How to Start a Roofing Business
Owning a roofing business can be extremely rewarding. Performing this type of work on someone’s home offers the satisfaction of completing work that contributes to your client’s life and well-being.
Roofing business owners carry out commendable duties while making generous profits. The work is engaging and utilizes the skills and experience needed to manage workers, manage projects, communicate with clients, and acquire new customers.
Roofing businesses provide roof replacement or repair roofs on residential homes and commercial buildings. Services include installing skylights as well as treating roofs for waterproofing, heat proofing, or soundproofing. As solar-powered shingles increase in popularity, roofing businesses are profiting from this trend by installing solar roofs with solar-powered tiles. The size of a roofing company can vary depending on whether or not the company works with general contractors to complete large commercial projects. A small roofing firm will typically focus on residential home projects, whereas larger companies build and replace roofs on large commercial buildings.
Running a roofing business requires strategic and financial planning to account for variations in weather and working conditions. In areas that experience extremely cold temperatures, roofing businesses do not operate during cold seasons. When severe storms such as hurricanes or tornadoes cause damage to roofs, the workload increases dramatically. The most successful roofing businesses are companies that earn a great reputation by providing excellent service.
The roofing contractors industry is driven by the success of the construction industry and factors that impact homeownership, such as mortgage rates. When the economy favors new construction of commercial properties due to business investments and loans affording the opening of new ventures, roofing contractors are needed to build roofs on the new buildings. A market that favors an increase in new homes being purchased also increases the amount of work available to roofing contractors who build roofs on those homes.
The roofing industry is expected to continuing growing based on new construction as well as repairs and reroofing. Profit margins have continued to increase over the last few years, and growth is projected for the next few years as sales increase for roofing contractors. According to Roofing Insights, the roofing industry is resilient because all buildings and homes need roofs. Related industries such as the home industry continue to grow, contributing to the projected increases in the roofing industry.
In recent years advances in technology have shifted the roofing industry towards environmentally friendly roofing. Some of the latest inventions, such as photovoltaic systems, are quite impressive. These new shingles allow business owners to meet Energy Star and LEED requirements. Residential property owners appreciate the savings on electricity solar shingles offer by powering their homes through their roofs.
Firms have also begun to take advantage of the ability to recycle asphalt shingles. Recycling asphalt shingles is a cost-effective means of disposal that is less expensive than landfill disposal. Many roofing customers have pledged loyalty to businesses implementing these environmentally-conscious practices.
Green roofs were not only a growing industry trend in 2017, but they became mandatory in the state of California on new construction. According to Grand View Research, some private companies receive tax breaks from local governments for installing green roofs. These roofs absorb and reflect heat, which reduces energy and saves a notable amount on air conditioning.
The target market for a roofing company is based on the type of roofing services the company provides. Small companies that specialize in repairs and replacement roofs should aim for homeowners in housing developments built at least fifteen years ago. A business that specializes in innovation and technological advancement should aim for customers that value environmental sustainability. These clients will appreciate roof installations that save energy or power homes and businesses.
Skills, experience, and education useful in running a roofing business
Starting a roofing business does not require a business degree, but certain skills and experiences can increase your business’s chances of success.
Roofing Experience. The roofing business requires experience in roofing or a similar construction job. This experience is needed to properly train employees, manage projects, and establish a proper standard of safety for your company to reduce risks.
Money Management. Finance is critical for a successful roofing business. Estimating and covering costs to complete projects and maintain cash flow during off seasons (in colder climates) requires proper accounting.
Management Skills. Management skills are needed to hire skilled roofers for your business. A roofing business with a small crew will generally have a hierarchical structure, including a foreman and supervisor. As the business owner, you will likely spend time offsite and need the skills to direct your crew.
Customer Service Skills. Customer service skills will help you build the reputation you need to grow your business in a highly competitive market. The ability to communicate what your business does, how you will service the customer and the desire for referrals can build the trust to convince clients they should choose your company.
Education. There are benefits to learning the trade through an apprenticeship program. Experienced roofers can acquire certifications through the National Roofing Contractors Association.
Checklist for Starting a Roofing Business
If you’re thinking about starting a roofing business, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write a business plan
After coming up with the idea, the next step in starting your own roofing business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, and much more.
Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect roofing business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
The name of your roofing business is important to communicate to your customers the type of work you do, but it also should indicate your strengths or specialties. Keep your target customer in mind as you select a name that tells your story in a few words.
The name of your business is like the first impression when you become acquainted with someone. It should be professional and build confidence that your business can complete the roofing work a customer needs. Aim to ensure your market that the work you do is dependable, safe, and durable. A roofing business company name should set the business apart from competitors by conveying the mission of your brand. For example, if safety is your top priority, Safety First Roofing would be a title that conveys the mission of your brand.
