The challenges of minding your business

Some of you are installers. Some are businessmen. Some of you operate roll formers. Some order metal panels and shingles. Some of you follow up on leads and sell. Some sign the checks. Some of you do all of those things … and much more.
No one knows better than you that no business runs itself and not everyone is cut out to run a business. Every businessman and businesswoman has needed help with something — the ones who make a go of it know where to find that help.
Who is most likely to know something to help you run your business? Manufacturers and suppliers may be able to help with some issues — installation training, marketing ideas, warranties, and technical information. All of these affect your bottom line, but maybe not as directly as some other items, like pricing, purchasing, and payroll. These are all issues you have to deal with on a regular, if not daily basis. You know you’re only making money when you’re on the roof, so you may not want to devote a lot of time to things like insurance, safety, and hiring.
Keeping tabs on all of these things help put you in a position to make money.
Several representatives operating metal roofing companies of various sizes shared their thoughts and ideas for dealing with these issues. So if you want to know how the big companies run things, or want to take a look into the world of a contractor with less than 10 employees, hopefully you can find something here that helps you.

Insurance
No one gambles better than an insurance company. That’s how insurance companies make money. Business owners are faced with the decision to play with the insurance companies — or take their own huge gamble. If you have insurance, it doesn’t necessarily mean you want to use it.
Some companies are willing to roll the dice. And those installers who don’t carry liability insurance and/or workmen’s compensation have a lower overhead. That means they are able to submit lower bids, says Randy Sanders, owner of Sanders Roofing Company in Krum, Texas. “But you’ve got to have liability and workmen’s comp if you want to bid the good work,” he says. “The ones who bid lower than us, it hurts us a little bit, but it’s not worth it to go without insurance. It would be nice if everybody had to play by the same rules to compete.”
Some roofers gamble without liability insurance — they haven’t had a claim in years, so they take a chance and go without it. To most it’s not worth that risk.
Jerry Iselin, owner of Metal Roof Specialties in Tacoma, Wash., keeps close tabs on all costs, including those relating to insurance. He says for an installing employee making $15 an hour, it costs his company $28.02 per hour to put that employee on the roof. More than half of the that $13.02 is directly related to workmen’s compensation and liability insurance. “Those are the realities of being a roofing contractor,” he says. “It’s also the reason it’s easy for a guy not running a legitimate business to beat the crap out of us on price. Those are real live numbers we deal with every day.”
For every man-hour worked by one of his installers, Iselin figures his workmen’s compensation cost is $3.93 an hour. “And I think that’s pretty low,” he says. “Some companies that have had a lot of claims are easily in the $6 an hour range.”
Iselin says keeping track of such figures helps make his business more profitable, because he can accurately assess the cost of a job.
Tracy Scott, owner of Best Metal Roof Period in High Ridge, Mo., works only with subcontractors, and about half of those crews have insurance. He has a simple formula for paying crews with and without insurance — crews without insurance get paid one-third less. “That’s about what it works out to be for roofers in the St. Louis area,” Scott says. “I have to maintain options because I’m working with subcontractors. But it’s pretty simple, those that have insurance get paid more money.”
The higher the work is, the higher the insurance premium  — it’s part of the formula established by insurance companies, which are generally pretty good at finding ways to increase premiums when dealing with conditions that are potentially more dangerous. Saint Louis Metalworks is a unique business, as less than 10 percent of the work it does is standing seam roofing. The rest of their work is with other roofing profiles, wall panels, roof edgings, copings, gutters, and gutter components. Kelly Luckett says the company owns a Jobsite gutter machine that manufactures a 7-inch box gutter. “So we’re continually battling the ‘Are you a roofer or are you not a roofer?’ question (with the insurance companies),” he says. “We cater to the roofing industry.”

