Unlike other industries which face stiff competition and lower position availability due to automation, the roofing business is still going strong. After all, a house without a roof isn’t much of a house, is it?
It’s understandable that you see the roofing industry as a lucrative step for your next business venture, but it’s not as simple as just nailing down some shingles. As with any entrepreneurial endeavor, you need to understand a thing or two about finance before you get started.
Your overhead costs
While most every business handles overhead costs, the term is rarely as applicable as when it’s applied to roofing. Your overhead costs are basically the essentials that you need to keep your business functioning. Whether this includes office space, materials, or equipment varies from business to business. Overhead costs also include the less tangible parts of roofing like accounting, labor, and legal fees. Viewing your total overhead costs against your revenue is the first step in determining how profitable you are.
When it comes to roofing, this is a little more difficult. While the bill ultimately falls to your clients when the job is done, there are times where your assets are going to be a little more liquid than you may be used to, which makes it harder to get a read on your profit. This is especially true when it comes to parts. You’re primarily responsible for suggesting and procuring parts for a roof and you’ll foot the initial bill. Ready to invoice? You need to make sure you include those parts in the grand total. Think of it as extending a line of credit to your clients.
The right parts
Speaking of parts, this is where you’ll have to make some tougher executive decisions. While it may be tempting to suggest a cheaper alternative to a client to avoid a good chunk of your money being tied up in purchases, you have to take a step back and look at the big picture. If you’re offering a quality guarantee, how much do you stand to lose in parts and labor if the cheaper product is faulty or doesn’t last through your warranty period? Most likely, that’s more than you’re willing to lose.
While you don’t need to suggest luxury products to every single client that walks through your door, always recommend durable materials that can handle the necessary wear and tear throughout the years. Products like Everlast II™ are specifically designed with durability in mind and should be at the top of your list, especially for more industrial projects. Most of your clients will be looking for a lasting solution, so if you’re unprepared to offer that to them, you could be saying goodbye to their business.
Keeping the books
Depending on the size of your business, you could handle some of the more menial accounting tasks on your own, like balancing your budget or tracking costs on a spreadsheet. Although you likely know that running a roofing business is a little more complicated than that. Especially where labor is involved, you need to know the basics of tax withholding, how paychecks work for your employees, and whether or not you’re legally obligated to help pay for health insurance costs.
Sounds like a lot to handle, doesn’t it? Oftentimes, roofers don’t have the bandwidth for a full-time accountant. But don’t worry, because there’s still a way to get professional help with your finances. Outsourced accounting firms are an excellent way to get the accounting assistance you require without emptying your savings trying to cover an annual salary. You receive tax information, cost analyses, and financial planning for a fraction of the price of a dedicated employee without a dip in quality. It’s a win-win situation.
A learning curve
It’s perfectly okay to feel a little overwhelmed by all of the financial jargon you’re going to come across, but once you’re over the initial learning curve, you’ll feel much more in control of your business. Roofing is an excellent way to break into entrepreneurship but, like any successful business venture, it requires time, patience, and dedication. You may not feel like a financial whiz now, but give it time. You’ll be crunching the numbers with the best of them in no time at all.