How to Start a Roofing Company
Starting a new roofing business is exciting, but it’s more complex than it looks. It can be challenging and stressful, too. Here are 5 considerations to make before starting a roofing business.
The construction industry is full of lucrative business opportunities. Roofing is one of them. If you want to start your own contracting business, the roofing industry might be the right fit.
But what would it take to launch and run your own roofing business? This article is a comprehensive guide on how to start a roofing company. It also covers the common pitfalls to avoid, key considerations to make, and helpful tips to follow to establish a successful roofing business.
To start, let’s look at the benefits of owning and running a roofing business.
The Benefits of Starting Your Own Roofing Business
Why start a roofing company? Well, entrepreneurship is often a personal choice or a result of certain circumstances. Whatever your motivation, you can reap the following benefits as a roofing contractor:
Being Your Own Boss
Owning a roofing business is a sure way to escape the tedious 9-to-5 grind. As a roofing business owner, you’ll be self-employed, your own boss, and in full control of your destiny. You’ll have total freedom to try out new ideas, work flexible hours, and make your own business decisions.
Such independence will drastically enhance your lifestyle by promoting a healthy work-life balance. Plus, the pride of owning a business builds personal confidence and a sense of fulfillment.
A survey of 605 small business owners and managers found that nearly two-thirds were motivated to own or manage their business to be their own boss.
One of the main goals of starting any business is to make money. A roofing business is no different. In fact, roofing is a highly lucrative industry with an insatiable demand for contractors.
For perspective, the U.S. roofing contractors’ market is a $56.7 billion commercial industry. And each of the top 10 roofing companies in the country makes upwards of $50 million annually. The biggest earners generate nearly a billion dollars.
Additionally, the demand for roofing contractors is only growing. The thriving construction industry is currently valued at $1.94 trillion. After all, every building needs a roof—be it a commercial estate or a residential home.
And unlike the rest of the building, roofs require regular inspection, maintenance, and repairs. Plus, most roofs typically last 15-25 years before needing a major overhaul or outright replacement.
So it’s safe to say the demand for roofing services is strong.
Learning and Growth Opportunities
Being a business owner presents you with numerous opportunities for professional development.
Firstly, you have ample room to spread your wings and realize your potential.
Secondly, you’re positioned to seize opportunities you never knew existed or were within your grasp.
Thirdly, you learn a lot as an entrepreneur—knowledge you can use to grow and improve yourself and your business.
While roofing is an excellent contracting niche, it might be your stepping stone to even greater things. A small contracting business may disrupt the industry with new roofing styles, materials, and standards.
Who knows? The sky is quite literally the limit when it comes to roofing.
5 Things to Consider Before Starting a Roofing Business
Starting a new roofing business is an exciting undertaking. But it’s usually more complex than it looks. It can be challenging and stressful, too, especially for first-time entrepreneurs. Aside from that, only some business endeavors become successful.
So, it’s important to lay some groundwork and weigh various options before committing to the venture. To that end, here are 5 key considerations to make before starting a roofing business:
1. Location, Location, Location
Roofing is a hands-on job. A roofing contractor can only serve a limited area, such as a town, city, county, municipality, or state. In other words, a roofing company is a localized business, making its location a critical consideration.
Where do you plan to establish your roofing business? Choosing a prime location is important because it determines the market you’ll be serving, the roofing services you can render, and the logistics of setting up and running the business.
According to CB Insights, 42% of startups fail due to a lack of market for their offerings. Your location is your market.
Research several areas and settle on the one that shows the greatest promise. This could be in population metrics, housing demand, and real estate development.
Pick just one location for a start. You can branch out to other places later as the contracting business grows.
2. The Roofing Services Scope
Roofing is a broad business category with several specialties. For instance, some roofers specialize in roofing commercial buildings, while others work exclusively on residential homes.
You can further narrow your focus on one or more of the following areas:
- New roof installation and replacement
- Roof inspection and damage assessment
- Roof design and architecture
- Roof repair, painting, and servicing
- Leak protection and insulation
- Roof and gutter cleaning
- Solar roof installation
While it helps to have a broad portfolio as a contractor, try not to stretch yourself too thin. Offer roofing services you’re confident you can deliver.
Specialize in what you’re good at or passionate about. Then ensure it aligns with the roofing demands in your target market.
3. Potential Competitors
Who do you see as your main competitors in the chosen service area? Look up other roofing businesses in your target market offering the same services you intend to sell.
Find out what they are doing, who they’re working with, who they’re selling to, and their prices to determine how you can differentiate your new business.
This is called competitor research and is a big part of market evaluation.
Researching your to-be competitors will guide you in pricing, structuring, and branding your offering to stand out among other roofing contractors. It essentially finds you a way into the competitive roofing market.
4. Funding Your Own Roofing Business
How do you plan to secure enough capital to start the business and keep it going until it can sustain itself?
A new business can take several months to break even, let alone turn a profit. Ideally, you’ll need enough working capital to keep the business afloat for at least the first six months.