Payroll
The local economy will have as much to do with how employees are paid as anything else. If the unions have a strong presence in a particular area, employers may have to pay their employees more or offer better benefits to keep them around. Bigger companies that do more complicated projects, or offer more services, expect more out of their employees, so they pay them more.
Fabri-Tech Sheet Metal of St. Louis is a union shop with 50-55 employees that will do approximately $10 million in business in 2005. Operations manager Mark Tucker says the company loses an occasional job because its union salaries mean he has to submit a higher bid, but that’s OK. “Not many companies offer the services we do,” he says. “If we’re doing a dome, we can do the structural steel, the deck, the underlayment and then fabricate the metal panels, so that gives us the advantage.” Tucker says Fabri-Tech needs to pay employees well to be able to handle all those tasks and do them well.
Luckett expects Saint Louis Metalworks to top $4 million in sales for 2005. The company employs union labor and Luckett says his workers are paid a little over scale. “We couldn’t get the kind of projects, the high profile work we’re getting without being union,” he says. “We’re lucky because there aren’t a lot of non-union companies in our area doing the kind of work we’re doing.”
Cal-Pac Residential Roofing in Rancho Cordova, Calif., is a non-union employer, offering medical and dental benefits along with a 401k plan. “We’re the only one in the area that offers all that, so we have a very low turnover rate,” says owner Lindsay Smith, who has about 35 employees. “We respect our employees, treat them with respect, and we applaud the work they do out there.”
Iselin says paying metal roofing installers is unique in the roofing world because he has to have experienced employees, and therefore, has to pay them more. “We can’t just go out and pluck employees off the street,” he says. “We have to cultivate our employees, make sure they are of high character, and fit into the culture of our business philosophy.”
When dealing with subcontractors, the amount of work available may influence their decision to work for you, as well as how much you pay them.
“I tend to pay crews a little more than in other areas, certainly more than they pay in Dallas and more than in Florida,” says Scott. “The thing is I offer a crew anywhere from 3-5 jobs and if they go to Florida, they’re contracted for 50 jobs. It depends what they want.”
Scott says Best Metal Roof Period can make better money on standing seam projects because most of the companies installing standing seam in the St. Louis area employ union labor. “I can come in 25-30 percent lower on a lot of jobs and still make a pretty good profit,” he says.
That’s what it’s all about.

Employee hiring and retention
One of the most time-consuming and costly investments any business has to make is training new employees. The higher the learning curve, the longer it takes for a new employee to be productive. A good employee who sticks around is valuable to any business. The trick is keeping those good ones around.
“We have a very, very low turnover, partially because we pay employees over scale,” Luckett says. Saint Louis Metalworks has scheduled breaks for employees on the jobsite, figuring that down time is made up in production by employees who appreciate a chance to take a break, or get something to eat or drink. He says the company also is willing to spend money on new equipment to improve efficiency.
At Cal-Pac, new employees start out as on-the-job helpers and get special attention from a supervisor at the jobsite. To keep things as simple as possible, installer employees specialize, meaning they work with only one product. Smith says employees are well trained on installing and on developing customer relationships, an important part of the business he says often gets overlooked.
Iselin has been in operation for 14 years and has 11 employees. Several of his employees have been with him for at least half of that time. “Employees don’t leave us as a rule,” he says. “We’re a good employer. I’ve got guys who have been here seven years, eight years, and a couple who have been with us for five years. We did lose a couple good guys this year that just relocated. They got tired of the hustle and bustle of the Seattle area.
“The reason they stay with us is because they are of like character and agree with our philosophy. We’re a family-owned business, my daughter works here and my sister works here. So it’s really about family values. We work five days a week, work 8- to 10-hour days, and no weekends. We have a 401k which we contribute to, health benefits.”
Iselin believes benefits are important to people who lead responsible lives, and therefore are more than likely to be responsible workers. “We don’t pay the highest wages, but I do everything I can to make sure everyone gets to work 40 hours a week, 52 weeks a year,” he says. “There are good people out there who want all those things.”
 Tucker says Fabri-Tech occasionally offers training sessions for employees who want to become more versatile, and therefore more valuable to the company. “When we get a good guy, we pay him a little extra, and the training is there for them to get better,” he says. “One weekend we offered a soldering class in our field shop and we had about eight or nine guys come in. When it comes to learning, we have a very willing workforce.”
Scott, who works with only subcontractors, has the good fortune of rehiring several of the better crews. Obviously, he prefers working with crews he is familiar with and knows will do a good job. “There’s about seven crews floating around I work with a lot,” he says. “They come from Kentucky and Ten-nessee. I’m going to Kansas City to interview some crews this week. I’ve got one crew from central Missouri that does a lot of stone-coated work. They have a lot of experience with the tile profiles and the battened jobs. That experience helps me get more jobs and we can offer a longer workmanship warranty.”
Somehow, you have to find a way to maintain a good relationship with the employees and/or subcontractors you want to have working for you. It’s pretty easy to detect which employees are happy and which are not. Sometimes they come right out and tell you or a supervisor.
A huge part of a contractor’s bottom line is knowing how much each employee is worth to the company. Just because one employee makes more than another, doesn’t mean he costs more to keep around.  
“Our guys aren’t union, but I’m sure there are days when they’d like to be,” Sanders says, laughing. “We pay them pretty good and they stick around.”
He says it’s not always easy to find good employees, so it’s beneficial to hang on to the good ones when you get them. “We treat them pretty good,” says Sanders, who employs six full-time installers and works with a couple subcontracting crews. “They get a paycheck every Friday, even if I don’t get one. We give them Christmas bonuses and bonuses if we do well on a particular job.” Sanders says his employees also have access to his lake house, near Gainesville, Texas. That’s a perk that’s difficult to quantify.

