financial Acumen

Followed closely by developing bulletproof repeatable processes.

Source: Easy entry industry that doesn’t require the proper knowledge or requirements”

“Stay humble anyone can fail” – someone who went through Bankruptcy suggests

Graham Dessert who was part of Roofing101, a very public roofing bankruptcy (grab the book about it here) says “There are many reasons.

1.  I’m well educated and so were my partners

2.  We had all the systems in place including sales, EOS, production, work flows etc ( I grew up in franchising)

3.  We created our leadership development program specifically to develop our internal employees and eventually turn into another stream of income

4.  We built an internal recruiting team that hired and helped train new employees

5.  We had an amazing brand and worked with one of the best to help us get it fine tuned

6.  We had suppliers allow us to go way above our limits, credit cards too…AMEX has a buffer zone…I think ours went to another $50k

I could go on.

No matter who you are, who’s in with you, how much money you have…you are not immune to the business failing.

Our business still tanked, $3.5M in debts.  I actually wrote a short book about.”

Get educated on your business, don’t rob Peter to pay Paul

Paul Perez of Texas Family Roofing says the “#1 Reason is Lack of Business Education.

Example:

Owner sells Job, buys materials on credit, pays labor, collects final payment, looks at bank account and proceeds to spend someone else’s money.

X10,x20 finally realized he/she is out of funds.

Owner has been collecting from Peter to Pay Paul the entire time.”

Technology problems and treating 10-99’s like W-2’s 

Bryan La Rue, roofing consultant says “The majority of Roofing Company owners are Subs that have gotten upset with their previous companies management. Then go off on their own, once they see an opportunity such as a large storm… In my opinion ANYONE who is mildly intelligent can make a 1 million dollar roofing company in Tornado Alley. However, the ones who fail to succeed in sustaining their business’s growth, for more than a few years. Usually lack knowledge when it come these three elements:

A. Technology to repeat sales Sales drive every single company, in order to succeed you need to be able to make your sales repeatable. You do that by:

  1. Organizing your leads
  2. Tracking your touch points (without relying on your salesman to leave notes)
  3. Having all communication tracked so that you can make templates for what works and trainings on what doesn’t.

Unfortunately in the space of roofing, the majority of CRMS are behind on their times. They don’t have virtual text threads, call recording, automatic text updates. They look like a 1995 version of a website and are inefficient. Instead of JobNimbus, hire a nerd as a “Lead Manager” and have them build you a custom Go High-Level CRM. Then build KPI forms to track what your salesmen do throughout the day. The goal here is to know “I spend this much $ on leads, we call/text them like this, this many times, and when we do we close at this %”.

B. Management Skills Unfortunately within this industry we struggle with mental health which 9 times out of 10 translates into addiction, and poor coping/communications skills. If you do not deal with the things that you are struggling with by either going to counseling or working on yourself as an individual you will most likely have an extremely high turnover rate within your company.

The ones that I have seen fail the most struggle with:

  1. Expecting their 1099 contractors to behave like W-2 employees
  2. Not validating their teams opinions
  3. Viewing themselves as a god for the small amount of success they have received i.e narcissism and egotistical Behavior

C. Becoming Self-Reliant What happens when the hail stops falling? How do you make sales? How do you pay your bills? How do you maintain the lifestyle you have built? How do you keep your team together? The short answer? Diversify. You need to figure out what you can add to your company as a service that you can sell in the off season. My opinion? Solar.

Not wanting to comply, will make it hard for you to then be a great leader

Eric Richardson of Roofing Specialists of San Diego says “Most companies fail because of lack of leadership and management. Most business owners started their own companies because they did not like being managed which makes them poor at management. Next in line is not tracking your profit analysis by the day and by the job.”

Economic Downturns, Competition and Bad Work

Travis Sliger of 4Ever Roofing puts it this way “A variety of reasons: Competition, Lack of Experience, Poor Workmanship/Service, Financial Mismanagement, Economic Downturns.

I’m sure I’m missing something but these are the most common I can think of.”

Reactivity vs. Systems & Processes

David Carroll of Dope Marketing says “A lot of the roofing companies that I see struggle run their business very reactively.

I do not see enough focus on systems and processes, but more just a version of everything running around the reactivity of a high performing owner, that sadly doesn’t have the right systems in place”

Don’t buy in to hyping enablers who just want you to keep giving them money 

Brad Akers of Brad Grows Businesses says

“I think the suppliers are the biggest enablers…

The almost immediate goal of a new roofing company is to get a credit line for as much as the supplier will allow, and then they may ever go get one somewhere else.

Their first few jobs from friends, family, referrals get them a nice little boost right out of the gate and they have more money in their business bank account than they ever have had in their personal bank account.

The supply rep is telling them how great they are, and they haven’t accounted for the fact that they still owe for materials on those jobs. They know, but they now assume that they will be able to recreate the initial success over and over without much more work.

Well they spend more than they should, probably cover the first rounds of the bill being due, but going deeper and deeper into their pockets to do it, until they accept the late payments.

Now they have very little clarity of their financial situation because they owe their supplier and are put on some sort of payment plan to get current which gives them a very difficult time of being profitable.

Next, they have a little cash and hire someone to do their ads or something like that, don’t know how to handle cold leads (because it’s the first time they have ever worked leads like this), don’t do as well as they’d like, and are in an even further financial crunch.

Obviously this is taking a lot of liberties, but having been on the supply side, the roofers side, and now the marketer/consultant side, this story repeats itself over and over and over.

Many don’t get past the first few payments and spend their life and energy just paying off their debts which doesn’t give them the ability or willpower to really step it up and grow.”

Sales reps get over eager and bite off more than they can chew 

Raymond Little of Perimeter Roofing:

“Sales rep have one good year, and jump out in the water 💦 and drowned

Owners that don’t stay involved lose too, think they can put their feet up and not do anything to are guilty and lose everything too”

Installing is not the same as running a business 

Cal Spoon of Insurance Busters says “They fail to understand installing is not the same as business. No matter how well you install, sell, maintain… if you don’t understand business, your true cost and… loss, success will be very hard to find.”

Avoid Buying Luxury Items You Don’t need

James Emerson of Renew Roofing agrees that money management is a big part of it “Margins they don’t understand P and L.

You can typically tell who’s going bankrupt after year one by how much they are posting about new toys.

There seems to be a correlation between the bigger the boat in year one or two faster their business sinks.”

Wrapping Up

If you’re a roofing company owner or are considering starting your own business, it’s crucial to understand the common pitfalls that can lead to failure.

By focusing on building strong business leadership skills, developing a solid foundation of financial acumen, and implementing effective systems and processes, you can increase your chances of success and avoid becoming another statistic.

Don’t wait until it’s too late – take action now to set your business up for long-term success.

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