Remember that you’ll also not be drawing any cash from the business during this time. So, ensure you have another way to meet your own financial needs until the business becomes profitable.
However, financial planning is often easier said than done. There’s more to it than just setting aside money to buy roofing equipment, tools, materials, and machinery. It would be best if you had a solid plan to spend the available cash as efficiently as possible through conservative financial management.
If financial planning is not your strong suit, you can hire a professional accountant to help you with bookkeeping and cash flow management.
To quote the same CB Insights report from earlier, “running out of cash” is the second most common reason for startup failure. Yet small businesses are less likely to develop a financial budget.
5. Short-Term and Long-Term Goals
Ask yourself what you hope to achieve by starting a roofing business. It could be to earn extra money, use your expertise in the roofing industry, or bring something new to the roofing world.
You should also know how far you’d want to grow the business. These are your objectives and vision for the company.
Establishing your short-term and long-term goals will put a target in your sights as something to work toward and a yardstick for measuring success.
What You Need to Start a Roofing Company
It doesn’t take much to become a roofing contractor. Here’s a condensed list of everything you need to start a roofing company:
- A deep passion for the roofing business
- An entrepreneur’s spirit and can-do attitude
- A fool-proof action plan
- Some level of knowledge and experience in roofing or general construction
- A reliable source of capital
- A ready market and a competitive edge
- Employees (as needed)
- Paperwork (registration, licenses, permits, insurance, etc.)
How to Get Started in the Roofing Industry
Starting a new roofing business might initially seem overwhelming, but the process is pretty straightforward. Below is a step-by-step guide on how to start a roofing company:
Step 1: Run a Feasibility Study
“Feasibility study” may be a strong phrase here. This is just a reality check to see if the business you envision is viable. Set out to answer these three questions:
- Is the market large enough to support a steady demand for your roofing services?
- Is the price point profitable for the business and appealing to customers?
- Is the business strategy clever enough to get ahead of competitors?
Study the market thoroughly via online research. Talk to experts or entrepreneurs in the construction industry. And share your ideas with colleagues/mentors/business coaches to hear their opinions.
If you get a “yes” to all three questions, you can move on to the next step. Otherwise, it’s back to the drawing board.
Step 2: Draft a Business Plan
A business plan will serve as the blueprint for your roofing business. It’s a formal document that takes your business idea and puts it on paper as an actionable plan.
Unless you’re planning to present your business to potential investors or partners, you only need to draft a lean or simplified business plan. A new roofing enterprise has relatively few moving parts.
So, your business plan only must cover the following items:
- Brief description of the business
- Service scope and target market
- Pricing and profit models
- Financial plan and budget
- Expected challenges and their solutions
- Resources needed (tools, equipment, machinery, labor, office space, etc.)
- Achievable milestones
Remember that the business plan must be realistic and based on your earlier market research. A well-written business plan is your roadmap to success. It tells you what to do and when to do it.
Step 3: Get Your Roofing Business Registered
With the business plan figured out, it’s time to pick a name for your roofing company and get it registered. The name should be unique, catchy, memorable, and relevant to you or the roofing industry.
Brainstorm a few business names and check their availability using online name checkers, such as this one. Also, some business filing agencies have online tools for checking business name availability.
After choosing an awesome name, select a business structure and file for registration. The business structure represents the organizational setup of the enterprise, which determines how it handles operations, taxation, and liabilities.
As a roofing contractor, it’s best to go with a limited liability company (LLC). An LLC is an independent legal entity with assets and liabilities separate from those of the owner.
To register a roofing LLC, you’ll file an application with the Secretary of State’s office. Some states require filing with a business bureau or a business agency instead.
You must also submit your articles of organization (or certificate of organization) and elect a registered agent to receive legal paperwork on your behalf. Articles of organization is a formal document describing the LLC’s setup (management structure, activities, members, etc.).
After that, apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). You’ll need an EIN to file federal taxes, open a business bank account, apply for loans, and hire employees.
Business registration processes and requirements vary from state to state. So, check with your local state authorities on the procedures for registering a roofing company.
Step 4: Get Liability Insurance
Working on roofs can pose severe risks to the safety of your workers and customers. Property, equipment, and tools can also get damaged in the line of work. That’s why it’s vital to insure a roofing business. Insurance protects you from damage and injury liabilities and ensures your staff’s well-being.
A roofing startup needs at least three types of insurance coverage:
- General liability insurance – Protects your company if it causes physical injury to others or damage to other people’s property, particularly on job sites prone to accidents.
- Professional liability insurance – Covers against claims of negligence, errors, or omissions.
- Workers’ compensation – Provides medical care and various benefits to workers who get injured or fall ill as a direct result of their job.
There are many other insurance policies you can buy for the business, including commercial auto coverage, business owner’s policy (BOP), property insurance, and business income insurance.