Marketing
Unfortunately, there are no simple directions for marketing your business. It’s trial and error for everyone. Anyone can spend money, but it may take a while to figure out what works best.
Part of the problem is there are so many options. You can advertise on television, radio, and billboards, in magazines, newspapers, phone books, and church bulletins. It’s never hard to find someone who is willing to take a chunk of your advertising budget.
Regular advertising is only the tip of the iceberg. Does your company operate and update a Web site? More and more, consumers are looking for answers online before they pick up a phone. There are opportunities to advertise online as well, on the Web sites of other businesses.
Your jobsites can be good or bad advertising for your business, depending on how long a job takes and how well it is done. Simple things like keeping a jobsite neat can create a positive impression with a potential customer. Signboards, uniforms for your employees, as well as company logos and phone numbers on your trucks are marketing items to consider.
Then there are local, regional, and national associations and the trade shows they operate. Having a presence at trade shows is valuable because the attendees are looking for better products and better ideas. It’s up to you to offer those products and ideas. Belonging to associations or serving on association committees can give you credibility — it shows that you are committed to your craft and the industry.
It’s sometimes difficult to devote a lot of time in finding ways to spend marketing money — when you don’t spend it, it feels like your saving. Ultimately, the key is tracking which marketing dollars are working.
Everyone likes word of mouth advertising, but you have to get it to work for you in a positive way.
Sanders says most of his advertising is done by word of mouth. “We’re in the Yellow Pages and we do some other advertising just because you have to,” he says. “Honestly, I don’t make a lot of time to take care of some of those things.”
Best Metal Roof Period has been a member of the Metal Roofing Alliance for three years, which accounts for about 40 percent of Scott’s marketing. He spends about 25 percent of his budget in the Yellow Pages and the rest is invested in home shows and signage. He says word of mouth has made Best Metal Roof Period the dominant residential metal roofing player in the St. Louis area. “I offer complete installation control and a solid 20 years on workmanship,” he says.
Cal-Pac does no more than six home shows a year and draws leads from referrals and direct mailings. The company also has hired someone to redesign its Web site. “You need to sell image and then support it with good service and good quality,” says Smith. Cal-Pac also has a small ad in the Yellow Pages, but for presence only. “Yellow Pages leads are not rated highly,” Smith says.
Tucker believes Fabri-Tech will take a closer look at its marketing plan. “Honestly, we don’t do as much as I’d like, we go a lot on word of mouth,” he says. In addition to a Web site, which doesn’t get updated as often as Tucker feels it should, Fabri-Tech is a member of Sheet Metal and Air Conditioning Contractors’ National Association and used to belong to National Roofing Contractors Association. The company’s owner serves on a SMACNA committee.
Where you do business, there are state associations or organizations worth joining. On a smaller scale, many contractors take advantage of membership opportunities in local home builders associations or an area chamber of commerce. Joining community organizations is another way to get your company’s name out there to potential clients.
Saint Louis Metalworks Company has a Web site, but gets most of its work as repeat business with the same roofing contractors. Luckett says the company also sponsors several “lunch-and-learn” sessions each month for architects, educating them on the options they have.
Metal Roof Specialties has tried it all. “And I mean tried because it wasn’t always with a lot of success,” Iselin says. “We started with Yellow Pages, and we tried TV and radio and direct mail. The direct mailings were a failure. TV worked for a while, but then it faded, and radio is so expensive.”
Metal Roof Specialties is a member of the Metal Roofing Alliance, which comes at an annual cost of $400. “I figure a good lead costs about $300 to $400, so if you sell one job from an MRA lead, you’ve got your money back,” Iselin says.
 
