29 Tips For Running A Successful Roofing Business. Monroe Porter PROOF Management
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1 29 Tips For Running A Successful Roofing Business Monroe Porter PROOF Management
2 About PROOF Management Established 1972 PROOF speakers have made over 4000 presentations PROOF has spoken to or worked with over 250,000 construction people PROOF offers Seminars Sales & Marketing, Financial & Business Consulting Networking groups
3 Our Networking Groups
4 About Your Speaker Been doing this for over 30 years Specializes in contracting Taught seminars in the US, Australia, New Zealand, England and Canada Comes from the industry & versatile
5 About Your Program-There Is No Logical Order.Just Information
6 1. Sales/Service Perceptions Versus Reality Decision making requires effort & energy = stress Our brains operate in two ways Fast for recall Slow for analytical Source, Thinking Fast & Slow, Daniel Kahneman Fast brain recall & makes decision making easier In an attempt to be efficient, fast brain perceptions can be incorrect
7 Misconception & Illusion Examples
8
9 Sales: Who Would You Believe
10 Service: Who s the Professional
11 Service: Who s the Professional
12 Sales: Work Looks More Precise & State of the Art What your process looks like counts!
13 2-Protect Yourself From Theft Buy employee theft insurance or look into bonding of key employees Separate check writing & checkbook balancing No debit cards-consumer laws do not apply to businesses Most theft is electronic Appear to be watching Locks are to keep honest people honest
14 3-Distributor 10-Day Pay Discounts Not taking 2% discounts adds up $4000 material per roof equals $80 discount per roof $80 x 100 roofs a year equals $8000 While it is only 2% of material costs, the discount represents a higher percentage of your overall profit $4000 roof-10% net profit=$400 profit $80=20% of profit
15 4. Upgrade Your Sub Management While subs may be fixed costs and appear cheaper than employees, management costs can be prohibitive $60,000 construction manager supervising 3 sub crews is $20,000 per crew or 100 roofs is $600 per roof Require subs to use technology and pictures for technical documentation Manage subs with: Regular communication meetings Simple but clear concise specs Adjust financial reward to sub compliance
16 5. Make Sure You Meet Sub IRS Guidelines If it looks like a duck. If it quacks like a duck. IT IS A DUCK!!!!
17 5. Meet IRS Subcontractor Guidelines For 2014, the Department of Labor has requested an additional 14m in funds to address independent contractors Use the IRS list of 20 guidelines- can be found on the internet Just because everyone else does it will not protect you
18 5. IRS 20 Rules Guideline 1. Opportunity profit or loss 2. Investment required 3. Works for more than one firm 4. Service access to the general public 5. Independent without supervisory instructions 6. Self-governing without company training 7. Not integrated part of overall business 8. Reward is on results, not process managed 9. Hires own workers and assistants 10. Work is irregular not a continuing relationship
19 5. IRS 20 Rules Guidelines 11. Work hours are self dictated 12. Worker is not full-time employed 13. Worker does not do all work on premises 14. Subs should sequence their own tasks 15. No regular reports required(time cards, etc.) 16. Pay by commission or job not by pay period 17. Should pay own travel and business expenses 18. Should have own tools and material 19. Cannot fire if contract performance is ok 20. Worker cannot merely quit due to contract
20 6. Small Job Estimating Fee Contractors tend to get the small jobs and repairs. One way to raise your prices without hurting your competiveness is to build a $100 estimating cost into each job. 100 jobs a year equals $10,000 and rarely impacts closing ratios.
21 7. Establish a Collection Policy Establish a set procedure and process for collection and make no exceptions Consider credit checks & google searches of potential clients Know the law and follow lien guidelines Be careful of salesmen collecting money If customer complains We filed a lien on your job, sorry. The bank and finance people require it. Since you are going to pay, I assume it s not a problem?
22 8. Buy Insurance Intelligently The purpose of insurance is protect you from disasters, not cover day to day fender benders. For This Not This
23 8. Buy Insurance Intelligently Buy from a business oriented agent Look for appropriate coverage, not just low price Make sure you are covered for things like non-employee owned vehicles, have large enough limits for an expensive home, umbrella coverage etc. Make sure worker s compensation certificates are held for all subs
24 9. Target Past Customers Don t assume past customers will automatically refer you Have a printed list of customers with address and phone numbers Regularly market to them Build a customer referral program
25 10. Keep a Competitive Hourly Crew Ratio Every crew needs a leader; pay well and focus on having one Be careful of only retaining leads and increasing your average hourly wage Keep your average wage competitive $16 plus $16 = $32 an hour two man crew $18 plus $14 = $32 crew $18 plus $18 = $36 crew
26 11. Give Up Your Calendar Customer phone tag is inefficient, have an office employee schedule appointments. This: Allows you to schedule calls geographically Qualify people over the phone Control interruptions More importantly, it helps organize you. If you are disorganized, accept it and have someone organized help you.