Step 3: Form a Business Structure
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a roofing business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
The location you choose to start your roofing business can be a designated space in your home. Most roofing companies do not require storage space for inventory. If there is space to park your roofing truck in your driveway, a home office can save money on your initial investment.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
A new roofing business owner will need to obtain business licenses and permits, which will vary from state to state. Many states require a contractor license, while a local business license may be required for contractors, depending on where the house they are working on is located.
In addition, a roofing business may need general licenses and permits and registrations such as a sales tax permit, Employer Identification Number, and Occupancy Permit.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a bike shop is another. Fortunately, the costs to start a roofing business are low, however, if a loan is needed, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs. Even with good credit, a loan guarantee from the Small Business Administration may still be required.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A roofing business will employ several advertising strategies to acquire new customers. Common advertising may include a website, social media platforms like Facebook, Pinterest, and Instagram, digital marketing on Google, direct mail, door-to-door solicitations to hand out flyers and business cards, truck wraps, and putting yard signs in clients’ yards while working on the job, and more.
One important task while working on the marketing is developing an online presence. A website developer may be out of the budget, but Wix makes it easy for non-technical people to get a website running quickly and affordably.
Step 9: Get Business Insurance
Insurance for a roofing business must cover more than other construction businesses because roofers work high off the ground and often work in hot weather. Being properly insured will protect the business in the event of damage to property and against lawsuits. While you will always need general liability insurance coverage, each state, county, and town may have different insurance requirements for roofing contractors.
A few types of insurance to consider when starting a commercial roofing business includes:
– General liability insurance helps cover the cost of property damage.
– Property insurance can cover the cost of your equipment and vehicle if any damage occurs.
– Workers’ compensation insurance covers medical costs and lost wages if employees are injured on the job.
– Vehicle insurance to cover the operation of a truck and trailer. While some roofers may do side jobs and not think about vehicle insurance, be sure to check as most personal policies won’t cover an accident when a vehicle is being used for business.
Step 10: Hire Employees
Your roofing business is highly dependent on your most valuable resource, namely your human resources. It is very important to have an effective process for interviewing, hiring, and onboarding employees.
Due to the high-risk nature of the business, it is advisable to hire skilled employees from established apprentice programs. On-the-Job training programs for new employees should be well developed. Consider hiring a roofing instructor to assist in developing your training program for safety and performance on projects. The Bureau of Labor Statistics reports most on-the-job training programs are led by experienced roofers who teach new roofers skills such as handling tools, equipment, and machines.
The roofing industry has a high turnover for roofers. It is a good idea to weed out workers with low performance but keep quality workers. Your business model should include incentives to keep skilled employees and provide opportunities for career advancement within reason.
It is also a great idea to require roofers to complete a safety certification that meets Occupational Health and Safety Administration standards before or after being hired.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Accounting is extremely important for a roofing company and can make the difference between success and rapid failure. Hiring an accountant is highly recommended, not only for taxes but to put a budget and financial structure in place to offset the seasonality of the business. Another financial consideration is that if your business works with general contractors on new construction of commercial properties, there can be a 30-90 day delay in payment. However, you will still need to pay your bills on time. A proper accounting system will help you manage cash flow during these circumstances.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a roofing business?
The costs to start your roofing business will include tools and equipment, a truck, insurance, and payroll. The tools and equipment you purchase will depend on the projects you complete, but you can keep costs down by purchasing used rather than new equipment or for infrequent jobs, renting can help lower costs as well.
Some common roofing business startup costs include:
– Vehicle and trailer – $15,000-$100,000
– Equipment such as a ladder, hammers, nail gun, air compressor, pry bar, wheelbarrow, and more – $500-$5,000
– Safety gear such as gloves, hard hats, ropes, etc. $500-$1,000
– Roofing software – $100/month
How much money can you make with a roofing business?
Your profit as a roofing business owner will depend on a number of variables, such as your initial estimate of the cost to perform a job versus the actual cost. To increase potential profits, invest in roofing technology that can accurately evaluate the cost of the materials, time, and other expenses needed to complete a project. In general, a roofing business owner with a crew of 10 members can expect to make around $70,000 annually.
Remember too, that since work will be outdoors, a majority of jobs will be done during decent weather. Be sure to adjust your sales projections and budget, especially if your business is located in an area with more rain or longer winter.
One common mistake roofers make is underestimating the cost to purchase materials to complete a project. Roofing software is available to help with these challenges and other common activities such as scheduling and measurements.
Are there grants to start a roofing business?
It’s extremely rare to find a grant to start a roofing business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a roofing business?
The NAICS code for a roofing business is 238160.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.