Purchasing
The products sold, installed, and guaranteed also come at a cost. If a company has a lot of jobs lined up and knows what products it will need and when those products will be needed, keep a large inventory may make sense. A large inventory requires a large investment.
A lot depends on the manufacturers and suppliers a company works with, and how fast they can deliver products. Developing solid relationships with manufacturers and suppliers can help get a better price — they will take care of larger and loyal customers first, just like you do.
Some like to make sure they have on hand whatever they may need. Cal-Pac keeps approximately $100,000 in inventory. “It’s rare if we run out of something,” says Smith.
On the opposite end of the scale are those who order as they go. Metal Roof Specialties stocks no roofing material — it’s all purchased as needed. “That’s one of the beautiful things about being in the metal roofing business,” Iselin says. “And today, there are so many color options, it would be hard to keep an inventory.” Iselin does stock various accessories like fasteners, underlayments, caulking, and pipe flashings — and he keeps it all in a 20×20 storage facility, not a warehouse.
Fabri-Tech works with different metals and lands some large jobs. Tucker says a quick turnaround on orders allows the company to keep a smaller inventory. “We try not to inventory too much,” he says. “We go through a lot of copper, so we keep some on hand. As far as galvanized or stainless, we know we can get what we need in a day or two, and then it becomes a price point — who can get us the best deal in a couple days.”
One job Fabri-Tech took on required 80,000 pounds of copper. “We purchased it on a conference call with a guy on the floor at the COMEX,” Tucker says. “You hang up the phone and you think, that’s pretty cool, but you still wonder if you got the best price.”
Sanders orders his metal roofing as needed, having it dropped off at the jobsite. His residential panels, a snap-lock system, come from Mueller. Commercial panels he orders from MBCI.
Scott orders direct from Metro Roof Products and McElroy Metal for each job. Vertical panels from McElroy are delivered to the jobsite.

Pricing
Depending on how much competition there is, pricing jobs can be a gamble as well. If a contractor wants the job, he’s got to submit a bid that’s at least competitive with the others. He also wants to turn a profit.
In October, Iselin presented a seminar at METALCON in Chicago titled, Pricing for Profit. He says the three main considerations for pricing a project that vary from job to job are slope, access, and complexity — and all affect the time it takes to install a metal roof properly. It’s simple math, really: Working on a steeper roof takes more time; if getting equipment and materials to a jobsite is difficult, it takes more time; and more and complicated details take more time. For each of those considerations, a contractor has to charge more.
“There are too many variables to installing a metal roof to suggest selling a square by a set price,” Iselin says. “It can be a hard thing for a contractor to understand, but it’s simple for a businessman.”
Iselin says the problem he has with selling strictly by the square, with no considerations for slope, access, and/or complexity is that the easy jobs will be more profitable, but the more difficult jobs will surely be less profitable. That’s OK for a while, until your bids are too high for the easier jobs and you’re only landing the more difficult ones — the jobs that are less profitable.
Some companies develop a formula for pricing, taking into consideration every aspect of a particular job. “We’ve got a spread sheet we stay pretty close to, but if it’s a job we really want to go after, we’ll fudge the margins some,” Tucker says. “If it’s a job that’s a dome and requires structural steel work and we know we don’t have much competition, we can set our price. It’s the same for someone who comes only to you and you know they want you to do the job, you can set the price. When the jobs are what we call commodity jobs, the jobs anyone can do, we don’t budge off our numbers. We’ve built a pretty good reputation the last five years.”
In residential applications, metal roofing has a lot of competition that sells on nothing but price. Properly installed metal roofing systems are better products, so don’t get caught up in that game. With any purchase, you almost always get what you pay for, Sanders says. “We’re not the cheapest one out there, but we do it right,” he says. “We’re just trying to make sure everybody gets taken care of. We’re honest and we guarantee our work, we stand behind our work. Customers need to know you’ll be there if there is a problem.” With the damage done in Texas by Hurricane Rita, Sanders says he is up against the roofers he calls storm chasers. “You can’t have someone from Illinois come down and put a roof on your Texas home and expect them to be around in a year when there’s a problem,” he says. “That’s why those guys are cheaper. They won’t be around to back their work.”
You can never underestimate the importance of accurate estimating. It’s really pretty simple: High bids will cost you jobs and low bids cost you money. To do a good job of estimating, you really have to understand all costs involved. “I look at all the factors when selling a job,” Scott says. “The No. 1 thing is pitch. Obviously, steep slopes are more challenging to work on. Access is not an issue because I can get stuff roof loaded. The other thing is cut work, how much cut work has to be done at the jobsite.”