27 12. Be More Community Visible Join Rotary, Lions or some type of business club Must be an activity you enjoy Consider public service projects and send a press release Make sure such projects have high visibility Find other contractors you do not compete with and share leads
28 13. Paradox of Saving Time-Efficiency and Value No one saves time-each 24 hours equal Time management is about choices Keep a time clock on yourself Evaluate for hourly value What can be delegated Which activities help you reach your goals Give up non-profitable tasks-don t be a crew babysitter and material errand boy Consider admin to help organize you Discipline is your friend Keep to do lists and other visuals
29 14. Track Closing Ratios Capture phone leads and track data Don t let commissioned sales people blow leads Separate repair from replacement leads Track by dollars sold & number of presentations Track advertising efficiency and closing ratios Ask how they heard about you For advertising, ask two questions Track closing ratio by type of lead Repeats and referrals should be 50% or more
30 15. Hire Slowly, Terminate Quickly Constantly look for people Hire work ethic, teach skill Build an organization Terminate problem employees sooner Don t be held hostage Avoid the trap of hiring too many friends and family of employees
31 16. Sell on the Spot Not all jobs can be sold on the spot but when possible it is a tremendous time and stress saver Staying in slow brain saves time If customer says no, you don t have to do formal written estimate Closing ratios will improve You can deal with objections and issues face to face
32 17. Preplan list Make a will Create a living will and medical directive Prepare a minor child custody directive Consider funeral preplanning For insurance, photograph home & office items Look into disability insurance Have 3-6months of emergency cash Learn CPR consider
33 18. Job Cost Equipment Maintenance Maintenance tracking software can be complicated and expensive. Simply assign each piece of equipment a job number and charge maintenance to those jobs. $
34 19. Upsell Amos Tversky-Prospect Theory How people assign values $30 discount versus $30 discount
35 20. Improve Attitude-Reprogram Instant Thoughts An Event Happens Instant Thought Occurs You Feel A Certain Way
36 21. Don t Start a Sale with Job Details Don t immediately go to the job and talk technical. Focus on value to the customer. Before we get into the job, I want to make sure I get things right. Some people roof because there is a leak, others are selling the property, others don t like what they have, others are trying to form a budget, others preparing for an event like an open house, help me understand what is driving your decision to do this now?
37 22. Never Use a Cash Accounting Format to Make Financial Decisions Accountants may use cash statements to reduce and postpone taxes Cash on hand has little to do with profit Accrual statements include what you owe and what is owed you.
38 23. Diversify Your Personal Assets Too many contractors mistakenly think retirement will come from the sale of the business-contracting businesses are hard to sell Use business profits to build balanced assets Building a shop and paying rent to yourself does not make sense if that shop and business represent 90% of your wealth Contribute early to a traditional retirement plan
39 24. Stop Hallway Management Don t discuss jobs and details on the run Rather have: Weekly production meetings Monthly financial meetings Regular sales meetings
40 25. Schedule Slow Brain Activities The brain works two ways Slow brain: memory recall Fast brain: analytical, problem solving & thinking It takes minutes to transition Consider a separate place for slow thinking Schedule blocks of time to do slow brain tasks
41 26. Invest in Good Administrators Too often contractors have poor admin help Good admins are very hard to find Strong admins are paid in lead person range Let that person manage your activities If you have to tell the person what to do, you have the wrong person
42 27. Have Legal Counsel Create a Contract Oh no, help me legal issues are very expensive Keep it simple but know local laws Understand consumer 72 hour right of refusal laws Consider an arbitration clause I am not a lawyer, hire one
43 28. Ask for the Order Would you like me to pencil you into our schedule? Then shut up, the next person to speak loses. Most people will not confront you, so there is nothing to be scared of Get people to tell you NO
44 29. Consider Raising Your Price
45 Summary Don t chop wood with a dull axe. Please feel free to ask your speaker questions about our networking groups. Thank You PROOF Management
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