More business insurance is generally better but prioritize the essential layers of protection first. Also, ask your insurer about bundled policies, as they are often cheaper and more convenient.
Step 5: Acquire the Necessary Licenses and Permits
You may need various licenses, certifications, or permits to work as an independent roofing contractor. The exact paperwork will depend on your state, county, city, or municipality.
Check with your local contractors’ governing bodies for all the authorizations required of roofing companies.
For the most part, contracting licenses and permits prove that your company complies with local labor laws, building codes, zoning ordinances, industrial standards, and so on.
Step 6: Get the Tools and Equipment You Need
With the paperwork out of the way, you can now focus on the operations side of the business. Roofing tools and equipment are your most critical operational assets, so get those first.
These are your ladders, nail guns, hammers, caulking guns, hoists, drills, pry bars, sheers, dump trailers, and safety gear. The items on your shopping list will, of course, depend on the sort of roofing jobs you intend to do.
While you’re at it, set up an operations center for your roofing business. That’s fancy talk for a business office.
An office address makes even a small company look more established and professional. But if the budget doesn’t allow for renting an office space, you can operate from home.
Step 7: Put Together a Roofers’ Team
You’ll certainly need some extra hands to get the roofing jobs done. However, it may not be such a good idea to rush into hiring full-time employees so early in the business.
At first, it would be safer and much cheaper to work with one-time contractors or handypersons on a per-job basis.
Later, you can think about a permanent team as the workflow becomes more consistent and predictable.
Financially speaking, this is a smart move because the average roofer’s salary is about $40,000 a year. Drawing that much from a new business that’s yet to stand on its feet might be disastrous.
Step 8: Brand and Marketing Your Roofing Business
Once everything is set up, the final step is drawing in customers. This is where branding and marketing come in.
Branding is basically anything that identifies or differentiates your roofing company from others. Your branding can be the company’s name, logo, or tagline. But branding goes even deeper than that. It’s also how the business interacts with customers, delivers its services, and presents itself.
While branding helps customers identify your company, marketing helps you score roofing jobs.
Contractor marketing generally involves spreading brand awareness to generate leads and converting those leads into paying customers.
Here’s how to do just that:
- Come up with a unique selling proposition (USP), something special that sets your roofing brand apart. It could be low prices, value-added services, exceptional roofing techniques, etc.
- Develop and launch a roofing website showcasing your business—what it does, who it serves, its location, and how to reach it.
- Claim and fill out your Google Business Profile.
- Get active on social media channels such as Facebook, Twitter, LinkedIn, Nextdoor, and Instagram.
- Run a local advertising campaign with billboards, pamphlets, park benches, newspaper ads, signage, and TV ads.
- Hire a local salesperson to spread the word about your new roofing company.
- Pay for digital ads on Google and social media.
- Make referral partnerships with other businesses in the local construction scene.
- Encourage word-of-mouth advertising by posting customer reviews and testimonials on your website, Google, and social media outlets.
Keep in mind that marketing is a multifaceted and continuous process. And the trick to any marketing effort is understanding the target audience. Learn and leverage your audience’s unmet roofing needs, preferences, and challenges. Only then will you be able to convince customers to hire your roofing company.
Tips for Creating a Successful Roofing Business
Anyone can start a business. An average of 4 million new business applications are filed every year. According to the U.S. Census Bureau, October 2022 alone saw 432,834 new business applications in the construction industry.
Unfortunately, not all businesses become successful. Data from the U.S. Bureau of Labor Statistics (BLS) shows that about 20% of new small businesses fail during their first year in business, and nearly half of all new startups never make it past five years.
However, do not let these statistics faze you. Many businesses are destined to succeed. But business success comes from a strong start, sound judgment, and informed business decisions.
Follow these quick tips derived from proven practices and common mistakes made by new roofing companies to boost your chances of success:
- Start with a feasible plan.
- Ensure you have enough money to see the venture through. Sometimes, this means borrowing.
- Capitalize on your company’s strengths and work on its weaknesses.
- Keep the expenses as low as possible.
- Separate your personal and business finances.
- Research the market and keep a close eye on competitors.
- Ensure your roofing company provides unique value to its customers.
- Be flexible and agile to adjust to market shifts and supply chain disruptions.
- Recruit qualified and experienced workers who value professionalism and quality in roofing jobs.
- Don’t bite off more than you can chew—accept only the types and number of roofing jobs you can handle.
- Leverage the value of B2B partnerships and networks in the construction industry to advance in the local market.
- Outsource what you can’t do alone (accounting, marketing, hiring, etc.).
Get Started Today
Enough talk. Let’s get to work. Here are five steps you can take today to make your roofing business dream a reality.
- Outline the specific services your roofing business will offer.
- Research potential roofing competitors in your area.
- Evaluate the local market demand. Can it support your business?
- Brainstorm a business name and confirm its availability.
- Begin applying for necessary roofing licenses and permits.
Starting with simple, actionable steps is the best way to begin. Before you know it, you’ll be running your own roofing business.