Safety
Like everything else discussed here, how you run your operation in regard to safety is your call. It’s your business. You’re responsible for its success, and every decision you make has an affect on its success, including safety. You don’t let your newest installer make marketing or purchasing decisions for your business, so you probably don’t want that person making decisions about what safety regulations they want to and don’t want to follow.
Not following safety regulations can cost you more than any safety equipment and every employee should understand what your expectations are.
The policy at Saint Louis Metalworks Company is to comply with OSHA standards. “It used to be that OSHA was like the Easter Bunny, no one ever saw it,” Luckett says. “But since OSHA grew teeth, they made believers out of a whole group of people. Now it’s just a part of everyday business. Sometimes it’s hard to get the men to believe there are repercussions, but we’ve got policies in place and to be honest, I don’t believe it has hampered production one bit.”
Scott says working with subcontractors provides a little extra challenge for following safety regulations, especially if he’s working with a new crew. “I watch what’s going on all the time and I don’t hesitate to make strong suggestions,” he says. “Sometimes they get a little aggravated, but I don’t care, I have to bring it to their attention. If you don’t like it, I can cut you a check and send you down the road. I’m trying to cultivate relationships with crews, treat them like partners.” Scott says that’s the best way to gain their respect and get their best work.
To follow the rules of the Occupational Safety and Health Administration and avoid the potential fines, know what safety equipment is required for the jobs you’re doing. If a job comes along that will require safety equipment you don’t have, get it or don’t take the job.
Cal-Pac follows California OSHA-issued safety regulations. “We’ve got the safety equipment we need,” Smith says. “We choose the roofs we want to do. If something’s not safe for our employees, we walk away. There’s better business out there.”
With any roofing job, there is going to be some danger involved, so you owe it to your employees to make every jobsite as safe as possible. Weekly toolbox talks and random reminders may seem like nagging or lecturing, but it is emphasizing the importance you place on safety.
“All my employees know the first thing I’m looking at when I drive up to a jobsite is, Is the ladder secure? Is everyone on the roof secure? Is everyone wearing the proper safety equipment?” Iselin says. “Honestly, if we were to lose someone at a jobsite, if someone would fall and die, I don’t think I’d have the stomach to put anyone on the roof again. I care about these people. Safety is a huge issue and we talk about it every day.”
The bottom line is letting your employees know what you want them to know about safety. They really can’t know too much about safety.
“Right off the bat, when someone starts working for us, they sign a safety agreement,” Tucker says. “They read it and sign it. Then they’re given safety glasses, a hard hat, gloves, harness, the basic personal safety equipment. It’s all on a checklist.” Tucker estimates, conservatively, Fabri-Tech spends at least $5,000 annually on such items — because of employee turnover and normal wear and tear to equipment. That figure doesn’t include the purchase of larger items like hoists and scaffolding.
“Every day we start the day off with a meeting discussing what’s going on at each jobsite, and safety is always touched on,” Tucker says. “We try to find the best way to get the job done well and get it done safely.”

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